K.K. Usha, J.
1. This reference, at the instance of the assessee under Section 60 of the Agrl. Income-tax Act, 1950, arises out of an order passed by the Kerala Agrl. Income-tax Appellate Tribunal, Addl. Bench, Ernakulam, in A. I. T. A. No. 39 of 1989. The relevant assessment year is 1979-80 and the relevant accounting year is July 1, 1977, to June 30, 1978. The following are the questions of law arising for consideration of this court ;
'1. Whether, on the facts and in the circumstances of the case, this Tribunal is justified in law in holding that the method adopted by the assessing authority for apportioning the agricultural income among the partners who were in the reconstituted firm at the time of making the assessment is correct and legal in view of the provisions contained in Section 28(1) read with Section 18(5)(a) of the Agrl. Income-tax Act, 1950 ?
2. Whether, on the facts and in the circumstances of the case, this Tribunal is justified in holding that the words appearing in Section 28(1) at the time of making the assessment' mean during the course of the process of assessment which shall commence with service of notice to the assessee and continues until the order of assessment is made ?
3. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in law in holding that the agricultural income is to be apportioned among the partners in the firm at the time of making the assessment and the erstwhile partners of the firm are to be approached for recovery only if recovery is not possible from the reconstituted firm ?'
The assessee is a registered partnership firm constituted under an instrument of partnership dated December 18, 1974, with 20 partners. The firm was reconstituted as per document dated March 28, 1978, whereby 10 partners retired, one person admitted and another person who died on March 21, 1978, was removed from the firm. After reconstitution, the firm had only 10 partners. The net income of the firm for the assessment year 1979-80 was fixed by the assessment order dated March 31, 1982, at Rs. 36,88,797. It was then apportioned among the 10 partners who were in the firm at the time of making the assessment in their new profit sharing ratio, effective from the date of reconstitution. The contention raised by the assessee that apportionment should be made among the partners who were available during the previous year was rejected by applying Section 28(1) of the Agrl, Income-tax Act, 1950. It was held that the partners as at the time of the assessment, should be made liable for the tax. The appeals filed before the Deputy Commissioner (Appeals) as well as the Tribunal were dismissed.
2. In our judgment in I. T. R. Nos. 19 to 28 of 1993, Issac Peter v. Commr. Agrl I. T. : [1998]229ITR752(Ker) , we have considered in detail, the scope of Section 28(1) and it has been held that even though the assessment has to be made on the reconstituted firm by applying the provisions contained under Clause (a) of Sub-section (5) of Section 18, the total income of each partner of the firm including therein his share of its income, profits and gains of the previous year has to be assessed and the sum payable by him on the basis of such assessment shall be determined. Therefore, no partner can be made liable to pay tax in respect of income, profits and gains which he has not received for the previous year. Following the above decision, we hold that even though a single assessment has to be made against the reconstituted firm for the year 1979-80, as regards income received for the period between July 1, 1977, and March 28, 1978, the liability for tax has to be apportioned between the partners of the firm before its reconstitution and for the period between March 28, 1978, and June 30, 1978, it has to be apportioned between the partners under the reconstituted firm.
3. We answer question No. 1 in the negative, against the Revenue and in favour of the assessee. We decline to answer question No. 2 as it is not relevant. In the light of our answer to question No. 1, we decline to answer question No. 3.
4. A copy of this judgment, under the seal of this court and the signature of the Registrar shall be forwarded to the Agricultural Income-tax Appellate Tribunal, Addl. Bench, Ernakulam.