N.M. Kasliwal, J. - (1.) WE propose to dispose of all the three above petitions by one single order as the parties in all the three cases are same and relate to matters under Section 256(2) of the I.T. Act, 1961, for the assessment years 1969-70, 1970-71 and 1971-72 and the points arising in all the above cases are almost identical.
(2.) BRIEFLY stated the facts of the Income-tax Case No. 199/1975 are that the petitioner moved an application under Section 185 of the I.T. Act for registration of a partnership firm consisting of Shri R.K. Bhargava, Shri Raja Ram and Shri Rahul. The partnership was alleged to have been constituted through a partnership deed dated 3rd November, 1967. Shri Rahul at this time was admittedly a minor. The ITO by his order dated 2nd March, 1972, refused registration, holding that the said partnership was not a genuine one. Being aggrieved by the said order, the petitioner preferred an appeal to the AAC, who, by his order dated 15th June, 1972, set aside the order of the ITO and held that the partnership was a genuine one. The department preferred an appeal to the Tribunal which allowed the appeal filed by the department, vide its order dated 26th November, 1973, and upheld the order of the ITO. The petitioner submitted an application under Section 256(1) of the I.T. Act requiring the Tribunal to draw up a statement of the case and to refer the same to this court. The learned Tribunal, however, by its order dated 28th November, 1974, rejected the reference application of the petitioner and hence the petitioner has submitted an application under Section 256(2) of the I.T. Act forgiving a direction to the Tribunal to draw up a statement of the case and to raise and refer the questions of law mentioned in the petition. In the Case No. 12/1978, the facts are almost identical with a slight variation that Shri Rahul Bhargava, one of the partners, had attained majority and a fresh deed of partnership was drawn up on 22nd October, 1968. An application submitted for registration of the partnership firm constituted by a deed of partnership dated 22nd October, 1968, for the assessment year 1970-71 was dismissed by the ITO; the order of the ITO was set aside by the AAC and, on an appeal filed by the department, the Tribunal set aside the order of the AAC and the application for making a reference was also rejected by the Tribunal. In the Petition No. 13/78, which relates to the assessment year 1971-72, the petitioner submitted an application for continuation of registration of the partnership firm. The ITO held that the previous applications for registration having already been refused, there was no question of continuation of registration and assessed the petitioner as an individual. The petitioner filed two appeals before the AAC, one challenging the refusal of registration and the other challenging the validity of the assessment. The AAC held that the petitioner was entitled to registration, following his order for the earlier assessment year. However, the other appeal was dismissed by him, The department filed a second appeal to the Tribunal against the order of the AAC by which he had granted continuation of registration to the petitioner-firm. The petitioner also filed cross-objections on the question of the validity of the assessment. The Tribunal allowed the appeal filed by the department on the question of registration and dismissed the cross-objections filed by the petitioner. The reference application filed by the petitioner under Section 256(1) of the I.T. Act was also dismissed. The admitted facts of the case are that one Shri R. K. Bhargava was carrying on business for some years as a sole proprietor, under the name and style of Messrs. Ranu Bros. The said Bhargava was carrying on business as a contractor and as such he was registered as a contractor with various Government departments. One Raja Ram was working as an employee of Shri R.K. Bhargava. A partnership firm was alleged to have been constituted by a partnership deed dated 3rd November, 1967, in which the shares of the partners in profits and losses were shown as under : JUDGEMENT_468_ITR117_1979Html1.htm On 22nd October, 1968, another partnership deed was executed in which the shares in the profits and losses were shown as follows: JUDGEMENT_468_ITR117_1979Html2.htm
(3.) THE name and style of the business in the partnership was also carried on in the same name, i.e., "M/s. Ranu Bros." The learned Tribunal after considering the entire facts and circumstances including the surrounding circumstances at the time when the partnership agreement was entered into, the manner in which the accounts of the business were kept, the right to receive profits and liabilities, the right to control the business and various other factors relevant with regard to the question whether a genuine partnership had come into existence or not, held that it was not a case of genuine partnership. Learned counsel appearing for the petitioner has vehemently contended that Section 4 of the Partnership Act defines partnership and Section 6 determines that in holding whether a group of persons is or is not a firm, regard shall be had to the real relation between the parties as shown by all relevant facts taken together. His contention is that what facts and circumstances in a given case constituted a firm is a question of law and this court should direct the Tribunal to draw up a statement of case. Learned counsel further contended that the inferences drawn by the Tribunal are based on pure conjectures. There was no material for coming to the conclusion that the firm was not a genuine one. The conclusions are also based on irrelevant and immaterial considerations. Learned counsel placed reliance on Umacharan Shaw & Bros. v. CIT [1959] 37 ITR 271 (SC), CIT v. Prakash Ram Gupta [1969] 72 ITR 366 (Pat), T.V. Mathew and Sons. v. Commr. of Agrl. I.T. [1977] 108 ITR 47 (Ker), CIT v. Maskara Tea Estate [1977] 108 ITR 70 (Gau), Jammula Venkataswawy & Sons v. CIT [1974] 96 ITR 625 (Orissa) and K.D. Kamath & Co. v. CIT [1971] 82 ITR 680 (SC). On the other hand, the learned counsel for the respondent contended that the question whether a partnership was a genuine one or not was purely a question of fact and the learned Tribunal has given detailed reasons for arriving at this conclusion which is based on the correct appreciation of oral and documentary evidence and thus no question of law arises. The finding of the learned Tribunal is not based on any conjectures but is based on material placed on the record of the case. Reliance is placed on Bhaichand Amoluk and Co. v. CIT [1962] 44 ITR 511 (SC). ;