TaxTMI 
TaxTMI 
2000 (12) TMI 16
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....he assessment year 1972-73, arise out of two appeals filed by Kalu Ram and Co. (Firm) (hereinafter referred to as "the firm") and Kalu Ram and Co. (HUF) (hereinafter referred as "the HUF"). The previous year relevant to the said assessment year ended on March 31, 1972, in both the cases. The business was originally carried on by the Hindu undivided family. There were three members in the Hindu undivided family, namely, Bal Kishan (karta), his brother, Bharat Singh and their mother, Smt. Kishan Pyari. The income from the business was assessed in the hands of the Hindu undivided family up to the assessment year 1971-72. On March 22, 1972, a deed of partnership was drawn up constituting the firm, consisting of all the above three persons as its partners. In the said deed, Bal Kishan was described as party of the first part, Bharat Singh as party of the second part and Smt. Kishan Pyari as party of the third part. The preamble to the deed read as under: "Whereas the party hereto of the first part took the works of contract, namely, (i) supply of 18000 cu.m. of 1 1/2" gauge stone ballast (3.8 cm) and 1500 cu.m. of 1" gauge stone ballast (2.5 cm.) duly stacked and loaded into rail bor....
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....ot contribute any capital. On the contrary, her account showed that she had withdrawn Rs.3,000 on April 1, 1971, and another sum of Rs.10,000 on February 9, 1972. Thus, she had a debit balance in her account. The firm submitted an application in Form No. 11 for grant of registration under section 184 of the Act on March 25, 1972, along with a certified copy of the said partnership deed dated March 22, 1972. The Income-tax Officer (in short "the ITO") was of the view that the firm was not genuine and the entire income of the business was required to be assessed in the hands of the Hindu undivided family as it was the real owner of the business. He was of the view that the karta of the Hindu undivided family was not competent to enter into partnership with other members of the family to carry on the joint family business and that any such agreement was void ab initio. On the facts the Income-tax Officer found that the alleged firm had not opened any new bank account; it had been carrying on business on the old bank account standing in the name of the Hindu undivided family; no separate books of account had been maintained for the business of the firm; even the refund of security d....
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....ngs: "Although, our above finding is sufficient to dispose of the present appeal, but in deference to the parties, we may give our finding on the other issues also. We do not agree with the observations of the Appellate Assistant Commissioner that the Income-tax Officer had raised no doubt about the genuineness of the firm. The Income-tax Officer clearly stated in his orders under sections 143(3) and 185 of the Act that the firm had not opened a new bank account and that it had carried on the bank account originally standing in the name of the family and that the receipts from the contract undertaking were all deposited in this bank account. He also observed that no separate books of account for the firm's business had been maintained and that the refund of the security deposit with respect to the contract undertaken by the family for the previous two assessment years had been deposited in the books of the alleged firm. Similarly, he pointed out that the contract originally taken in the name of the karta as representing the family had been carried on as the business of the alleged firm. In our opinion, on these facts also, it cannot be said that a genuine firm had come into exis....
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....nto the genuineness of the firm and its constitution as specified in the instrument of partnership. If, on such enquiry he is satisfied that there is in existence a genuine firm with the constitution so specified, he is obliged to pass an order in writing under section 185 of the Act, registering the firm. If, however, he is not satisfied, he has to pass an order in writing refusing registration to the firm. In other words, in order to obtain registration of a firm it is not only mandatory for the assessee to file an application and declaration on behalf of and signed by all the partners along with an instrument of partnership, specifying the individual shares of the partners, it is equally obligatory for the Assessing Officer to enquire into the genuineness of the firm. Whether a firm is genuine or not is a pure question of fact. It is for the Assessing Officer in the first instance and the Tribunal, as a final fact-finding authority, to reach a final finding on this question (see Ratanchand Darbarilal v. CIT [1985] 155 ITR 720 (SC)). In the instant case, although the partnership was evidenced by an instrument of so-called partnership specifying the individual shares of the thr....