1986 (5) TMI 77 - AT - Income Tax

Additional Evidence, Assessment Year, Firm Registration, In Part, Partnership Deed, Res Judicata

Summary

Issues:
Renewal of registration for the assessee firm based on the distribution of profits among partners as per the partnership deed.

Analysis:
The appeal before the Appellate Tribunal ITAT INDORE concerned the refusal of renewal of registration to the assessee firm due to non-compliance with the distribution of profits among partners as per the partnership deed. The dispute arose from the rejection of the assessee's application for continuation of registration in the assessment year 1979-80. The Tribunal, in a previous order, had refused to accept that the alleged correction of profit allocation was a mistake, concluding that the firm was not genuine.

During the hearing, the assessee's counsel argued that a different conclusion could be reached in the present year despite the similarity with the earlier assessment year's facts. The counsel cited various court decisions to support the argument that a different conclusion could be taken in different assessment years. However, the departmental representative relied on the Tribunal's and lower authorities' orders.

The Tribunal carefully considered the arguments and noted that the profits were not distributed according to the partnership deed in the current assessment year, similar to the previous year. The Tribunal highlighted a circular stating that the Income Tax Officer (ITO) should allow the assessee to seek fresh registration instead of merely refusing continuation based on the previous year's refusal. The Tribunal also discussed the applicability of the rule of res judicata in tax assessments, emphasizing the need for new evidence to arrive at a different conclusion for the same assessee in different years.

The Tribunal rejected the assessee's argument that registration should be granted despite incorrect profit distribution based on Section 271(4) of the Income-tax Act. The Tribunal held that the real income for penalty purposes should be based on the partnership deed, and the absence of proper profit distribution did not warrant registration. Citing precedents, the Tribunal concluded that without new material, the finding of the earlier year would be binding for the subsequent year for the same assessee, leading to the dismissal of the appeal.

In summary, the Tribunal upheld the refusal of registration renewal for the assessee firm due to non-compliance with profit distribution requirements outlined in the partnership deed. The decision was based on the lack of new evidence to warrant a different conclusion from the previous year's findings, in line with legal principles and precedents cited during the hearing.

Judgment:
The appeal was dismissed by the Appellate Tribunal ITAT INDORE, affirming the refusal of renewal of registration for the assessee firm based on the non-compliance with profit distribution requirements specified in the partnership deed.