TMI Blog1978 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed that the share of Hari Ram was six annas and those of his two sons five annas each. The claim of partial partition was accepted by the ITO by an order dated August 18, 1966. For the assessment year 1962-63, the assessee-firm was granted registration, Subsequently, the CIT passed an order under s. 263 setting aside the assessment of the firm in the status of a partnership firm and directed the ITO to make the assessment afresh. The Commissioner found that though the application for registration was made in the proper form and within time, yet actually the division of share of the profits was not made in accordance with the division of profit indicated in the partnership deed. The deviation was that Hari Ram Khanna instead of gettin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ountant inadvertently because the partners were the father and his two sons and ordinarily one can think that they would have equal shares." It emphasizes that this deviation occurred subsequent to the making of the application. It expressed the opinion that even this minor irregularity could have been covered by imposition of penalty under s. 271(4) of the Act and, therefore, it was not a case where registration could validly be refused on the finding that the firm is not genuine. The appeals were allowed. At the instance of the Commissioner, the Tribunal has referred the following question of law for our opinion : "Whether, on the facts and in the circumstances of the case, registration under s. 185 of the I.T. Act, 1961, for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shable. In that case, a portion of the profits were not divided amongst the partners at all. The division of shares took place before the application for registration was made and the declaration given that the shares had been divided in accordance with the partnership deed was found to be false. In this view, it was held that para. 3 of r. 6 was clearly violated and hence the ITO was justified in refusing registration. The distinguishing features are that in the present case the distribution of profits had not taken place at all when the application for registration was made and the explanation for the irregularity, if any, was, on facts, found believable by the Tribunal. On the facts and in the circumstances of the case, we are satisfie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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