1994 (12) TMI 47

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....partners on the deposit accounts in their individual capacity in the firm far the years under consideration was liable to be disallowed under section 40(b) of the Income-tax Act, 1961 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the action of the Income-tax Officer in initiating reassessment proceedings under section 147 of the Income-tax Act, 1961, was in accordance with law ? " This income-tax reference relates to the assessment years 1974-75 to 1979-80. At the material times, there were three partners in the firm of the assessee, namely, Ghanshyamdas Kotumal, Gopaldas Ghanshyamdas and Ramesh Ghanshyamdas. Each one of them was a partner in the assessee's firm in a repres....

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....upies a dual position. Qua the partnership, he functions in his personal capacity ; qua the third parties, in his representative capacity. This dual position of a partner " qua the partnership " and " qua the third parties " is clearly recognised by the Supreme Court in CIT v. Bagyalakshmi and Co. [1965] 55 ITR 660. In the case of CIT v. Jhabarmal Agarwalla [1990] 184 ITR 431, a Division Bench of the Gauhati High Court, of which one of us (Dr. B. P. Saraf J.) was a member, after considering the decision of the Supreme Court in CIT v. Bagyalakshmi and Co. [1965] 55 ITR 660 and also of the Allahabad High Court in the case of Madho Prasad v. CIT [1978] 112 ITR 492 has held that in a case where the karta of a Hindu undivided family is a partner....

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....er section 143(3) of the Act on October 16, 1975, for the assessment years 1974-76, on May 31, 1977, for the assessment year 1976-77 and on August 31, 1978, for the assessment years 1977-78 and 1978-79. These assessments were reopened by the Income-tax Officer under section 147 of the Act and the only item of additional income included in the assessments was the interest as aforesaid paid by the assessee-firm. The Income-tax Officer initiated reassessment proceedings under section 147(b) of the Act on July 25, 1979, since the audit objections were received from the internal audit party of the Income-tax Department pointing out that the interest paid as aforesaid was wrongly allowed. The Tribunal, the final fact-finding authority under the A....