Section 189 - Firm dissolved or business discontinued - Income-tax Act, 1961

Firm dissolved or business discontinued. 189. (1) Where any business or profession carried on by a firm has been discontinued or where a firm is dissolved, the 1 [Assessing] Officer shall make an assessment of the total income of the firm as if no such discontinuance or dissolution had taken place, and all the provisions of this Act, including the provisions relating to the levy of a penalty or any other sum chargeable under any provision of this Act, shall apply, so far as may be, to such assessment. (2) Without prejudice to the generality of the foregoing sub-section, if the 2 [Assessing] Officer or 6 [ the Joint Commissioner (Appeals) or the Commissioner (Appeals) ] in the course of any proceeding under this Act in respect of any such firm as is referred to in that sub-section is satisfied that the firm was guilty of any of the acts specified in Chapter XXI, he may impose or direct the imposition of a penalty in accordance with the provisions of that Chapter. (3) Every person who was at the time of such discontinuance or dissolution a partner of the firm, and the legal representative of any such person who is deceased, shall be jointly and severally liable for the amount of tax, penalty or other sum payable, and all the provisions of this Act, so far as may be, shall apply to any such assessment or imposition of penalty or other sum. Explanation. 5 [ Omitted by the Finance Act, 1992, w.e.f. 1-4-1993 . ] (4) Where such discontinuance or dissolution takes place after any proceedings in respect of an assessment year have commenced, the proceedings may be continued against the person referred to in sub-section (3) from the stage at which the proceedings stood at the time of such discontinuance or dissolution, and all the provisions of this Act shall, so far as may be, apply accordingly. (5) Nothing in this section shall affect the provisions of sub-section (6) of section 159. ----------------------- Notes :- 1. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 2. Substituted for Income-tax by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 3. Words Deputy Commissioner (Appeals) or the omitted by the Finance (No. 2) Act, 1998, w.e.f. 1-10-1998. Earlier Deputy Commissioner (Appeals) was substituted for Appellate Assistant Commissioner by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988. 4. Inserted by the Finance (No. 2) Act, 1977, w.e.f. 10-7-1978. 5. Prior to omission, Explanation, as inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-10-1975 was omitted by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1989 and later reintroduced by the Direct Tax Laws (Amendment) Act, 1989, w.e.f. 1-4-1989. 6. Substituted vide THE FINANCE ACT, 2023 dated 31-03-2023 w.e.f. 01-04-2023 before it was read as, the 3 [***] 4 [Commissioner (Appeals)]