9911796707
TMI Blog1982 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... lding that in view of the Explanation to s. 185(1), the two lady partners are benamidars for their husbands without material or evidence on record and without judicial appreciation of the correct facts of the case and law on the subject. 4.3. The appellant contends the Explanation to s. 185(1) has no application to the facts and circumstances of the case and the said AAC has exceeded his jurisdiction in doing so when such finding was never given by the ITO in his assessment order and the AAC has no jurisdiction to assume the power of the ITO and Act as an ITO to hold that the said two ladies are benamidars for their husbands when the ITO himself in his assessment order holds that the appellant is a branch of a registered firm of Abhaykumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a new entity i.e., with self, his wife, his daughter-in-law and the son, as partners. The ld. ITO, thus, negative the assessee's claim for registration with the following observations : "It is only a branch business of that firm From the facts discussed above, I have no hesitation to hold that the income of M/s. Mithalal Ashokkumar belongs to M/s Abhaykumar Jaswantkumar, Indore, and the genuine firm known as M/s. Mithalal Ashokkumar has ever come into existence which can be granted registration. Since the assessee filed its return separately in the status of the firm, the same has been disposed of purely protective measure in the status of AOP vide my assessment order of date. As no genuine firm has ever come into existence, the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee paid the rent for the business premises occupied by it and the lady partners were not and cannot be said as benamidars of their husbands. It was also contended that these ladies arranged their share-money through identifiable sources. 7. Shri Kasbekar further submitted that the reasonings adopted by the ld. ITO and the ld. AAC are not the same. He continued that the ld. ITO considered the assessee as a branch of that firm i.e. M/s. Abhaykumar Jaswantkumar, whereas the ld. AAC confirmed the ld. ITO's action considering the ladies as benamidars. He continued that the absence of active participation in the business of the assessee by the ladies could not be a cogent reason for refusing registration. For assistance, the ld. Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istration. Since the limitation was involved, the ITO finalised the assessment on protective basis subject to the ultimate order. The ld. D.R. also submitted that the case laws relied upon by the A.R. cannot be of any help to the assessee, since the facts and circumstances are different. 9. In reply. Shri Kasbekar submitted that there is no evidence that the same management was looking after both the firms. Moreover, he contended that in terms of clauses of the deed, any partners is competent to manage the affairs of the firm. Business of the assessee also was said to be different and that rectification could not be an answer when the partner has been assessed as such before the assessment of the firm. 10. After having heard the parties a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. ITO came to the conclusion that the assessee was not and could not be a genuine firm in its own right. He appears to have come to the right conclusion that the assessee was some sort of an extension of the old firm and the some constituents of the assessee were quite ignorant and passive about its business activities. In these circumstances, the inference drown by the ld. AAC that the ladies could be benamidars of their husbands also could not be without a cogent justification. It is, therefore, safe to infer that the revenue authorities were not altogether unjustified to negative the assessee's claim for registration. 12. The ld. Advocate, on behalf of the assessee, relied on the ratio in he case of United Patel Constructon Company fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed, could approach by way of rectification application, and, there therefore, cannot be any question of double taxation. The case laws above, appear to be in the situation where all the facts were available before the ld. ITO. In the present case before us the situation appears to be otherwise. The assessee, therefore, appears to receive no direct support from the ratios in these cases because of the finding of fact recorded by us. 14. In the light of our preceding decision, we are of the considered view that since no genuine firm was brought into existence, the ld. ITO rightly negatived the assessee's claim. In fact, the entire arrangement appears to the a sham. The ld. AAC correctly confirmed the right action of the ld. ITO in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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