TMI Blog2002 (3) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... ners, viz., (i) Shri Narendra Singh B. Bindra, (ii) Smt. Gurubindar Kaur K. Bindra, (iii) Smt. Manjit Kaur Harvindar Singh Bindra. 3. There were proceeding of search under s. 132 carried out in this group of assessees on 6th July, 1989 in the course of which two lady partners, namely, Smt. Manjit Kaur and Smt. Gurubindar Kaur were examined. It appears that in their statements recorded at the time of search, they had not shown sufficient acquaintance with the affairs of the firm and therefore, the proceedings were taken to cancel registration of the firm for the asst. yrs. 1989-90, 1990-91 and 1991-92. In these three years, the income of the assessee-firm was clubbed in the hands of M/s Gurunanak Industries, Aurangabad for the detailed rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that these two ladies in their statements showed ignorance of the name of the firm in which they were partners as also regarding the capital contribution as well as sources of income. Smt. Gurubinder Kaur had deposed that she was a partner in the firm M/s Gurunanak Industries when actually she was not a partner in that concern. The nature of business described by her also was incorrect. According to the AO this fact clearly showed that the firm was not genuine and was floated to divert the income of M/s Gurunanak Industries by introducing two wives of the main partner of M/s Gurunanak Industries, Aurangabad. Registration was therefore, cancelled under s. 186(1). 6. On appeal, the learned CIT(A) reversed the finding of the AO. In dealin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intenance of books was not sufficient reason for refusing registration. He relied upon the following cases: (i) V.K. Kurian K.P. George vs. CIT (1967) 63 ITR 675 (Ker) (ii) CIT vs. Chandra Co. 1976 CTR (All) 135 (iii) Ozhukal Ouseph vs. Dy. CIT 1978 CTR (Ker) 33 : (1978) 113 ITR 894 (Ker) 9. As regards the contention that the present firm had been floated to divert the income of M/s Gurunanak Industries, Aurangabad, by introducing two wives of the main partners, the CIT(A) did not find any merit in the said claim. According to him, the motive behind floating the firm of M/s Gurunanak Concrete Products was not with a view to divert income or reduce the tax liability of M/s Gurunanak Industries. The CIT(A) relied on the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... divert the income of the main partnership M/s Gurunnanak Industries. He next submitted that the observations of the learned CIT(A) that recourse to s. 263 ought to have been made is also improper inasmuch as the order under s. 186 was prefectly legal and was passed after complying with all the necessary conditions in that regard. He submitted therefore, that there was no warrant for presuming that order under s. 186 was not properly passed in any case. He therefore, sought restoration of the order of the AO in refusing registration under s. 186(1) of the Act. 12. On the contrary, Shri K.A. Sathe, the learned counsel for the assessee, submitted that assessee-firm complied with all the legal requirements, viz., there was a partnership deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search. In explaining the nature of her source of income, she did say that she was a partner in the firm. In answer to question 19 she did state the names of the partners of the firm correctly and also had stated the details of the bank account. In regard to the statement of other lady partner Smt. Gurubindar Kaur recorded at the time of search, it was contended by the counsel that questions which were asked to her themselves were very confused because in question No. 6 she was asked as to who were the partners in Gurunanak firm. It was quite likely that because of the pressure of the search the said lady got confused about the name of the firm and wrongly stated that she was a partner in the firm M/s Gurunanak Industries. 14. Shri Sat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the detailed reasons given by him in his impugned order. Registration has been cancelled mainly on the ground that the two lady partners during the course of their statements recorded during the course of search have not shown sufficient acquaintance of the affairs of the firm. In this case, it is an admitted fact that the firm was constituted by a valid partnership deed. The two ladies had contributed capital and they were not working partners. The working partner was Shri Narendra Singh Bindra who was validly acting on his behalf as well as on behalf of the two ladies. A partnership could not necessarily become non-genuine only because one or more partners were not aware of the details about the partnership business as held in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X
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