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TMI Blog1994 (4) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... 74, there was no genuine firm in existence entitled to registration under section 185(1)(a) of the Income-tax Act, 1961, for the assessment year 1972-73 and to the benefit of continuance of registration for the assessment year 1973-74 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the firm Paras and Co., Pali, was the benamidar of Dalichand Tejraj, Pali ? " The facts as stated by the Tribunal in the statement of the case are that the assessee-firm was constituted by a partnership deed executed on December 8, 1970, and consisted of four partners, namely, Parasmal, Smt. Leela Devi, Smt. Kamla Devi and Smt. Ugam Devi, who were the family members of Dalichand Tejraj (Hindu u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as deposed that she does not know the profit-sharing ratio of the partnership and she has never seen the business premises of the partnership or as to who are the persons used to sit in the business premises. The yarn purchased is kept in the godown but to whom the godown belongs was not known to Smt. Leela Devi. In the statement of Smt. Kamla Devi, she was also not aware with regard to the amount of rent paid to Dalichand Tejraj and it was not in her knowledge as to who is maintaining the accounts of the firm or where the goods of the firm are kept and sold. In the statement of Smt.Ugam Kanwar it was found that she does not know the name of the market where the shop is situated and she never visited the business premises. She had no knowle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted and they were members of the Hindu undivided family of Dalichand Tejraj and the office premises of both the firms were the same. In the statement of Parasmal, it was found that he was also not remembering as to in which year the firm was constituted and stated that it is only the difference of the prices which is received as profit from Dalichand Tejraj (Dalichand Padamji is the trade name). The delivery of the goods was not taken except when the stock was accumulated and that to Dalichand Padamji no rent was paid for the premises. The bills, memos or any other documents with regard to the transaction with Dalichand Padamji were maintained and only " Dalali " was paid. The salary was paid to Sampatraj who was related to Parasmal. He was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a paper firm. The fact that the firm was operating from the business premises of Dalichand Padamchand and that the members are closely related and the profits remain in the books of the firm as the same was not withdrawn by any of the partners was also noticed and it was held that it is in fact a benami concern of Dalichand Tejraj and is not entitled for registration. The arguments of both learned counsel have been heard. The question as to whether the partnership is genuine and actually exists is a question of fact. It is the totality of the circumstances which has to be seen. Under the provisions of section 185(1), registration is to be granted if the genuine firm was in existence with the constitution so specified in the deed of partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding circumstances, including evidence as to the interlacing or interlocking of management, finance and other incidents of the respective business. The partners may decide to carry on another business and share the profits therein. But in order to consider that they are separate and distinct businesses, the surrounding circumstances, namely, interlacing or interlocking of management, finance and other incidents of the respective business have to be seen. The finding which has been recorded shows that there was nothing separate and business was carried on in the same premises. The partnership firm was not maintaining the books of account, vouchers. The staff was common and even on enquiry it was found that no work was done by them. Both the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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