9911796707
TMI Blog1979 (2) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... and derives income from cotton ginning factory. It filed two returns one for the period 20th Oct., 1969 to 26th Jan., 1970 and the other for the period 27th Jan., 1970 to 9th Oct., 1970. Both the returns were filed in the name and style of M/s. Jamna Dass Chhabil Dass. The assessee's case before the ITO was that two assessments were necessitated because on the death of Naurang Rai, one of the partners, the firm stood dissolved on 26th Jan., 1970 and that the provisions of s. 188 of the Act were applicable. The argument raised was that there being no provision in the partnership deed dt. 15th Oct., 1973 providing that in the event of death of any of the partners the partnership would continue, the provisions of s. 40C of the Partnership Act intervened and resulted in dissolution of the firm. The ITO after referring to certain authorities rejected the assessee's claim. The AAC upheld such action by relying on the Punjab Haryana High Court judgment in the case of Dharam Pal Sat Dev. vs. CIT (1). 4. Shri B.S. Gupta, Advocate appearing for the assessee, fairly accepted that in view of the Full Bench judgment of the Punjab and Haryana High Court in the case of Nand Lal Sohan Lal vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s already been noticed that if one of the partners dies or an additional partner is introduced in a partnership, a new partnership comes into existence if the case is viewed strictly in accordance with the provisions of the Indian Partnership Act, but the Act makes a thorough departure from those concepts and expressly provides that such changes would ensure continuity of the firm as a unit of assessment". Their Lordships have observed that because of the changed definition of the word 'person', a partnership firm has been invested with the status of a continuing entity and a unit of assessment. The framing of only one assessment against a person is the normal rule and two assessments can be framed against the person only under exceptional circumstances recognised by the Act. 6. Keeping the above in focus when we notice that the death of Naurang Rai partner, did not effect the continuity of the business and in his place, Smt. Mohran Devi was admitted as a partner and his share was allotted to her and the business continued uninterrupted, the case is fully covered by the provisions of s. 187 (2) of the Act, as noted above. 7. Coming to the second issue in the cross objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discrepancies. The assessee furnished a list showing details of the purchases effected from various villagers. According to the information furnished before the ITO, the assessee took deliveries of 1423 qtls 43 kgs of Kapas on 'Udhari' basis between 11th Nov., 1969 to 5th Dec., 1969 though necessary entries were effected as purchases between 18th Feb., 1970 to 24th Feb., 1970. The ITO recorded the contention that delivery of the 'Udhari' Kapas was a normal practice and the assessee's case was not an exception. Financial difficulty was stated as an additional factor as to why 'Udhari' Kapas was being accepted. The ITO was also informed that the assessee procured the help and services of one Radha Kishan, Dalal of Jind, to get facility of delayed payment and that the said Dalal charged Rs. 50 per truck as 'Dalali' for getting such accommodation from the Zamidars. The fact that M/s. Narsing Dass Ram Chander, who were having a current account with the assessee, used to supply Kapas in the earlier years, was also pressed into service for the submission that the benefits of 'Udhari' system prevalent in the market was enjoyed. Explaining the modus operandi of obtaining delivery on 'Udnar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it should have maintained 'Nakal Bahi' or Takpati Bahi' for recording the receipt of 'Udhari' basis Kapas in its factory premises, otherwise it could be very difficult for the firm to settle the accounts later on. The ITO stated that the assessee was making cotton purchases from M/s. Narsing Dass Ram Chander which were recorded in the account books on or before 16th Dec., 1969 and that the said firm had also debited the assessee's account before the said date on account of cost of Kapas, beside the truck freight etc. In the ultimate analysis, the ITO rejecting all contentions of the assessee, added Rs. 2,64,260 as value oif excess unexplained stocks of cotton of 1283 qtls 41 kgs and 300 gms pledged with the Central Bank of India as on 26th Jan., 1970. The assessment order is dt. 25th March, 1974. 10. The assessee went in appeal before the AAC and on 18th March, 1975 the following remand order was passed which we consider necessary to reproduce because such order, to a great extent, clears the issue before us which is whether the AAC rightly deleted the addition of Rs. 2,64,260 made in the assessment:- "The major point of dispute for the asst. yr. 1971-72 centres round the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the trucks names of the agriculturists from whom Kapas was obtained on 'Udhari' basis, truck numbers, weight of Kapas obtained, date of payment of freight and the octroi, amount of freight, amount of octroi, value of Kapas as finally determined and the date of payment to the agriculturists. A copy of the statement is enclosed with this remand order. 