TMI Blog1982 (6) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... same was constituted only of two partners S/Sh Kalu Ram and Sat Parkash. During assessment year under consideration, the third gentlemen Shri Ramesh Kumar was taken as a partner and a new partnership deed was executed on the strength of which the assessee put in claim of registration by filing Form No. 11. 2. In course of assessment proceedings, the ITO examined Shri Ramesh Kumar and for certain defects pointed out by the ITO in his assessment order cancelled the registration. The AAC came to confirm his action vide his order dt. 7th Dec., 1978. 3. When the assessee contested this finding of the AAC before the Tribunal, the Tribunal vide its order dt. 2nd April, 1980 dismissed the assessee's appeal for default of appearance exercising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that in case all the circumstances are taken into consideration the assessee's appeal deserves to be dismissed. 5. After taking into consideration the rival submissions and carefully going through the papers on record, we are unable to confirm the action of the AAC. First of all we would like to reproduce the statement of Shri Ramesh Kumar's verbatum recorded by the ITO in respect of which the assessee's allegation has been that it was recorded by Inspector. Its perusal shows that the same might have been written by the Inspector but the same is signed by the ITO and duly signed by assessee's counsel Shri S.P. Goel. The assessee cannot have the grouse now that it was recorded in English and by the Inspector because it is too lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership? A.I started my own business of Attachi making at Hissar and the investment was made by my parents. The name of firm is M/s Jain Bag Making Co., Hissar. Q. From the record I find that you drew some amount from the firm during the accounting period 1974-75. Can you tell me the amount you drew? A. No I cannot tell the amount as I never drew any money from firm. Q. Can you tell me the date or month in which the partnership deed was signed by you? A. No, I do not remember. Q. Can you tell me the names of witnesses in wholes presence you signed the partnership deed? A. There were only two names of the partnership deed and the third name was of mine. I cannot tell the name of any witness. Q. Can you tell m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by an employee it becomes an ingenue partnership and the said partner is nothing but an employee. This observation seems to be based on too farfetched an imagination and according to this, employees are not capable of doing any work which partner can do but as per our view cases are not unknown where they do better than the bosses. In case on the equation of employee's work and that of the partner's issue of registration is to be considered, it will be most unfortunate day for the taxpayers. The perusal of Ramesh Kumar's statement also shows that he used to give samples of cotton to the constituents besides looking after the guests of the firm. He clearly stated that the made no investment. He did unequivocally mention that he resided wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of profits itself could not constitute the partnership." 7. According to us, looking after the guests is not an unimportant work and even if it is an unimportant work so considered for sake of argument, it cannot be said that the partner is equal to an employee and that makes the firm ungenuine. From thoroughly going through the reasoning of the lower authorities and the statement, we find that even considering all the circumstances, the Punjab Haryana High Court's decision in the case of CIT vs. Kanhayalal Ram Chand 1973 CTR (P H) 103 : (1979) 119 ITR 377 (P H) instead of Revenue supports the contention of the assessee. In that case, their lordships held, "that in considering whether a firm is genuine the question is not whether each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res of the partners; (ii) an application on behalf of, and signed by all the partners and containing all the particulars as set out in the Rules must be made. (iii) the application should be made before the assessment of the firm under s. 23, for that particular year; (iv) the profits or losses, if any, of the business relating to the accounting year should have been divided or credited, as the case may be, in accordance with the terms of the instrument; and (v) the partnership must be genuine and must actually have existed in conformity with the terms conditions of the instrument of partnership, in the accounting year," 8. A perusal of facts shows that in the light of above stated conditions, the assessee does not fails anyw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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