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2002 (8) TMI 20 - HC - Income TaxFirm registration - Whether, on the facts and circumstances of the case, the Tribunal was right in coming to the conclusion that the firm was not a genuine one on the strength of the statement made by the lady partner? - we answer the questions referred to us by the Tribunal for our opinion in the affirmative, i.e., in favour of the Revenue and against the assessee.
Issues:
Validity of firm's registration under Income-tax Act based on genuineness of partnership. Analysis: The case involved an application under section 256(1) of the Income-tax Act, 1961, where the Tribunal referred the question of the firm's genuineness for opinion. The firm was formed by a partnership deed, and the Income-tax Officer, after examining a lady partner, concluded that the firm was not genuine and rejected the registration application. The Appellate Assistant Commissioner and the Income-tax Appellate Tribunal upheld this view. The counsel for the assessee argued that the lady partner's lack of knowledge did not negate the firm's genuineness, as she was aware of her share and capital contribution. However, the Revenue's counsel supported the Tribunal's decision. The High Court reviewed the statements and orders of the lower authorities. The Tribunal had considered various precedents and confirmed the finding that the firm was not genuine. The Court noted that all three authorities had concurred on this point, limiting the Court's scope for interference. The lady partner admitted she was unaware of the partnership deed's terms and had not signed it during formation. Despite the firm's claim of interest payment to her, she stated she had not received any interest. In cross-examination, she revealed her lack of knowledge about the partnership documents, indicating a lack of genuine partnership. The Court emphasized that the firm's genuineness was a factual determination, and the lady partner's lack of awareness of the partnership details supported the finding of the firm being non-genuine. Given the consistent factual findings, the Court upheld the Tribunal's decision in favor of the Revenue, disposing of the reference petition.
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