TMI Blog1987 (2) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... t the returned income of Rs. 1,56,500 the assessed income was Rs. 19,53,930. The quantum appeal is now pending before the CIT(A). For assessment year 1981-82 continuation of registration was sought for under s. 184(7). Form No. 12 was filed on 27-6-1981. A search and seizure operation was carried out on 12-9-1983 in the premises of the assessee and some of the partners. Several materials were recovered from the assessee's premises and also from the residence of Mrs. Tayamma wife of Sri Gopala Rao, Matrusri Co-operative House Building Society. From the seized materials it was found out that the assessee firm engaged itself in selling the lands at Miyapur and collecting 'on money'. The income-tax return for assessment year 1981-82 was filed on 1-9-1981 and in the income-tax assessment each one of the seized material was discussed in the assessment order and clear reasons along with supporting material were given in the said assessment order for treating Matrusri Co-op. House Building Society as a dummy of the assessee or conduit pipe through which the assessee firm sold plots at Miyapur and pocketed the money. The search and seizure operations revealed that the assessee firm had earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us of the assessee as a registered firm. We have heard Shri N. Santhanam, learned Departmental Representative and Shri N. Srirama Murthy, learned counsel for the assessee. The learned departmental representative mainly relied upon the Andhra Pradesh High Court decision reported in CIT v. Badjanapara Salt Co. 1974 Tax. LR 19. In that case two of the partners though minors were made responsible to share losses and they were treated as full-fledged partners. By oversight or mistake registration was granted for one or two years. Subsequently the question of granting continuation of registration came up for consideration. The High Court held that there is distinction between a case where there is no firm at all in existence or no genuine firm in existence and a case where though a firm is in existence it is not valid in law. What all decided by the Andhra Pradesh High Court in that case was that continuation of registration can be refused even in a case where it was found that there was no valid firm in existence. According to the Andhra Pradesh High Court to grant continuation of registration a firm should be in existence and it should also be a valid firm. An objection was raised in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 3 thereof they appended a certificate to the effect that 'the profits of the previous year are divided and credited as shown below'. The Tribunal found that the firm had earned profits in the black market and though it had distributed its book profits among the partners according to the instrument of partnership it had not distributed the profits earned by it in the black market amongst the partners according to the instrument of partnership: Ultimately the Hon'ble Supreme Court held on the above facts that the application for renewal of registration made by the assessee did not comply with the conditions prescribed in paragraph 3 of rule 6 of the Indian Income-tax Rules, 1922, and the firm was not entitled to renewal of registration for the assessment year 1948-49. The learned Departmental Representative also wanted to rely upon the Allahabad High Court decision in Krishna Gopal Bros. v. CIT [1977] 110 ITR 378. In that case it was held that in order that a firm may obtain registration it must apply in form No. 11 of the Income-tax Rules, 1962 containing a certificate that the profits of the previous year will be or have been divided according to the shares specified in the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed assessment. Therefore, the certificate contemplated by rule 6 is not a mere formality. It has a definite purpose. If a portion of the profits earned by the firm was not actually divided amongst the partners or credited to their accounts, then the only course open to the Income-tax Officer was not to register that firm and to tax the partners of the firm as an association of persons. 6. We accept this argument that the benefit of getting renewal of registration was available for the first time only under the Income-tax Act, 1961. If we examine form Nos. 11 and 12 under the Income-tax Rules, 1962 it would be clear that para 4 in form No. 11 is analogous to para 3 in rule No. 6 of the IIT Rules, 1922. The requirement that the profit and losses are to be divided and credited at the end of the previous year as should be provided in the schedule given under form No. 11. However, that requirement is not essential in form No. 12 of the IT Rules, 1962. Form No. 12 is a prescribed form to get renewal of registration under s. 184(7). 7. In Voleti Veerabhadra Rao Sons' case the Andhra Pradesh High Court clearly held as follows: " As the provisions of s. 184(7) do not specify the asc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
