1984 (5) TMI 89

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....tindra Ch. Chandra. But in cl. (5) of the deed of partnership, it was mentioned inter alia as under: "5. That the accounting year of the firm shall be the Financial year. The accounts of the firm shall be closed and adjusted at the end of each accounting year and the net trading result shall be ascertained and shall be credited to their respective personal accounts. The partners shall participate in the net profit as well as in loss in the following proportions. 1. Shri Ganeshji Maharaj 4 per cent 2. Shri Shankarlal Jhunjhunwala 32 per cent 3. Shrimati Purabee Dey 32 per cent 4. Shri Jatindra Ch. Chandra 32 per cent " This fact led the ITO to believe that although it was a firm constituted by three partners. But in fact four p....

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....n reported in the case of CIT, Mysore vs. Shah Mohandas Sadhuram (1965) 57 ITR 415 (SC) and in the case of Ram Laxman Sugar Mills vs. CIT U.P. Anr. (1967) 66 ITR 613 (SC) for the proposition that the defect pointed out by the ITO was not so serious as to render the assessee firm as ingenuine and, therefore, is not entitled to the benefit of registration. The ld. departmental representative highlighted the reasons given by the lower authorities for coming to the conclusion that there was no genuine firm in existence during the assessment year under consideration. 5. Sec. 186 of the IT Act empowers the ITO to cancel the registration already given for a particular assessment year which reads as under: "Sec. 186(1): If, where a firm has been ....

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....unt from time to time or at any time. Clause (7) of the deed of partnership stated that the control and management of the business shall vest in the partners equally and they are authorised jointly and severally to sign, execute and complete transactions, etc. Therefore, it can be legitimately presumed that Shri Ganeshji Maharaj was never made a partner. Even in cl. (5) of the partnership deed on which much reliance was placed by the Revenue, there was a clear mention that the accounting year of the firm shall be the financial year. The accounts of the firm shall be closed and adjusted at the end of each accounting year and the net trading results shall be ascertained and shall be credited to their respective personal account. However, ther....