TMI Blog1980 (2) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 % (iv) Maheshchand Agarwal 25 % (v) Smt. Prabha Agarwal 25 % Smt. Prabha Agarwal is the wife of younger brother of partner No. (iv), Sri Maheshchand Agarwal. Accounts of the firm were closed for the first year on 28th Feb., 75. Application was made for registration in From No. 11 on 30th March, 74 but therein the assessment year was erroneously mentioned as 1974-75. On 20th Aug., 76 the assessee firm filed another application for registration in Form No. 11 mentioning the correct assessment year i.e. asst. yr. 1975-76. ITO refused registration for two reasons. Firstly, the application for registration filed on 28th Aug., 76 was barred by time and the delay in the filing of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged before the learned AAC that the ITO's finding that Smt. Prabha Agarwal was a benami of Sri Maheshchand Agarwal was not correct. It was explained to the learned AAC that the amount invested by Smt. Prabha Agarwal in the assessee firm was her own amount which she had received as a gift from Sri Maheshchand Agarwal. It was also stated that the lady had agreed to become a partner and had promised to invest money in the firm much before she received the gift from Sri Maheshchand Agarwal. It was emphasized that Smt. Prabha Agarwal exercised effective control over the said amount and also over the profit earned by her from the assessee firm. Reference was also made to the affidavits of Sri Maheshchand Agarwal and of Smt. Prabha Agarwal stating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Maheshchand Agarwal just a few days before the amount was invested. Another fact which influenced the learned AAC was that the funds invested in the assessee firm by Smt. Prabha Agarwal along with the profit earned by her was withdrawn and was deposited with M/s Ajmer Construction Co., wherein Sri Maheshchand Agarwal was a partner which suggested to the learned AAC that Sri Maheshchand Agarwal had directly or indirectly enjoyed the said fund and the profits earned by the lady. On these considerations the learned AAC felt that the ITO was right in his conclusion that the lady was benamidar of Sri Maheshchand Agarwal. 4. Against the decision of the learned AAC the assessee has come up in appeal to the Tribunal. It is vehemently urged by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had exercised full control over these. Our attention was drawn to affidavit of Smt. Prabha Agarwal filed before the ITO and also to the assessee firm's letter dt. 19th Nov., 77 addressed to the AAC in which it was stated clearly that after withdrawing the capital and the profit from this firm Smt. Prabha Agarwal invested the same in M/s Ajmer Construction Co; Jodhpur in which her husband was one of the partners and again, invested further in M/s Vijay Construction, Jodhpur in which she herself became partner with several strangers who were prepared to corroborate that she was a genuine and independent partner. The learned AAC, learned counsel stated, was not right in holding the it was Sri Maheshchand Agarwal who exercised control over th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demanded from her. We do not think in the face of these accepted and unchallenged facts, it could be said that the lady was not a partner in her own right and that she was benamidar for Maheshchand Agarwal. 6. It is well established that the ordinary presumption of law is that the apparent state of affairs is real unless it is proved to the contrary and, therefore, the burden of proving that a transaction is sham or that the person in whose name the property stands is not the real owner but is only a benamidar for another is on this taxing authorities. In the famous case of CIT vs. Gokuldas Hukumchand(4). Beaumount CJ observed, "now, all those facts undoubtedly give rise to a suspicion that the two minor sons are really nothing but nomin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the profits earned from this firm by the lady was exercises by Sri Maheshchand Agarwal. In coming to this conclusion the learned AAC proceeded under the misconception that these were invested in the firm M/s Ajmer Construction Co., Jodhpur in which Sri Maheshchand Agarwal was a partner but without realising that in the same firm the husband of the lady was also a partner. 8. The position thus is that Smt. Prabha Agarwal, according to the statements of all the partners, joined the firm in her own right as a financing partner and she did provide her own capital of Rs. 10,000. She exercised full control over this amount. She also exercised full control over the profit earned by her. There is no material on the record to show that the po ..... X X X X Extracts X X X X X X X X Extracts X X X X
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