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TMI Blog1988 (1) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of the assessee firm as well as books belonging to M/s Anamika Enterprises. The office of M/s Anamika Enterprises was mentioned to be situated at 1-Ka-21, Jawahar Nagar, Jaipur. According to the learned Sr. Departmental Representative, this was the residential premises of one of the officers of the assessee firm. The learned Senior Departmental Representative went on to submit that the partners of M/s Anamika Enterprises are three in number, two of whom were ladies. The ladies were wife and the mother of the partner of the assessee firm. The third was one Mr. Ramesh Gupta, who also happened to be a relative of the partners. The examination of the records of M/s Anamika Enterprises revealed that in the year under review the entire purchase of various steel items was made from the assessee firm. The ITO in paragraph 11 onwards of his order had observed that the goods so purchased by the assessee firm were at a lower price than what was sold to outsiders. The total of the purchases was to the tune of ₹ 2,55,866. The ITO also observed that the so-called partners had brought in capital in shape of cash, which according to them, were borrowed from one Jai Shree Enterprises in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not in doubt that it had opened a bank account. 5. The ITO had further observed that the so-called capital brought in by the partners was utilised in making payment to the assessee firm only. The learned Departmental Representative submitted that the assessee, no doubt, had filed the confirmation of the party from whom the assessee had withdrawn the funds for introducing capital into the firm M/s Anamika Enterprises. The conclusion drawn by the ITO in view of the proximity of dates of loans taken from the Calcutta firm, their introduction as capital in the firm M/s Anamika Enterprises followed by books being seized in the premises of the assessee firm, and the entire purchases being made from the assessee firm, sales being made to some of the parties to whom the assessee firm had been making sales in the earlier years, there being no freight charges and one of the partners Shri Ramesh Gupta not being able to answer but giving contradictory answers, made the ITO to come to the conclusions that M/s Anamika Enterprises was existing only in paper and was mode of transfer of funds or rooting of funds by the assessee firm back to it. Sec.144 proceeding were also taken up and the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee firm. He also filed copies of the cash statement of the firm from Nov., 1979 onwards. He filed balance sheets of the lady partners of M/s Anamika Enterprises as appearing in Murli Rolling Mills, copies of sales-tax assessment orders and a chart showing the purchases as well as sales. He also filed copies of statements of Ram Babu, Ramesh Gupta, Dinesh Gupta as well as the Bank certificates as to who are the partners of the firm M/s Anamika Enterprises as well as confirmation certificates from M/s Jai Shree Industries Calcutta. The learned Senior Departmental Representative raised objections in admission of various documents being placed by the learned counsel for the assessee on the ground that these were additional evidences. His main objection was in regard to the various bills raised by the assessee firm, the certificate from the provident Fund Commissioner, copies of ledger accounts, copies of the parties to whom, the goods were sold by the Anamika Enterprises and the sales-tax assessment orders etc. The learned counsel for the assessee submitted that all these documents had been examined by the ITO and had been drawn reference by him in his assessment order. He sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being brought from Calcutta is also totally wrong observation. Initially, they contributed ₹ 1,000 each in cash and later additional capital was brought in Feb., 1980, and March, 1980. Even Shri Ramesh Gupta has brought in his own capital to a small extent and balance was loans borrowed by him. The point emphasised by the learned counsel Mr. Ranka was what was necessary to be established by the partners is that they contributed capital, which may be either from their own funds or might have been borrowed from various persons. Though the amounts were borrowed, for which confirmation has been provided which have not been found to be wrong. The conclusion arrived at that they are not partners in reality is based on no evidence. The learned counsel further submitted that the distribution of profits amongst the partners needs that the profits of the firm must be shares by them and they must enjoy the fruits of the partnership. The fact that they had enjoyed the fruits of the partnership is clearly brought out from the balance sheet which the two lady partners had filed with the IT authorities in Calcutta wherein they had clearly showed the investment in the firm Anamika Enterprise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otally baseless has been rightly deleted by the CIT (A) and we confirm the same. 8. As regards the benami nature of the business the number of transactions are 10. It is an admitted fact that the turnover of the assessee firm is in the range of 1.06 crores and for just a paltry sum of ₹ 2,55,866 representing sale to Anamika Enterprises on which the profit was in the range of ₹ 9,000 only in total. It appears that the idea which was roving in the minds of the ITO was based on suspicion only. The ITO' s suspicion was based on the fact that the lady partners were related to the partners of the assessee firm as wife and mother. This is followed by Anamika Enterprises being floated for trading in items of iron and steel. The suspicion drew stronger because Anamika Enterprises made their purchases entirely from the assessee firm. Since Anamika Enterprises transferred all the funds that were received by it immediately to the assessee firm, the ITO conclude that the entire thing was only a make shift arrangement. To add to this, he found that some of the customers were earlier customers of the assessee firm. We are in full agreement with the ITO that these are circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uming that it has been omitted to be credited to the partners capital account the profits of the year. If the fact remains that they had enjoyed the profits, filed the returns of income in accordance with the deed of partnership that is showing the share income as per the rates agreed to between them. It would be sufficient compliance of the requirement that partners have shared the fruits of the partnership. In the instant case, all the evidence are available to establish that the three partners had enjoyed the fruits. The lady partners had also indicated their investment in the firm and even Shri Ramesh Gupta had filed his return showing the income from the firm. Therefore, all this goes to establish that the partners were partners in reality and that it was only Shri Ramesh Gupta, who carried on the business, for himself as well as the two lady partners. 9. In view of the above, we have come to this conclusion that Anamika Enterprises is an independent concern from the assessee firm and therefore, they cannot be treated as a benami concern of the assessee firm and therefore, the income of Anamika Enterprises from the trading transactions have been rightly deleted by the CIT ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a fact that more quantity of coal was purchased from private agencies is not disputed. According to him, the addition was made purely on surmise. As regards the so called purchases from Jemco it was pleaded that certain goods were required by the assessee firm and, therefore, they had approached Jemco to send the goods on approval which was returned to them on the same day as they did not approve of the same. Therefore, the noting which was only for memory sake was rightly treated by the CIT (A) as no purchases made by the assessee. 14. On the issue of excess consumption of coal, we are of the view that CIT (A) had considered the quantum of purchase from Government agencies as well as private agencies and found that the purchase from Government agencies had reduced by about 180 M.T. and the purchase from the private parties had gone up by about 80 M.T. it was also observed by him that the consumption of coal as compared to last year had increased by 150 M.T. Therefore, considering all these facts we came to this conclusion that the addition was totally unnecessary and on these facts we have only to confirm the action of the CIT (A), which we do. 15. As regards the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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