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TMI Blog1988 (8) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... to in his order had joined hands to form a partnership under the name and style of M/s Gian Chand Jagjit Kumar co. wine contractors, to carry on the business of purchase and sale of country liquor as well as Indian manufactured foreign spirit. The partnership was evidenced by an instrument dt. 5th April, 1978 which was made effective from 1st April, 1978. The ITO referred to the decision of CIT vs. Hardit Singh Pal Chand Co. (1979) 8 CTR (P H) : (1979) 120 ITR 289 (P H), according to which, the assessee was not entitled to registration because it was not a legally constituted firm. The Assessee's contention in this behalf was that all the partners were licencees and they were not strangers. They had actually been allotted vends at the time of auction and they had only joined hands together for the smooth working of vends. None of the outsiders had been taken as a partner in the assessee-firm and their joining was perfectly legal. The ITO was, however, of the opinion that Shri Krishan Chand, Sh. Dinesh Kumar and Sh. Darshana Nand were strangers to L-13 vend at Nalagarh, L-14 vend at Derowal and L-1 vend at Nalagarh. Similarly, S/Sh Sat Pal, Vinod Kumar, Bhupinder Kumar were stra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Bharatgarh (Pb) V. Raj Kumar and Giah Chand L-10A, retail vend of beer at Bharatgarh (Pb). VI. Raj Kumar and Jagjit Kumar L-2, i.e., retail vend of Indian manufacture foreign liquor at Dhabota." In the third year again, the manner of obtaining the licences by various persons was as below: "I. Sat Pal s/o Jagat Nath, Bhupinder Kumar Vinod Kumar and Sat Pal S/o Lal Chand L2,i.e., retail vend of Indian Manufactured foreign spirit at Nalagarh II. Jagjit Kumar and Gian Chand Singal L-14, i.e., retail vend of country liquor at Jogan. III. Jagjit Kumar and Gian Chand Singal L-14,i.e., retail vend of country liquor at Ghamrola IV. Jagjit Kumar and Gian Chand Singal L-14, i.e., retail vend of country liquor at Ram Shehar V. Jagjit Kumar and Gian Chand Singal L-14, i.e., retail vend of country liquor at Doli VI. Gian Chand Singal and Sat Pal s/o Lal Chand. L-14, i.e., retail vend of country liquor at Suraj Majra VII. Satya Pal s/o Jagan Nath, Jagjit Kumar Gian Chand Sharma and Sat Pal s/o Lal Chand L-14, i.e., retail v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 943 (P H) wherein the High Court had held that the mere fact that the partners of the firm had indulged in certain unlawful activities, would not make the firm to be non-genuine and registration could not be refused to it on that basis. Reliance was also placed by him upon a decision of the Chandigarh Bench in the case of Jagdish Rai Mong 14 TLR 756. Consequently, he directed the ITO to allow registration to the assessee firm. In the subsequent years, he pointed out that though the constitution of the firm was slightly different but in other respects the issues involved were the same except for a minor difference in the second year in which Hoshiar Singh's name mentioned in the licence vend regarding L-14 at Nalagarh along with other four persons was there and the said Hoshiar Singh had not become a partner, so it could be presumed that some other partners had represented him as a benamidar. But, according to him, this presumption did not necessary follow merely because Hoshiar Singh had not joined the assessee firm. Consequently, similar directions for allowing registration to the assessee firm were issued in respect of later two years. In all the three years, the Revenue has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e with the terms and conditions of the contract and the excise rules. There was nothing to suggest that the partners had any intention to infringe or violate the provisions of any law. Even otherwise, the reason for obtaining the names of the partners who handled liquor on the licences, is that anti-social or undesirable persons should not carry on liquor business but in the present case all the partners are licensees at one place or the other. Therefore, the mere fact that they have pooled their sources and agreed to share the profits earned from all the vends in a particular ratio, would not affect the legality of the partnership, which cannot be said to be against public policy. 6. This Bench has already accepted these propositions in the case of Jagdish Rai Monga. The decision of the High Court, referred to by the ITO, namely, Hardit Singh Pal Chand Co., was duly considered by the Tribunal who held that the assessee was entitled to registration unless it was proved by the ITO that the intention was to carry on business in contravention of the Excise rules/law. We were informed at the time of hearing that the High Court had not chosen to call for a statement of the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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