9911796707
TMI Blog1979 (2) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... agwandas alone was competent to operate the bank account. The Officer had also examined Gyaniram on 25th Nov., 1976. He stated that he did not know the capital invested by the order two partners and simply stated that he was withdrawing Rs. 350 per month for his expenses. He also admitted that he was not competent to operate any bank account. The officer noticed that Shri Bhagwandas, when carrying on the business in the same name as a sole proprietor, had a current account with the Syndicate Bank and even after the business was coverted into a partnership he operated the account without intimating the bank authorities about the change. Enquiries at the Bank revealed that Bhagwandas was the sole proprietor. When the assessee was called upon to state why the Bank authorities were not intimated, they admitted the fact, but submitted that the firm was otherwise genuine. Reliance was placed on certain cases. The Officer found that those cases are not applicable. He chose to apply the decision in the case of Samiyur Rehman Bros. The Officer then found that the firm applied to the Register of firms for registration under the partnership Act on 22nd March, 1974. The Registrar advised the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount will be opened it would be operated in that manner Dealing with the second contention, it was submitted that it is wholly irrelevant for purposes of registration under the IT Act. The firm applied for registration under the partnership Act and that is not relevant for our purposes. The learned counsel posed a question; if the assessee had not sought for such a registration, what would have happened? He submitted that when the assessee applied to the Registrar of Firms for registration, he wrote back to say that in view of the Emblems and Names (Prevention of Improper Use) Act XII of 1950, the name of the firm should be changed. Later, he also enquired whether the firm was carrying on export or import trade with foreign countries. The firm replied in the negative. Finally, the Registrar of firms issued a show cause notice why the firms issued a show cause notice why the firm should not be prosecuted under s. 6 of the Act XII of 1950. The firm replied that they were not aware of the provisions of the Act. Mention was also made in their letter to the fact that the firm had applied to the central Government for relaxation and the matter is still pending. It was further pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them had credit balances in the proprietary business they were connected with the business earlier. At this stage, the learned counsel for the assessee clarified to us that they were employees previously. The departmental Representative submitted that against this background, the allocation of a large slice of profit to each of them shows the disproportionate allocation. Referring to the bank account it was stated that the outside world was not informed about the constitution. Bank is a proper representative of the out side world. Even though Clause 9 of the partnership deed provided for the opening of a bank account, it was not done. There is no agreement in the deed for the continuation of the old bank account. Clause 13 of the deed states that all the partners are managing partners, but then the actual fact was not in conformity with that clause, namely two of them had nothing to do with the bank account. They are partners only on paper but not in reality. The departmental Representative submitted that the assessee may be able to explain each one of the points but the totality of the circumstances should be taken before coming to a conclusion as to whether the firm is genuine or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply the learned counsel submitted that the ITO had not questioned the genuiness of the firm. He referred to the fact that the capital of Rs. 20,679 is all that the assessee brought in from the previous business. The stock is represented by creditors as well. Partner Umedmal withdrew Rs. 26,000 ie., more than what he brought in and unless he is a partner he could not have withdrawn such a large amount. On the other hand, Bhagwandas withdrew only Rs. 4,800. He submitted that the bank is not the entire outside world. The partners have acted as partners in the business jointly. In this connection reference was invited to the letter to the ITO dated 19th Nov., 1976 detailing the aspects of the business managed by each of the partners. Bhagwandas used to look after the collection, purchases and bank transactions besides attending the shop. Umedmal also looked after purchases by going to various places and contacting mills for supply of rice. Gyaniram looks after sales in the shop. He then submitted that there was an implied agreement between the partners for the continuation of the bank account in the name of one of them because the others knew about the bank account and it was in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning Rs. 2,200, but he did not Know how much was invested by Umedmal and how much by Bhagwandas. He spoke to the fact that he signed a partnership deed To a question as to what was his activity, he replied that he would attend the shop, show the varieties of rice to customers and sell the commodities. He also stated that his Minum will prepare the bills and he will also some times prepare simple depending in the circumstances as he knew only Hindi language. He also stated that he was not at the moment working in Bharat Trading Co. as it was closed seven months earlier. The Officer had asked as to what profit did he get from he Bharat Trading Co., and the reply was that he got Rs. 13,000 for the first year and for the other years the accounts were not decided. For the three years in all he withdrew Rs. 12,000 He withdrew monthly Rs. 300 to Rs. 350 for expenses. A reading of these two statements clearly shows that they are partners and that the inference drawn from their statements by the Officers below cannot be supported. The fact that they have not brought in capital adequately does not militate against the genuineness of the firm. From the information gathered at the time of hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. Act XII of 1950 was enacted for the prevention of improper use of certain emblems and names. Sec. 3 was in these terms: "3. Prohibition of improper use of certain emblems and names. Not withstanding anything contained in any law for the time being in force, no person shall accept in such cases and under such conditions as may be prescribed by the Central Government, use, or continue to use for the purposes of any trade, business, calling or profession, or in the title of any patent, or in any trade mark or design any name or emblem specified in the Schedule or any colourable imitation thereof without the previous permission of the Central Govt. Or of such Officer of Government as may be authorised in this behalf by the Central Government". Sec. 5 is in these terms: "5. Penalty: Any person who contravenes the provisions of s. 3 shall be punishable with fine which may extend to five hundred rupees". Cls. 4 and 7 of the Schedule may be taken to cover the case. However, there is no specific provision that the word 'Bharat' is prohibited. A reading of the section would show that certain names are prohibited for the purposes of any trade, business etc., without the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
