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TMI Blog1983 (8) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... -78, there were three partners in the firm out of which the above two persons represented their respective HUFs, and the third was an individual partner. The individual resigned from the firm and for the assessment years 1978-79 to 1980-81, the two individuals representing the HUFs, continued to be partners. For all the years, there was no capital account in the name of the individuals Mansukhlal Dwarkadas and Himatlal Dwarkadas. There were accounts in the name of the HUFs of Mansukhlal Dwarkadas and Himatlal Dwarkadas. Interest was being paid and credited to these accounts. It is this amount of interest which the ITO and the Commissioner in their orders under section 263 wanted to add to the total income of the assessee-firm under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are two important facts more than the above which support his case. In our view, while every partnership firm does usually maintain an account for a partner, it is not necessary that a capital account of the partner appearing in the book is a sine qua non for the validity or the continuance of a partnership. There could be a positive capital account for a partner, there could be a negative capital account ; certainly in between there could be a case of no capital account either. The mere fact, therefore, that there is no capital account separately in the name of the individual partner, does not mean that whatever exists to which profit is credited should be treated as the account of the individual partner. In fact, we do not see any difficu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not the case of the department that the HUF's account is as a matter of fact a benami account for the individual partner. Even if as subtly indicated by the learned counsel for the department, this were to be thought of, the onus is on the department to prove that the account is a benami one. This onus not having been discharged, the account standing in the name of the HUF must be regarded both as a matter of fact and in law as belonging to the HUF only. It has nothing to do with the individual partner. The learned counsel for the department pointed out that making such an entry would be an easy way of getting out of section 40(b). We de not think so, because there is nothing in income-tax law or accountancy which forbids a partner from i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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