Law:

Section:

Section 184 of the Income-tax Act, 1961 (corresponding to section 26A of the Indian Income-tax Act, 1922 - Firm - Position prior to 1-4-1993 - Assessment years 1958-59 to 1960-61 - Assessee-firm was granted registration for assessment years 1952-53 to 1957-58 - However renewal was refused for relevant assessment years on ground that one of the partner was benamidar and firm was not genuine - Tribunal gave a clear finding that firm was genuine though one of partner might be a benamidar who had contributed capital to firm - Whether when finding of Tribunal that assessee-firm was a genuine firm had not been challenged, mere objection raised by revenue that one of partner of firm was benamidar, was not sufficient to deny renewal of registration to firm - Held, yes - Whether therefore, Tribunal was right in holding that renewal of registration was wrongly refused - Held, yes FACTS A partnership consisting of B.M. and K., niece-in-law of B.M. and K.A. was constituted. Each of the said three partners under the said deed had equal shares of the profit and loss of the firm. The firm was duly granted registration under section 26A of the 1922 Act, for the assessment years 1952-53 to 1957-58. For the assessment year 1958-59, the ITO refused renewal of registration to the firm on the ground that the partnership firm was not genuine and that K.A. was not a real partner. The AAC also came to the conclusion that K.A. was merely a name-lender and could not be a real partner and, as such, he confirmed the order of the ITO on the ground that the firm was not genuine. The Tribunal however, held that registration had been wrongly refused to the assessee-firm and on that ground allowed the appeal and directed the ITO to grant renewal of registration to the firm. On reference : HELD The Tribunal had come to a finding that the firm was a genuine firm under the Partnership Act and its validity had never been questioned in the long history of the assessment of this firm. The document had been duly executed. The shares of the partners had been specifically mentioned and the legal relationship between the partners inter se was established. There was no finding of fact that the deed of…

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