9911796707
TMI Blog1988 (4) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... e therein were relatable only to the non-sharing of the losses by them for the relevant assessment years, which were filed in terms of the directions given by the Tribunal and were in full consonance with the instructions of the CBDT issued in their Circular dated 4th April, 1978. 3. We have heard the learned representatives on both the sides and have given our utmost consideration to the arguments advanced before us and the records to which we were taken through. 4. We shall deal with the facts first, In respect of the aforesaid four assessment years, the Income-tax Officer on the 8th and 9th of January, 1985, passed assessment orders granting appellant the benefit of continuance of registration under the Income-tax Act. The learned Commissioner taking a view that the Income-tax Officer's action fell within the ambit of section 263 of the Act issued requisite notice to the assessee to show cause as to why directions be not issued to redo the assessments. This notice was replied by the firm vide its letter of 13th March, 1987. The firm, inter alia, took objections that are summarised in the grounds of appeal indicated hereinbefore. The Commissioner of Income-tax, however, disag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the instrument of partnership dated 31-12-1969 admitting me to the benefits of the partnership earlier remained unchanged. " [Emphasis supplied] The learned Commissioner, on the basis of the aforesaid identical averments made by the partners, took the view that it meant that since the date of attaining majority and till the date of executing the affidavits, i.e., 17-10-1984, these minors had not been sharing the losses of the firm and that the shares specified in the instrument of partnership earlier remained unchanged. That no fresh partnership deed except the one dated 31st December, 1969 admitting them to the profits of the firm had been executed. However, verification of records reveal that for the assessment year 1977-78, a loss of Rs. 4,522 suffered by the assessee-firm was shared by all the partners in their respective ratio contrary to what had been declared by these partners in the affidavits referred to above. On the basis of this contradiction, the learned Commissioner took the view that the averments made by these six partners that they had not been sharing losses of the firm were found to be false. 9. We may point out here in the first instance that there is no d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ull-fledged partner on attaining majority would ipso facto become liable to share in losses also. In case losses are borne in entirety by only some of the partners the partnership deed would still be a valid one. Farther section 30(7)(b) of the Indian Partnership Act lays down that where a minor elects to continue as a partner, his share in the property and profits of the firm shall be the share to which he was entitled to as a minor. As per section 4 of the same Act, the partners must agree to share profit and hence agreement to share losses is not essential. Thus section 30(7)(b) read with section 4 of the Act makes it clear that when a minor elects to continue as a partner he shares in profits only. However, if it is decided among the partners that the minor on attaining majority should share In losses also, then and only then a fresh deed of partnership effecting the change would be necessary. Therefore, the firm is allowed continuance of registration for the relevant assessment year, the ITO should satisfy himself on the basis of either an affidavit of the partner who attained majority or his statement on oath that he is not sharing in losses and that shares in profits and los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uffered by the firm was shared by all the partners in their respective sharing ratios contrary to what has been affirmed in the affidavits. At this stage of proceedings we submit that the sharing of losses by the above persons is on account of a mistake committed by the accountant due to which our firm has already suffered the penalty of being assessed as an unregistered firm for the assessment year 1977-78." 15. This has been disbelieved by the learned Commissioner on the count that the return for the assessment year 1977-78 filed on 31-3-1978 was signed by Shri Vithal Rao Gampa, partner who was looking after the business of the assessee-firm. There is no dispute that assertions and averments made in a document are usually attributable to the person signing it, yet, we cannot lose sight of the attendant facts and circumstances of a given case and so also to the explanation offered, if any. While there is no dispute that the partner had signed the return, as is statutorily needed, there is equally no dispute that the plea of the firm that the sharing of losses by all the partners was on account of a mistake committed by the accountant which also cost the firm badly as they were t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
