Section 176 of Income Tax Act "Discontinued business"
176. (1) Notwithstanding anything contained in section 4,
where any business or profession is discontinued in any
assessment year, the income of the period from the expiry of
the previous year for that assessment year up to the date of
such discontinuance may, at the discretion of the Assessing
Officer, be charged to tax in that assessment year.
(2) The total income of each completed previous year or part
of any previous year included in such period shall be
chargeable to tax at the rate or rates in force in that
assessment year, and separate assessments shall be made in
respect of each such completed previous year or part of any
previous year.
(3) Any person discontinuing any business or profession
shall give to the Assessing Officer notice of such
discontinuance within fifteen days thereof.
(3A) Where any business is discontinued in any year, any
sum received after the discontinuance shall be deemed to be
the income of the recipient and charged to tax accordingly
in the year of receipt, if such sum would have been included
in the total income of the person who carried on the
business had such sum been received before such
discontinuance.
(4) Where any profession is discontinued in any year on
account of the cessation of the profession by, or the
retirement or death of, the person carrying on the
profession, any sum received after the discontinuance shall
be deemed to be the income of the recipient and charged to
tax accordingly in the year of receipt, if such sum would
have been included in the total income of the aforesaid
person had it been received before such discontinuance.
(5) Where an assessment is to be made under the provisions
of this section, the Assessing Officer may serve on the
person whose income is to be assessed or, in the case of a
firm, on any person who was a partner of such firm at the
time of its discontinuance or, in the case of a company, on
the principal officer thereof, a notice containing all or
any of the requirements which may be included in a notice
under clause (i) of sub-section (1) of section 142 and the
provisions of this Act shall, so far as may be, apply
accordingly as if the notice were a notice issued under
clause (i) of sub-section (1) of section 142.
(6) The tax chargeable under this section shall be in
addition to the tax, if any, chargeable under any other
provision of this Act.
(7) Where the provisions of sub-section (1) are applicable,
any notice issued by the Assessing Officer under clause (i)
of sub-section (1) of section 142 or section 148 in respect
of any tax chargeable under any other provisions of this Act
may, notwithstanding anything contained in clause (i) of
sub-section (1) of section 142 or section 148, as the case
may be, require the furnishing of the return by the person
to whom the aforesaid notices are issued within such period,
not being less than seven days, as the Assessing Officer may
think proper.
177. (1) Where any business or profession carried on by
an association of persons has been discontinued or where an
association of persons is dissolved, the Assessing Officer
shall make an assessment of the total income of the
association of persons 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 Assessing Officer or the Commissioner
(Appeals) in the course of any proceeding under this Act in
respect of any such association of persons as is referred to
in that sub-section is satisfied that the association of
persons 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 member of the association of persons, 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.
(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
persons 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.