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TMI Blog2004 (12) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961?" The assessee is a partnership firm. In 1972, the partners of the assessee-firm constituted another partnership firm under the name and style of M/s. Gupta Rice and General Mills. The assessee filed the returns of income for the years 1972-73 and 1973-74 disclosing an income of Rs. 25,650 and Rs. 35,550, respectively. The Income-tax Officer, Kaithal (for short "the Assessing Officer"), completed the assessment for the two years at Rs. 27,770 and Rs. 38,370, respectively. Two separate returns for the years in question declaring income of Rs. 60,450 and Rs. 45,525, respectively, were filed in the name of M/s. Gupta Rice and General Mills for which a separate registration was claimed. The returns of the assessee as well as M/s. Gupta R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1972-73 and 1973-74. The Commissioner of Income-tax (Appeals) allowed the appeals filed by the assessee and set aside the orders of penalty. The Tribunal dismissed the appeal of the Revenue and held as under: "We are in agreement with the reasons given by the Income-tax Officer in not accepting the contentions made before him and sustained by the Appellate Assistant Commissioner. Since the facts mentioned by the Income-tax Officer in his order under section 186(1) remain uncontroverted, we have no hesitation in coming to the conclusion that the firm constituted by the deed of partnership dated March 15, 1972, consisting of 8 partners was not a genuine firm. We also agree with the Income-tax Officer that it was a branch of the main firm, G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , there was another undisputed deed of partnership executed between the four partners who were partners in the present assessee-firm but had decided to form another firm in the name of Gupta Rice and General Mills, the business whereof was to deal in rice selling and any other business mutually agreed upon. Ganga Ram Jati Ram, the assessee-firm, was not carrying on business of rice selling at all. So by the partnership deed dated January 1, 1971, a new partnership had certainly come into existence. It is correct that the partners of this new firm were again the same which constituted the assessee-firm. But it has been held in the case of R.N. Oswal Hosiery and Mahabir Woollen Mills v. CIT [1968] 70 ITR 843 (P & H) that though two separate b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s had a separate sales tax number, it carried on separate business and maintained separate accounts. There was some reason for adding more partners inasmuch as Muni Devi was the owner of the land where Gupta Rice and General Mills carried on its business and no rent was charged in consideration of the share of partnership given to her. She had also executed the mortgage deed of the property to the Haryana Financial Corporation as a co-mortgagor. The only thing proved was that there was not enough evidence to prove that the oral agreement of adding four more partners between April 1, 1971 to March 15, 1972. But from this it does not follow that Gupta Rice and General Mills never existed. In fact, it existed with even the new constitution bef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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