1988 (8) TMI 123 - AT - Income Tax

Summary

Issues:
1. Assessment of the firm as an unregistered firm.
2. Refusal to grant registration to the firm.

Analysis:
1. The judgment pertains to two appeals by the assessed regarding the assessment for the year 1984-85. The firm filed declarations in form Nos. 11 and 11A along with a partnership deed dated 15th Nov., 1982. The assessment was completed under section 143(3) treating the firm as an unregistered firm, with a separate order under section 185(1)(b) refusing registration. The appeals were consolidated for a common hearing as they shared the same factual background.

2. The main contention was that some partners had been assessed adopting the share income of the firm as that of a registered firm in their individual assessments. The firm argued that since these assessments were final, it could not be treated as an unregistered firm. Reference was made to the Boards Circular No. F. 75/19/19/191/62-ITJ and a decision of the Bangalore Tribunal. The Revenue relied on a decision of the Andhra Pradesh High Court which was distinguished.

3. The key question was whether the firm should be assessed as a registered firm based on the individual assessments of the partners. The Revenue argued that most assessments were under section 143(1) and had not been reopened. However, in one partner's assessment under section 143(3), the share income was treated as that of a registered firm. The Tribunal distinguished a previous case where a minor was treated as a major, stating that the facts were different in the present case.

4. The Tribunal referred to a Supreme Court decision and Board Circulars which clarified that if partners were assessed based on their share income from the firm, the firm could not be assessed as unregistered. Relying on these authorities, the Tribunal held that the assessment of the firm as unregistered was invalid and should be canceled. Consequently, the firm was entitled to be assessed as a registered firm for the year 1984-85 and granted registration.

5. As the first issue was decided in favor of the firm, the Tribunal did not delve into the question of the genuineness of the firm. The appeals were allowed, and the firm was granted relief based on the assessment as a registered firm, rendering the refusal of registration invalid.