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TMI Blog1977 (7) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... selling centres including the centre in Sangam village which was not specified in the partnership deed. The ITO, therefore, held that the business that was carried on by the assessee-firm was not in accordance with the provisions of the partnership deed and hence registration claimed under s. 185 is liable to be refused. In the course of the examination of the books of account the ITO noticed that licences were obtained by 12 partners in respect of 13 sendhi shops but in respect of a shop in Sangam village the licence of which stood in the name of one G. Narayana Reddy, there was no mention about it in the partnership deed. The ITO, therefore, held that the licence held by Shri G. Narayana Reddy was unauthorisedly exploited by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dy and this business was exploited by the assessee-firm without any authority and thereby the AAC agreed with the ITO that there was contravention of the provisions of s. 14 of Abkari Act. He also noticed that at least four partners did not appear before the ITO on specific summons issued to them. The non-appearance of the partners before the ITO the AAC held can lead to the conclusion that the firm in fact was not genuine. The AAC also mentioned the fact that though Shri A. Shankar was a partner in the assessee-firm as mentioned in the partnership deed, his brother Shri A. Rajeswar signed the return for this year originally. However, the examination conducted by the ITO revealed that Shri A. Shankar did not know very much about the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncerned, he might have contravened the provisions of s. 14 of the Abkari Act inasmuch as he has allowed the licence standing in his name to be exploited by the assessee-firm but the illegal act of Shri G. Narayana Reddy will not make the business carried on by the assessee also as illegal. In this view of the matter it was submitted that the decision of the Andhra Pradesh High Court in the case of CIT vs. Krishna Reddy(1) relied on by the authorities below will not be applicable to the facts of the case. Regarding the non-appearance of some of the partners before the ITO it was contended that four of the partners could not appear before the ITO due to various reasons and out of these four, two were partners in the preceding assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed that in the partnership deed it has been mentioned that there are only 13 Sendhi Shops and as a matter of fact the books of account show that the assessee-firm was carrying on business in 14 shops including the one at Sangam village. The licence in respect of the shop in Sangam village admittedly stood in the name of Shri g. Narayana Reddy and this licence was transferred without any authority to the assessee-firm and thereby there was contravention of the provision of s. 14 of the Abkari Act. In view of this it was submitted that the assessee-firm is not entitled to registration as has been held by the Andhra Pradesh High Court in the case of CIT vs. Krishna Reddy(1). The learned Departmental Representative has further argued that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be transferred to another party then prior permission should be taken from the Excise authorities. In this case the licence in respect of the shop in Sangam village stood in the name of Shri G. Narayana Reddy and if he has allowed this licence to be transferred to the assessee-firm, the contravention of the provisions of s. 14 of the Abkari Act would be in respect of Shri G. Narayana Reddy and not in respect of the assessee-firm. In other words, we feel that there is much force in the contention raised by the learned counsel that the assessee-firm did not carry on any illegal business and if at all there was any illegal act done it was done by Shri G. Narayana Reddy in transferring the licence to the assessee-firm without the prior pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w erred in refusing to grant registration to the assessee-firm. 6. However, there is another aspect which has to be considered as to whether the firm which has to be granted registration should be the one which was carrying on business in Sangam village also. It appears that the assessee-firm did not have any authority for carrying on business in Sangam village or to exploit the licence standing in the name of Shri G. Narayana Reddy. Being so, we feel that it would be appropriate to give registration only to the firm which carried on business in 13 branches including the branch in Sangam village. The AAC of Income-tax has mentioned in the appellate order that it would not be possible to allocate the income of the shop in Sangam village si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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