INCOME TAX OFFICER v. JANTA RICE MILLS
[Citation -1986-LL-1223-2]

Citation 1986-LL-1223-2
Appellant Name INCOME TAX OFFICER
Respondent Name JANTA RICE MILLS
Court ITAT
Relevant Act Income-tax
Date of Order 23/12/1986
Assessment Year 1980-81
Judgment View Judgment
Keyword Tags profit and loss sharing ratio • renewal of registration • issue in appeal • form no. 12 • rice mill • benami
Bot Summary: Upholding the claim of the assessee for registration for asst. In the consideration of the ITO the assessee by not showing the income of M/s Pawan Udhyog had not fulfilled one the two conditions and therefore following the Supreme Court's pronouncement in Khanjanlal Sewak Ram vs. CIT 83 ITR 175 refused the renewal of t h e registration. For the detailed discussion made above, the ITO is directed to grant renewal of registration to the assessee firm for the year under consideration. The Commissioner had not endorsed the finding of the ITO that Pawan Udyog was a benami concern of the assessee. Counsel for the assessee that the income of Pawan Udyog was liable to be included in the income of the assessee in appeal. We find not support arising from the material brought on record for the stand of ITO refusing the renewal of registration for which the assessee had applied in the prescribed form within the statutory period. If the income of Pawan Udyog was not liable to be included in the income of the assessee firm there could be no point in disallowing the claim for renewal on the ground that income of Pawan Udyog being a benami concern of the assessee firm found a part of the income of the assessee firm and which had not been distributed among the partners in the profit and loss sharing ratio specified in the instrument of partnership.


Revenue is in appeal against order passed by Commr. (A) upholding claim of assessee for registration for asst. yr. 1980-81. firm had been allowed registration in proceeding year. During following year namely asst. yr. 1980-81 appellant firm applied for renewal of registration in prescribed form No. 12. According to ITO assessee had concealed sizeable part of his income carried out in name of Pawan Udhyog. Accordingly one of two important requirements namely that profit and loss, if any, of business relating to accounting year should have been divided or credited as case may be according to terms and conditions of instrument. In consideration of ITO assessee by not showing income of M/s Pawan Udhyog had not fulfilled one two conditions and therefore following Supreme Court's pronouncement in Khanjanlal Sewak Ram vs. CIT (1972) 83 ITR 175 (SC) refused renewal of t h e registration. assessee firm having felt aggrieved took this matter in appeal before Commr. (A) who did not agree with ITO and reversed his finding by making following observation: "Record evidence fact registration had been granted for asst. yr. 1978-79 and renewal was granted for asst. yr. 1979-80 and that for year under consideration all conditions entitling assessee for renewal of registration have been complied with. Hence, renewal of registration could not have been refused, particularly when requirements prescribed under statute have been complied with. Had ITO wanted to challenge genuineness of ground or make enquiries thereto, legal course opened to them could have been to take recourse to Section 186 of IT Act, 1961 and not to refuse continuation of registration particularly when undisputedly (i) registration had been granted in asst. yr. 1978-79 and renewal had been granted in asst. yr. 1979-80 and continued partners of same set business even in assessment year under consideration as is evident from profits apportioned amongst them in books of account duly examined by ITO (ii) Form No. 12 had been duly filed in prescribed form and in prescribed manner. For detailed discussion made above, ITO is directed to grant renewal of registration to assessee firm for year under consideration." Revenue has felt aggrieved and has brought issue in appeal before Tribunal. Departmental representative speaking for Revenue pointed out that Commissioner (A) in reversing finding of ITO did not meet point which had been raised by ITO in disallowing renewal registration. According to him business of M/s Pawan Udyog was benami business of assessee firm. Therefore, profit derived from M/s. Pawan Udyog during year was left undistributed amongst partners of assessee firm in profit and loss sharing ratio specified in instrument of partnership. It was pointed out by ld. counsel for assessee that Commissioner (A) who heard appeal against assessment order fo Janta Rice Mill had deleted same so included representing income of Pawan Udyog in hand of Janta Rice Mill by order passed on 21st May, 1984 in appeal no. IT 279/83-84. Commissioner (A) had not endorsed finding of ITO that Pawan Udyog was benami concern of assessee. Therefore, very corner stone on which ITO had acted upon, his stand for refusing renewal disappeared. Having considered facts brought on record we are of view that revenue had not been able to make out case against plea of ld. counsel for assessee that income of Pawan Udyog was liable to be included in income of assessee in appeal. There was no rebuttal of claim of assessee that Commissioner (A) had not endorsed inclusion on ground that Pawan Udyog was benami concern of assessee. In absence of any rebuttal from Revenue that finding of Commissioner (A) had been challenged in appeal before Tribunal, we are to take it that revenue had acquiesed in finding of Commissioner (A). Therefore, we find not support arising from material brought on record for stand of ITO refusing renewal of registration for which assessee had applied in prescribed form within statutory period. If income of Pawan Udyog was not liable to be included in income of assessee firm there could be no point in disallowing claim for renewal on ground that income of Pawan Udyog being benami concern of assessee firm found part of income of assessee firm and which had not been distributed among partners in profit and loss sharing ratio specified in instrument of partnership. We upheld finding of Commissioner (A) and dismiss appeal of revenue. In result revenue's appeal is hereby dismissed. *** INCOME TAX OFFICER v. JANTA RICE MILLS
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