Firm dissolved or business discontinued
Section 189 of the Income-tax Act, 1961 deals with firm dissolved or business discontinued. Where any business or profession carried on by a firm has been discontinued or where a firm is dissolved, the 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 prov The Act came into force on 01 Apr 1962. Repealed by the Income-tax Act, 2025 with effect from 1 April 2026, but conduct before that date is still charged, tried and appealed under it.
(1) Where any business or profession carried on by a firm has been discontinued or where a firm is dissolved, the 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 assess- ment.
(2) Without prejudice to the generality of the foregoing sub-section, if the Assessing Officer or 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.—[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.
Provisions applicable to past assessments of firms.
Section 189, The Income-tax Act, 1961 (Act 43 of 1961).
Now in the Income-tax Act
INCOME-TAX-ACT-2025 330 Firm dissolved or business discontinued Official correspondence
Measured by comparing the text of the two provisions, not taken from an official correspondence table — there is no machine-readable one. See both texts side by side before relying on it.
Both regimes are live. The repealed enactment still governs what happened while it was in force. We never redirect one to the other.
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Mohan International v. Union of India
Court's Decision & Legal Precedent
Labelled Final Order 13.01.2025 (order-1.pdf; DATE-VERIFIED): Delhi HC quashed reassessment orders for AYs 2015-16 and 2016-17 that added import values under s.69 r/w s.115BBE in the name of a partnership dissolved in 2011. On uncontroverted material that the firm had converted to a proprietorship, IEC/PAN were updated, and the same imports were already accounted/taxed in the proprietorship’s audited returns, the Court held the AO failed to examine that stand and that s.115BBE additions on a non-existent firm’s PAN could not stand.
On this section: Clarifies limits of s.189 dissolved-firm assessment power where business continuation and returns sit with a successor proprietorship.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 189
What have the courts held on Section 189 of the Income-tax Act?
Mohan International v. Union of India (13 Jan 2025) is the leading judgment on this section among those set out below: Clarifies limits of s.189 dissolved-firm assessment power where business continuation and returns sit with a successor proprietorship.
How do I find court cases under Section 189 of the Income-tax Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Income Tax Act 189, section 189 Income Tax Act, section 189 of the Income-tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with Mohan International v. Union of India (13 Jan 2025).
What should I read with Section 189 of the Income-tax Act, and has it changed?
Its own text turns on section 159 (Legal representatives), so none of them can safely be read on its own. 2 other provisions in this corpus refer back to it. For anything done on or after 1 April 2026 the provision to read is Income-tax Act, 2025, section 330 (Firm dissolved or business discontinued), which replaced it; conduct before that date is still charged, tried and appealed under this section.
When did Section 189 of the Income-tax Act come into force?
Section 189 of the Income-tax Act, cited as Income Tax Act 189, came into force on 01 Apr 1962, having been enacted on 13 Sep 1961. It is no longer in force.
Other sections of this Act
- 10. Incomes not included in total income30885 words
- 2. Definitions11419 words
- 80HHF. Deduction in respect of profits and gains from export or transfer of film software, etc7148 words
- 80-IB. Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings5474 words
- 155. Other amendments5451 words
- 139. Return of income5400 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Recovered from the consolidated text published by the Income Tax Department, as amended by the Finance Act, 2026. India Code holds no record of this Act in any form. This page is not a substitute for legal advice.