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TMI Blog1981 (4) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... its constitution of the firm or the shares of the partners since the last day of the previous year and hence the registration may be continued. By an order under s. 186(1), the ITO cancelled the renewal of registration granted to the assessee and amended the assessments qua all the three years on the ground that the actual share as per partnership Deed and the shares in which the profits had been distributed were not identical. He pointed out the discrepancy as under; Name of the partner Actual shares as per partnership deed. Share in which profits Have been actually distributed 1. Shri Ugamchand 20 per cent 10 per cent 2. Shri Dhanpatchand 30 per cent 30 per cent 3. Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istake in the actual distribution of profits was purely a clerical mistake by which the share of Shri Ugamrj was credited at 10 per cent instead of 20 per cent as mentioned in the partnership deed whereas the share of his minor son Master Ajit Chand was to be at 20 per cent instead of 10 per cent. This did not affect the other partners and in any case the Revenue did not stand to loose because the share of Ajit Chand, minor was to be actually included in the total income of Shri Ugam Raj. The AAC was, however, of the opinion that the share ratio adopted for distribution of profits was not actually in accordance with the ratio applicable in the earlier assessment year for which the assessee had been granted registration. No fresh partnership ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... j within certain limits so as to reduce his Wealth-tax liability. He referred to the increase in the capital of Master Ajit Chand, minor. As a result of this incorrect distribution of profits, he consequently confirmed the order of the ITO cancelling the registration. The assessee is dissatisfied and has come up in second appeal before us. 5. We have heard the representatives of the parties at length in these appeals. During the hearing of these appeals, the representative of the assessee put in an application for additional evidence consisting of an affidavit sworn by one Sampatraj Solanki son of Mitha Lalji Solanki who was the munim of the assessee firm during the period in dispute. The said deponent has sworn that the mistake in distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would not lead too the conclusion tha the firm was not really a genuine firm. In CIT vs. Hariran Khanna 1978 CTR (All) 36 : 1979 116 ITR 886 (All), there was a minor/division in the division of shares. Nevertheless it was held that the firm could be treated as genuine and entitled to registration inasmuch as the deviation was influenced by the inadvertent fault of the Accountant. In ITO vs. Sudhir Engineering Co., 1975 Taxation, Volume 41 (6)-65, it was held that maintenance of accounts was not at all necessary in order to enable an assessee, a firm of contractor's to secure registration and the absence was not sufficient to refuse registered to the assessee, so that it follows that even if the assessee had not maintained any accounts it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication for renewal of registration as invalid In the present case, the AAC has proceeded on the ground that the capital of minor son swelled on, which might adversely affected the Revenue. Apart from this apparently the distribution of shares differently from the Partnership Deed has not affected the Revenue inasmuch as the shares of profits from the firm earned by the minor is to be clubbed with the share of his father under s. 64(1)(iii) of the IT Act, Since it is contended in the application for additional evidence that ultimately the entries have been reversed and the profit sharing ratio as agreed to in the deed had been actually maintained in the ultimate accounts, we are of the opinion that it is a proper case where the assessee sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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