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TMI Blog1970 (2) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Andhra Pradesh High Court in Commissioner of Income-tax v. Chennabasappa. 2. Whether, on the facts and in the circumstances of the case, the applicant-firm was entitled to registration under section 26A of the Income-tax Act ? " The facts and circumstances in which these questions came to be referred may be briefly stated : The applicant-firm styled Variety Hall and Ramakrishna Textiles carrying on business in retail cloth constituted under an instrument of partnership dated December 27, 1958, applied for registration for the assessment year 1960-61 under section 26A of the Act. They also filed a return showing an income of Rs. 13,084. A sum of Rs. 1,600 was added as profits while making the said return with an explanati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue. In so far as the first question is concerned, Mr. Dasaratharama Reddy, learned counsel for the assessee-firm, sought to contend that when the Income-tax Officer and the Tribunal had held that the accounts were not properly maintained, then the very same accounts should not have been relied upon by him for the purpose of arriving at a figure of Rs. 15,000, as income from undisclosed sources. This point, however, was not raised before any of the income-tax authorities nor was it raised before the Tribunal. What all that was argued was that the Income-tax Officer ought to have taken Rs. 8,500 as the peak credits and not Rs. 15,000. It was never contended that the accounts discarded for one purpose could not be made the basis for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm was constituted under an instrument of partnership dated December 27, 1958. The orders of the various authorities disclose that this was a genuine firm. All that the Income-tax Officer and the Tribunal held was that a sum of Rs. 15,000, was not disclosed by the firm as its income and added the said sum as the assessee's concealed income from undisclosed sources. But on that basis the existence of the firm or its genuineness was not doubted. The mere fact that certain amount of income was concealed by a firm duly constituted under an instrument of partnership does not justify the rejection of its claim for registration under section 26A of the Act. Mr. Ananta Babu, learned counsel for the department, relied upon a decision of this court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect of section 26A and the rules made thereunder was that the Income-tax Officer could not reject an application made by a firm, if it gave the necessary particulars prescribed by the rules and if there was a firm in existence as shown in the instrument of partnership. We have taken a similar view in R. C. No. 30/66 dated 3-2-1970. In view of the facts found by all the authorities, including the Tribunal, the genuineness of the assessee-firm cannot be doubted. The mere fact that the firm did not disclose certain sum as the profits earned by it does not disentitle it to be registered under section 26A of the Act. We, therefore, answer the second question in favour of the assessee. In the result, the first question is answered in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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