TMI Blog1980 (2) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... took with them the fifth and sixth partners as working partners. The newly constituted partnership was to commence the work from March 20, 1965. It was to execute the contract work of Khari Feeder Project. Clause VI of the partnership deed embodies that the capital of the firm was to be provided by the main firm. Clause VIII shows that the 5th and the 6th partners were introduced as working partners. Their share in profit and loss was at 30% each. The bills were to be prepared and payment was to be received by the first four partners and the expenses required to be incurred for the execution of the work were to be paid by the partners of the main firm to partners Nos. 5 and 6 of the assesseefirm. The assessee-firm applied for its registration in the prescribed form on March 30, 1965. The ITO doubted the genuineness of the firm. In that connection, he examined Minohmal and Chaturdas. Chaturdas admitted that he had been working as munim with M/s. Hemandass Dhanrajmal on a monthly salary of Rs. 35 for the last 8 or 10 years. Analysing the statements of Minohmal and Chaturdas and contradictions in their statements together with human probabilities, the ITO concluded that the newly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts, make payment of the amount received from partners Nos. 1, 2 or 3 to the labour. They were also not authorised to prepare the bills and receive the payments. The assessee-firm was registered with the Registrar of Firms, Rajasthan, Jaipur, as No. 904167 on June 26, 1967. The assessee-firm then applied for registration of the firm under s. 185 of the Income-tax Act, 1961. The ITO doubted the genuineness of the partnership firm. He recorded the statements of Lekhraj and Kalidass (two newly introduced partners) on July 26, 1971. Hemandass was also examined on the same date. The ITO came to the conclusion that neither Lekhraj nor Kalidass had any earlier experience of technical nature or of administrative nature in irrigation contract work. They were simply performing the functions of a mistry. No capital was invested by them. They could not even read the partnership deed. They did not know whether M/s. Hemandass Dhanrajmal maintained any accounts or not. They had no knowledge about the account books and from their statements it appears that no account books were maintained by them. He further held that no separate bank account for the concern, M/s. Hemandass Dhanrajmal (Jawahar Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine ? (b) Whether, on the facts and in the circumstances of the case, the Tribunal was right in refusing to grant the claim of registration ? " Learned counsel appearing for the assessee and the revenue agree that the questions raised in both the reference petitions are identical and, therefore, these reference petitions should be disposed of by a common order. Learned counsel for the assessee urged that the ITO as well as the Tribunal had based their findings on irrelevant considerations. The evidence produced in both the cases clearly proves: (i) the formation of a partnership; (ii) the execution of partnership deed ; (iii) the execution of the contract work by all the partners and particularly the newly added partners in both the firms; and (iv) the distribution of their respective share of profits to all the partners. The Tribunal ignored the convincing evidence, even though there was absence of positive material, proving that no genuine partnership was formed. According to the learned counsel, questions raised by the assessee are questions of law and that the Tribunal went wrong in not stating the case and referring the questions for the opinion of this court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the arguments advanced before us clearly reveal that in fact what the learned counsel for the assessee wants to urge is that the conclusions drawn by the Tribunal from the facts found by it were unsound and erroneous. Learned counsel has taken us through the statements of the partners and the other facts and taking them one by one has contended that the facts were susceptible of inferences other than those drawn by the Tribunal. He also offered explanation for each fact in order to make them consistent with the inferences which the learned counsel wanted to draw. Ultimately, the arguments boiled down to the position that the conclusions reached by the Tribunal were not justified. This clearly is an erroneous approach to the whole question. The Tribunal has dealt with seriatim the points so raised, the correctness of which has not been questioned by the learned counsel for the assessee. When a conclusion has been reached on an appreciation of a number of facts, established by evidence, whether that is sound or not, must be determined not by considering the weight to be attached to each single fact in isolation, but by assessing the cumulative effect of all the facts put together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has to be only inferred from the circumstances of particular case. The taxing authorities are often confronted with the tendency on the part of the assessee to create a new and different partnership by introducing servants and close relatives as partners. They might have been given the status of general partners, but their rights and powers are so restricted that it would be difficult to hold them as real partners. The tendency of the real partners will be to impose restrictions in the matter of drawing on bank accounts and entering into business contracts, control of establishment, etc. Such a position holds good in the case in hand. Now, the question remains whether the evidence on which the Tribunal relied is such as it cannot be termed to be admissible in support of its conclusion. Our answer to this is in the negative. The other circumstances, relied upon by the Tribunal, are also of the same pattern and none of them can be said to be irrelevant or inadmissible. In sum, we are unable to hold that there is no legal admissible evidence on record or circumstances to support the conclusion arrived at by the Tribunal. There are well accepted notions that questions of law an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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