9911796707
TMI Blog1978 (8) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... a partnership deed dt. 2nd July, 1973. The ITO however held that the old firm of M/s. Munshi Abdul Rahaman Bros., with 4 partners was not dissolved but only 2 of its partners left the partnership and there was only a reconstitution of the firm with the remaining 2 partners, though the name also was changed. The ITO found that the closing sock of the old firm was sold to the new firm on deed dt. 30th June, 1973 and although the dissolution deed dt. 10th Oct., 1973 mentions that there were no outstanding taxes or liabilities, it was found that the new firm had taken over the credits of 3 old creditors. It was pointed out before the AAC that as there was difference of opinion between the 4 partners, the old firm was dissolved and Sri Munshi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s books of accounts were closed not on 30th June, 1973 but on 10th Oct., 1973 when the old firm was dissolved while the new firm came into existence from 1st July, 1973. Even the name of the firm was changed from M/s. Munshi Abdul Rahaman Bros., to M/s. Munshi Abdul Rahaman Sons. Merely because the premises were the old one, it cannot be said that the same old firm continued the business with only change of constitution, because the new firm did not take over the assets and liabilities of the old firm. The stock in hand of the old firm was sold to the new firm. The creditors etc., were paid off by the old firm and accounts between the partners were settled. Under s. 187(2) of the IT Act, 1961 a change in the constitution of the firm tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credits had been wrongly entered in the books in the name of the partner Sri Munshi Abdul Rahaman though the amounts had been received as a loan from Sri Dada Hayat Khalandar Bellary, who was earlier working as a chargeman in the Railway workshop at Hubli and had retired and received the amount of Rs. 18,000. The ITO made enquiries with the Railways and found out that Sri Dada Hayat Khalandar Bellary had received only a sum of Rs. 1,891 on 17th Oct. 1967 Rs. 21,974 on 13th Nov., 1967, He had retired on 3rd Sept., 1967. The ITO therefore asked the creditor to appeal again before him and another statement was recorded. He stated that he had received Rs. 16,000 from Provident fund and Gratuity and if he was given time he would prove the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the explanation offered and deleted the addition. 7. We have heard the learned Departmental representative and counsel for the assessee. The credit appeared in the books of the firm in the name of a partner. Normally it is the partner who should explain the source thereof. But the firm informed the ITO that the entry in the books regarding the cash credit in the name of the partner was wrong because the credits came from Dada Hayat Khalandar. Dada Hayat Khalandar informed the ITO in his statement that he had received Rs. 18,000 on retirement from Government but that was found to be false because all that he received was a sum less than Rs. 5,000. That story was given up before the AAC and a new story was put up that the amount was rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention that the explanation of the assessee in regard to the cash credits cannot be accepted. 8. It was further urged before us by the assessee's counsel that since the credits appeared in the name of the partner, the amount should be added in the hands of the partner and not of the firm. We specifically asked the learned counsel as to what his stand on fact was? He stated that his stand was alternative. On facts it was Dada Hayat Khalandar who had lent money and if this was rejected his contention was that in the eye of law the amounts should be assessed in the hands of the partner and not the firm., We have rejected the factual claim that the loan was genuine and that it had come from Dada Hayat Khalandar. Once the cash credits appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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