INCOME TAX OFFICER Vs. GOPAL PULSE MILLS
INCOME TAX APPELLATE TRIBUNAL
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NATHU RAM, A.M. : -
(1.) THESE are appeals preferred by the Revenue against the orders of the CIT(A)/AAC for the asst. yrs. 1979-80, 1980-81 and 1981-82. As the issue involved is common these appeals have been heard together and disposed of by this consolidated order.
(2.) The grievance of the Revenue for asst. yr. 1979-80 is that the learned CIT(A) erred in holding that the assessee-firm M/s. Shri Gopal Mills is genuine and further erred in directing the Assessing Officer to grant registration to the firm. The grievance for asst. yrs. 1980-81 and 1981-82 is against allowing continuation of registration to the firm.
The facts in brief are that the firm M/s. Bansilal & Co., was constituted during the accounting year relevant to the asst. yr. 1975-76 by Shri Bansilal Athumal and Chandumal Safermal among others. The firm was doing business in food grains as well as manufacturing of moong and tuvar pulses. As the profit of the firm was steadily rising the business relating to manufacturing of pulses was diverted to newly constituted firm Shri Gopal Pulse Mills (assessee) w.e.f. 10th Nov., 1977 which was constituted by the following :
The Assessing Officer found that as per the terms of the partnership deed of the assessee-firm capital was invested and would continue to be invested by all partners with mutual understanding. But no interest would be charged thereon. The godown premises was provided by partner Shri Gopaldas and he would not charge any rent. Factory premises were taken on rent from Shri Tharumal and its tenancy rights would vest in the firm. The Assessing Officer observed that partner Shri Gopaldas gave godown premises for use of the firm as a consideration for sharing profits. Further though Shri Tharumal, husband of Smt. Jankiben was owner of the factory premises but the tenancy rights therein were given to the firm. The Assessing Officer came to the conclusion that the firm as constituted was not genuine for the following reasons : 1. Smt. Jankiben brought in capital of Rs. 85,041 on withdrawal from M/s. Bansilal & Co. Shri Tharumal husband of Smt. Jankiben was partner in the firm M/s. Bansilal & Co. from its very inception. He retired from the firm in the asst. yr. 1975-76 to make way for his wife Smt. Jankiben to become partner from asst. yr. 1976-77. She brought capital of Rs. 15,000 in M/s. Bansilal & Co. as gifted by Shri Hotchand Billaram. The Assessing Officer further found that the lady in her statement recorded during the course of search deposed that she never deposited any amount or capital with any firm and the ownership lies with her husband. He, therefore, held Smt. Jankiben as benamidar of her husband Shri Tharumal in the case of the assessee-firm also. The Assessing Officer also found that the factory premises belonging to her husband Shri Tharumal was earlier used by the firm M/s. Bansilal & Co. for manufacturing of pulses but the factory premises during the current year were given on nominal rent to the assessee-firm in which Smt. Jankiben became partner. This fact also supported the view taken that she was benamidar of her husband.
(3.) SHRI Gopaldas became full-fledged partner sharing profits and losses to the extent of 40% in the firm. The Assessing Officer found that as per his school certificate his date of birth was 1st Jan., 1962 and as such he completed only 15 years and 10 months on the date of joining the firm. He being a minor could not become full-fledged partner. The firm was, therefore, not validly constituted. When confronted it was claimed by the assessee that correct date of birth of SHRI Gopal is 12th Jan., 1959 as recorded in Chathi Vahi in which birth date of all the members of the family are recorded. Further in the life insurance policy taken by SHRI Gopal the date of birth was recorded as 12th Jan., 1959. The birth date of 1st Jan., 1962 mentioned in school certificate might be due to admission problem. The Assessing Officer recorded statements of SHRI Gopal and his father SHRI Bansilal about the birth date. The assessee also failed to produce the birth certificate from the records of the municipality or panchayat. The Assessing Officer found some inconsistency in the statement recorded and not satisfied with the evidence given. He held that the assessee-firm is not validly constituted in law SHRI Gopaldas being minor having joined the firm as full pledged partner sharing profits and losses.;
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