- (1.) This appeal by special leave is from an order of the Punjab High Court rejecting an application by the Commissioner of Income-tax, Punjab, under S. 66(2) of the Indian Income-tax Act, 1922. On April 21, 1953, 14 partners of the firm of Messrs. Chander Bhan Harbhajan Lal of Rupar (hereinafter referred to as the assessee firm) constituted under the instrument of partnership, dated December 5, 1952, applied to the Income-tax Officer, Project Circle, Ambala, for registration of the firm under S. 26-A of the Indian Income-tax Act. It may be mentioned at this stage that there was another firm of the name of Chander Bhan and Co., of Ferozepore (hereinafter referred to as the Ferozepore firm), consisting of 8 partners and constituted under a deed, dated June 14, 1952 which provided inter alia : "If any one of the executants enters into business individually or along with another person, all the "partners of the firm shall be entitled to the profit and liable for the loss, accruing from that business according to the shares hereinbefore mentioned."
(2.) One Gosain Chander Bhan was a partner of both the assessee firm and the Ferozepore firm. In course of proceedings arising out of the application for registration of the asseessee firm under S. 26-A, Harbhajan Lal, one of its partners, stated on January 30, 1954: "I Harbhajan Lal son of Shri Ram Chand of Rupar solemnly declare that firm M/ s. Chander Bhan Harbhajan Lal consisted of 14 partners as mentioned in the return and deed of partnership. Gosain Chander Bhan was partner not in his individual capacity but on behalf of the firm M/s. Gosain Chander Bhan and Company Ferozepur having about six partners. Other partners are partners in their individual capacity." It seems that other partners of the assessee firm made similar statements on February 27, 1954
(3.) The capital of the assessee firm was supplied by Gosain Chander Bhan. It appears that Gosain Chander Bhan had taken the capital from the Ferozepore firm, and the amount was shown as an item in his accounts with the Fezorepore firm.;