7. The case is remanded to the ITO for— (i) Examination of the cash book to verify the payments of freight and octroi in respect of every transaction mentioned in the enclosed list; (ii) Scrutiny of the octroi receipts (these are in the miscellaneous folder) to verify the correctness of the dates, amounts, truck Nos. etc. as also the names of the consignor and the consignee; (iii) Examination on oath of Radha Kishan, Dalal, Jind, and partner in M/s. Narsing Dass Ram Chander, Commission Agents, Jind, to ascertain the correctness of the averments made on behalf of the appellant; (iv) Examination on oath of the agriculturists from whom Kapas was obtained for specifically ascertaining — (a) Whether or not they sent Kapas on 'Udhari' basis to M/s. Jamna Dass Chhabil Dass Cotton Factory on the relevant dates and the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer was a futile exercise because numerous documents connected with receipt of 'Udhari' basis Kapas came to be scrutinised by the ITO. On the contrary, for the assessee Sh. B.S. Gupta, Advocate, submitted that in the assessee's own file there is nothing in the hands of Sh. Paras Dass Jain, Advocate, who appeared both before the ITO and the AAC when the remand order was passed (Sh. Paras Dass has since died) to the effect that even the contemporaneous register in which arrival of 'Udhari' basis Kapas in the assessee's factory was recorded alongwith all necessary details, was taken possession of by the ITO. Shri Gupta made a statement at the bar that he was personally conversant with the handwriting of Sh. Paras Dass Jain, Advocate. We would have considered such submission as unsupported and, therefore, not proved but para 6 of the AAC's remand order prompts us to accept this version of the assessee that it did have contemporaneous evidence in the shape of a register about obtaining of 'Udhari' basis Kapas and in such contemporaneous register every possible information as to from which Zamidar 'Udhari' basis Kapas was taken, when was the price settled, when was the payment made and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Letter dt. 20th May, 1975 of the ITO, 'A' Ward, Hissar addressed to the Tehsildar, Jind. 60 Certificate dt. 27th May, 1975 of Patwari, village Julani. 61 Report of Tek Chand Patwari, village Bighana, received from Tehsildar, Jind 62-72 Copy of account of Narsing Dass Shyam Sunder, Jind. 73-74 For the assessee, we have a paper book, containing 119 pages. Page 82 of the assessee's paper book give complete details of 'Udhari' basis Kapas received. Such details is in graphical chart and not only the date of arrival of trucks is mentioned but names of the agriculturists, their villages, truck numbers, weight of Kapas in each truck, payment of freight and octroi, amount of freight paid, amount of octroi paid, price of Kapas settled and the dates of payments have all been given. We have already recorded above that such details were furnished to the AAC when he passed the remand order dt. 18th March, 1975. 13. We have very carefully perused the entire material before us. Before we go to the arguments of the parties, we like to refer to a decision dt. 28th April, 1975 of the Chandigarh Bench of the Tribunal in the case of M/s. Ram Chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was being accepted by the Assessing Officers there even in respect of the assessment years earlier than the one involved in this case. It is really surprising that the Revenue's attitude in the assessee's case came to be adopted differently. As it is, the situation created by the Assessing Officer rightly came to be remedied by the AAC. Though we may not agree with the entire reasonings of the AAC, his decision on the issue is certainly correct. When we hold this, we have in focus the Revenue's arguments taken before us. At this stage, it may be noted that though the remand order was passed by Shri E.K. Koshi AAC the deletion has been made by Shri O.P. Bansal, AAC. In other words two AAC's have viewed the situation and their approach has been in our view, similar. 14. For the Revenue, Shri C.S. Jain submitted that the onus was on the assessee to prove that 'Udhari' basis goods were received, as contended before the Assessing Officer. According to Sh. Jain furnishing of details before the ITO as given at page 82 of the assessee's paper book did not clinch the issue. Sh. Jain submitted that the ownership of the goods in the truck and octroi receipts being shown that of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8th June, 1971. First hearing took place on 14th July, 1972 and the assessment came to be completed on 25th March, 1974. We informed ourselves of the order-sheet entries of the Assessing Officer and are satisfied that the assessee gave all information which it was required to do and which could be furnished for its assessment. We have perused numerous certificates connected with the assessee's case that it procured Kapas on 'Udhari' basis and there being no corresponding purchases recorded in the books, there was difference between the stocks as shown pledged with the bank on 26th Jan., 1970 as compared to the stock register maintained. If the goods procured lying with the assessee on 'Udhari' basis are taken into account, there could be said to be absolutely no unexplained pledging of stocks. We, therefore, uphold the AAC's order on the point of deletion of Rs. 2,64,260. 16. Ground No. 3 of the appeal agitates deletion of the addition of Rs. 10,000 each in the cotton and oil accounts. We reject the Revenue's contentions and for such decision we rely completely on paras 14 and 15 of the AAC's order. The addition was made by the ITO on the only ground that there was shortage of y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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