1986 (12) TMI 81 - AT - Income Tax

Summary

Issues:
- Appeal against the order upholding the claim of the assessee for registration for asst. yr. 1980-81.
- Disagreement between ITO and Commr. (A) regarding renewal of registration.
- Allegation of benami business regarding M/s Pawan Udyog.
- Challenge of renewal refusal by the Revenue before the Tribunal.

Analysis:
The appeal in this case revolves around the renewal of registration for the assessment year 1980-81. The Income Tax Officer (ITO) refused the renewal, citing the non-disclosure of income from M/s Pawan Udhyog by the assessee, which, according to the ITO, violated the conditions for renewal as per the instrument of partnership. The Commissioner (A) disagreed with the ITO, emphasizing that all conditions for renewal had been met by the assessee, as evidenced by the previous registrations and compliance with prescribed requirements. The Commissioner (A) directed the ITO to grant the renewal of registration to the assessee firm for the year under consideration.

The Departmental representative, representing the Revenue, contended that M/s Pawan Udyog was a benami business of the assessee firm, and the profits from it were not distributed among the partners as per the partnership agreement. However, the assessee's counsel pointed out that a previous order by the Commissioner (A) had not endorsed the ITO's finding regarding Pawan Udyog being a benami concern. The Tribunal noted that the Revenue failed to rebut the claim that the Commissioner (A) had not endorsed the inclusion of Pawan Udyog's income in the assessee's income. As there was no challenge to the Commissioner's finding, the Tribunal found no basis for the ITO's refusal to renew the registration based on the inclusion of Pawan Udyog's income.

After considering the facts presented, the Tribunal concluded that the Revenue did not provide sufficient evidence to support the ITO's decision to deny the renewal of registration. The Tribunal upheld the Commissioner (A)'s finding and dismissed the Revenue's appeal, emphasizing that if Pawan Udyog's income was not to be included in the assessee's income, there was no justification for refusing the renewal based on the alleged benami nature of Pawan Udyog. Ultimately, the Tribunal ruled in favor of the assessee, dismissing the Revenue's appeal against the renewal of registration for the assessment year 1980-81.