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INCOME TAX APPELLATE TRIBUNAL, GAUHATI
H.S. Ahluwalia, EGBERT SINGH, JJ.
Income-tax Officer -Appellant
Versus
Jasraj Rampratap -Respondent
IT APPEAL NOS. 436 AND 441 (GAU.) OF 1979
Decided On : 13-10-1981
Advocates Appeared:
R.N. Bora,R.P. Jain, R.P. Agarwalla
R.N. Bora,R.P. Jain, R.P. Agarwalla
ORDER
2. The main dispute in these appeals relates to the assessee's right to continuation of registration for all the years under consideration. The ITO noticed that the profits in all these years had not been distributed according to the agreement of partnership which stipulated for sharing of profits and losses in the following ratios :
The ITO, therefore, called upon the assessee to explain as to why the registration granted to it should not be cancelled, to which the assessee's reply was that the firm had been registered ever since the year 1967-68 and there has been no change in the constitution nor could it be said that there was no genuine firm in existence during the assessment years under consideration. The ITO however, concluded that as the partners had distributed profits in a different manner other than specified in the partnership deed, it amounted to change in the constitution of the firm within the meaning of section 187(2)(b) of the Income-tax Act. After obtaining the approval of the IAC of Income-tax Dibrugarh Range, Dibrugarh, he cancelled the registration of the firm for all the years in question.
3.The assessee went up in appeal to the AAC and contended that the change in the ratio of sharing profits as pointed out by the ITO was a minor mistake caused by the Accountant and did not make any monetary difference in the overall total. The nature of business, composition of partners, conditions, etc. as laid down in the original partnership had remained unchanged and therefore, registration could not have been refused merely on the basis of minor mistakes. It was also contended that the ITO had been intimated that the arithmetical mistake committed by the Accountant had been corrected by duly debiting or crediting the accounts of the respective partners, who had confirmed that it was a genuine arithmetical mistake. Reliance was placed upon a decision of the Andhra Pradesh High Court in Commissioner v. Voleti Veerabhadra Rao & Sons (1972)84 ITR 764 (AP) and the Allahabad High Court decision in Commissioner v. Hariram Khanna 1978 Tax LR 245. In the later case the share of Hariram disclosed mentioned in the partnership deed was 6 annas and the share of his sons as 5 annas each. An application had been made in the proper form but the Commissioner found that the division of shares was not made in accordance with the division of profits indicated in the partnership deed. Instead of 6 annas and 5 annas each the shares were distributed in equal proportions, i.e. 31/3 annas each. The ITO and the AAC had held that was the firm not entitled to registration. The Tribunal however, was of the opinion that such mistake could have been committed by the Accountant inadvertently because the partners were the father and the two sons and ordinarily could have equal shares. On a reference, the High Court held that the partnership was genuine and was entitled to registration. Following these decisions, the AAC held that the assessee was entitled to registration. The Department has consequently come up in second appeal before us.
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H.S. Ahluwalia, Judicial Member - These six appeals have been filed against a common order dated 22nd February, 1979 of the AAC and are, therefore, disposed by this single judgment.
2. The main dispute in these appeals relates to the assessee's right to continuation of registration for all the years under consideration. The ITO noticed that the profits in all these years had not been distributed according to the agreement of partnership which stipulated for sharing of profits and losses in the following ratios :
| 1. Jhabarmal Kanoi | 31per cent |
| 2. Bhagwati Pd. Kanoi | 31per cent |
| 3. Smt. Gomti Debi Kanoi | 19per cent |
| 4. Shyamsundar Kanoi | 19per cent |
Actually in the books of account the actual distribution was found to have been made in the following ratios:
| 1. Shri Jhabarmal Kanoi | 30per cent |
| 2. Bhagwati Pd. Kanoi | 30per cent |
| 3. Smt. Gomti Debi Kanoi | 20per cent |
| 4. Shyamsundar Kanoi | 20per cent |
The ITO, therefore, called upon the assessee to explain as to why the registration granted to it should not be cancelled, to which the assessee's reply was that the firm had been registered ever since the year 1967-68 and there has been no change in the constitution nor could it be said that there was no genuine firm in existence during the assessment years under consideration. The ITO however, concluded that as the partners had distributed profits in a different manner other than specified in the partnership deed, it amounted to change in the constitution of the firm within the meaning of section 187(2)(b) of the Income-tax Act. After obtaining the approval of the IAC of Income-tax Dibrugarh Range, Dibrugarh, he cancelled the registration of the firm for all the years in question.
3.The assessee went up in appeal to the AAC and contended that the change in the ratio of sharing profits as pointed out by the ITO was a minor mistake caused by the Accountant and did not make any monetary difference in the overall total. The nature of business, composition of partners, conditions, etc. as laid down in the original partnership had remained unchanged and therefore, registration could not have been refused merely on the basis of minor mistakes. It was also contended that the ITO had been intimated that the arithmetical mistake committed by the Accountant had been corrected by duly debiting or crediting the accounts of the respective partners, who had confirmed that it was a genuine arithmetical mistake. Reliance was placed upon a decision of the Andhra Pradesh High Court in Commissioner v. Voleti Veerabhadra Rao & Sons (1972)
4. We have heard the representatives of the parties at length. The facts and the decision in the case of Hariram Khanna have been narrated above and to our mind this case is entirely on all fours with the present case. Rather we would go a step further and say that the present case
