9911796707
TMI Blog1979 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... he other partners were not real partners and, therefore, the partnership was not genuine. On appeal, the AAC also came to the conclusion, on a careful appraisal of all the facts and circumstances of the case, that as the firm, as constituted by the instrument of partnership, dated December 11, 1967, did not really exist, it was not entitled to registration under the Act. On further appeal, the I.T. Appellate Tribunal also considered the evidence and other circumstances of the case and held that the Revenue authorities were right in refusing registration. An application for reference to the court before the Tribunal having been rejected, the assessee applied to this court under s. 256(2) of the I.T. Act and this court directed the Tribunal t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect as defining the rights of the parties as between themselves." The Tribunal, therefore, considered the question whether the partnership, constituted under the instrument of partnership, was genuine in the sense that it was intended to have real effect as governing the rights and liabilities, inter se, in relation to the business of the firm. The Tribunal observed that no doubt all the partners signed the partnership deed and also the application for registration before the ITO and in the intimations to various officers and banks mentioning that all the partners referred to in the partnership deed were partners. It, however, observed that a mere signing of the document will not amount to the recitals in the documents being true and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership was not genuine merely because the partners had not withdrawn the amount standing to their credit in the books of account by way of profit. The Tribunal considered several other facts and circumstances in coming to this conclusion. The learned counsel for the assessee submitted that the ITO was bound to register the partnership and he cannot refuse registration on the ground that one of the partners is a benamidar of another. In support of this contention reliance was placed upon the decision of the Supreme Court in CIT v. A. Abdul Rahim Co. [1963] 55 ITR 651. In that case, it was held that a partner's benami character did not affect the benamidar's capacity as partner or his relationship with the other members of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and duty of the ITO to refuse registration if the partnership is not genuine and the deed of partnership is a sham and nominal transaction. In Madhusudana Co. v. CIT [1973] 88 ITR 395, a Division Bench of this court to which one of us (hon'ble the Chief Justice) was a party, it was held that whether a firm is genuine or not is a question of fact though the question whether there was any material for the Tribunal to find that the partnership was or was not genuine, is a question of law. In that case, it was held that there was material for the Tribunal to hold that there was no genuine firm in existence. It was observed that the Tribunal's order need not be examined, sentence by sentence, minutely. It is the totality of the material and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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