Firm dissolved or Business discontinued - Section 189 - Income Tax - Ready Reckoner - Income Tax

Firm dissolved or Business discontinued - Section 189 If the firm has been dissolved or business discontinued, the Assessing Officer shall make an assessment of the total income of the firm as if no such discontinuance or dissolution had taken place. All the provisions of the Income tax Act including provisions relating to the levy of penalty shall apply to such assessment. Every person who was at the time of such discontinuance or dissolution of 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 any other sum payable under the Act for all the assessment years since the formation of the firm. 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 in point no.2 above from the stage at which the proceeding stood at the time of such discontinuance or dissolution and all the provisions of Income Tax Act shall apply. Without prejudice to the generally of the foregoing sub-section, if the Assessing Officer or the Commissioner (Appeals) [ Inserted FA 2023 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.