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TMI Blog1970 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... competent ? 2. Whether Kishorilal Khemka has been rightly held to be a partner of the Bharat firm ? " On December 1, 1942, a partnership firm was constituted consisting of Raja Jwala Prasad and Jyoti Bhushan Gupta for undertaking engineering and construction works under the name and style " Bharat Engineering & Construction Company ". The terms of the partnership were reduced to writing by a deed dated February 6, 1943. The deed contained special provisions relating to the rights and liabilities of Raja Jwala Prasad, and paragraph 15 declared : " The second party (namely, Jyoti Bhushan Gupta) shall be entitled to take Mr. Kishorilal Khemka, Mr. Dwaraka Prasad Jhunjhunwala and Mr. Venkatla G. Pittie as partners in the firm but without aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta filed the appeals before the Appellate Assistant Commissioner, Kishorilal Khemka also filed appeals against the assessments. These appeals remained pending and were disposed of some time after the appeals filed by Jyoti Bhushan Gupta were decided. The Appellate Assistant Commissioner dismissed the appeals filed by Kishorilal Khemka as incompetent in the view that, as one set of appeals had already been filed by the firm against the assessment orders, namely, the appeals filed by Jyoti Bhushan Gupta, a second set of appeals against the assessment orders was not competent. The Appellate Assistant Commissioner observed that two appeals against the same assessment order, one by the firm and the other by one of the partners, were not envis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment and thus he was entitled to be considered as an assessee with a right of appeal against the assessments made on the defunct firm. The Tribunal rejected the contention on the ground that the conditions of the second proviso to section 30(1) were not satisfied inasmuch as Kishorilal Khemka was not " individually assessable on his share ".The firm had been treated as an unregistered firm. Section 30 of the Indian Income-tax Act, 1922, so far as is material, provided : " 30. Appeal against assessment under this Act.--(1) Any assessee .... denying his liability to be assessed under this Act .... may appeal to the Appellate Assistant Commissioner against the assessment ... Provided further that where the partners of a firm are individ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the second proviso to section 30(1). The proviso does not apply where the firm has been treated as an unregistered firm and the Income-tax Officer determines the sum payable by the firm itself. The Tribunal has found that neither section 23(5)(a) nor section 23(5)(b) has been applied to the present case and, accordingly, the second proviso to section 30(1) is not attracted. That is a conclusion with which we agree. But it was also urged before the Tribunal that the assessee had a right of appeal under the substantive provision of section 30(1) which declared that " any assessee ... denying his liability to be assessed under this Act... may appeal to the Appellate Assistant Commissioner against the assessment ...... " The Tribunal rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tendolkar J., speaking for the court, observed : " . . . . . and where after notice to all the alleged partners the Income-tax Officer proceeds to determine who the partners are and what their shares, obviously an appeal against this part of his order shall lie under section 30 at the instance of any one who denies his liability to be a partner and from the decision of such appeal a further appeal shall in an appropriate case lie to the Tribunal. If the Income-tax Officer determines the question without notice to the parties concerned, then his determination will be liable to be set aside in appeal at the instance of an aggrieved party because the determination in the absence of the party concerned cannot bind him ; and if the Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue that the supplementary deed was never filed before the income-tax authorities, but there are other circumstances which point heavily to the conclusion that he was inducted as a partner into the firm. The several applications made under section 26A for the assessment years under consideration were signed by Kishorilal Khemka as a partner of the firm and disclosed his share as partner. No explanation has been attempted to indicate why he signed those applications as a partner of the firm. That act on his part supports the statement in the returns filed by the firm that he was one of the partners. In our opinion, the second question must be answered in the affirmative. Accordingly, the two questions are answered as follows : Question No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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