High Court Of Rajasthan : Jaipur Bench
Bheruram Ratanlal vs. CIT
Section 184(7)
Y.R. Meena & Shashi Kant Sharma, JJ.
IT Ref. Appln. No. 60 of 1987
5th July, 2002
Counsel Appeared
A. Kasliwal, for the Appellant : R.B. Mathur, for the Respondent
JUDGMENT
BY THE COURT :
On an application filed under s. 256(1) of the IT Act, 1961, the Tribunal has referred the following question for the opinion of this Court : “Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that on filing of the revised return distribution of enhanced profits is required for continuance of partnership firms as registered under s. 184(7) of the IT Act, 1961 ?”
The assessee has claimed the status of a registered firm for which a declaration under s. 184(7) was filed along with the original return of income. In the original return, income declared was Rs. 21,060. Subsequently, the assessee has filed the revised return on 28th Nov., 1979, and in the revised return, he has declared the income of Rs. 40,625. The admitted fact is that no books of accounts are maintained by the assessee. The AO has refused to grant the registration to the firm of the assessee on the ground that there being no books of accounts and there being no evidence as to whether the enhanced profits were distributed amongst the partners in accordance with the declaration filed under s. 184(7) of the Act. Assessee is not entitled to continue the registration of the firm.
In appeal, the AAC has allowed the appeal holding that once the partners have certified for distribution of the profits amongst them, the registration should be granted.
In appeal before the Tribunal, the Tribunal came to the conclusion, that there is no distribution of enhanced profits in accordance with the declaration under s. 184(7) of the Act and, therefore, restored the view taken by the AO. Heard learned counsel for the parties. Mr. Kasliwal, learned counsel for the assessee, submits that assessee was a registered firm in the preceding year and this year only continuation of the registration is required for the firm. As per sub-s. (7) of s. 184, if assessee shows that there is no change in the constitution of the firm, the shares of the partners and assessee-firm furnishes the returns before the expiry of time allowed and also declaration in the prescribed form verified in the prescribed manner, the registration should be allowed to continue.
Mr. Kasliwal further submits that the registration once granted can be cancelled only under s. 186 (1) and 186(2).
6. Mr. Mathur, learned counsel for the Department, submits that when the original return has been filed, declaration under s. 184(7) has been furnished along with the original return. In the original return, the income shown was Rs. 21,060 and in the revised return, the income shown was Rs. 40,625. When the declaration of income shown was only Rs. 21,060, no further declaration was furnished though the income was shown as Rs. 40,625. Therefore, firm is not genuine and no case for continuation of the registration is made out.
7. The Tribunal is a fact-finding body. The finding of the Tribunal that along with original return, assessee has filed the declaration and in declaration, the income of the firm was shown as Rs. 21,060. Thereafter, revised return was filed. There in the revised return the income has been shown as Rs. 40,625 but no further declaration has been filed. The declaration has remained the same as was filed along with the original return. When in the original return the declaration was shown as Rs. 21,060 and in the revised return, the income was shown as Rs. 40,625, what is the correct state of affairs of firm not known and genuineness of firm is in doubt. Merely, if some member has certified that the income and the profits distributed as per partnership deed is not enough, once the finding is there that assessee has failed to prove that the partners have acted as per terms of the partnership deed, the firm is not genuine and when the firm is not genuine, there is no question of continuation of registration. It is also pertinent to note that in earlier years books of the firm were not rejected; this year assessee has not maintained the books of accounts. Therefore, we find no infirmity in the order of the Tribunal.
In the result, we answer the question in affirmative i.e., in favour of the Revenue and against the assessee. The reference so made stands disposed of accordingly.
[Citation : 257 ITR 795]
