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Section 4 of the income-tax act, 1961 - Income-Chargeable as-Bangalore branch of Assessee-firm was closed and later converted into new firm in which sons of partners of assessee-firm were partners-Madras tribunal held that new firm was not genuine and hence not entitled to registration-Whether pursuant to this finding to which assessee-firm was not a party. Ahmedabad Tribunal was justified in confirming ITO's order of including income of new firm in total income of assessee, without any evidence independently established to show that new firm continued to be branch of assessee-firm-Held, on facts, no [case remanded for re-examination] Facts The assessee-firm, based at Surat, had a branch at Bangalore. This branch was wound up in October 1957, and a new firm was simultaneously formed at Bangalore, with the sons of the partners of the Surat firm as partners. Right from 1959-60 to 1965-66 the assessee-firm was assessed on the basis that the Bangalore firm was not its branch. The ITO refused registration to the Bangalore firm and the Madras Bench of the Tribunal upheld the ITO's order, holding that the erstwhile Bangalore branch of the assessee-firm continued to exist under the guise of an independent firm. The Karnataka High Court, however, held that this finding was without jurisdiction since the Tribunal should have limited itself only to the question whether the firm was genuine and had an independent existence, so as to be entitled for registration, and consequently, the Court remanded the case back to the Tribunal. The Madras Tribunal thereafter gave a finding that the Bangalore firm was not genuine, and was hence not entitled to registration. Meanwhile, based on the earlier order of the Madras Tribunal for the assessment years 1966-67 to 1969-70, the ITO, Surat, clubbed the income of the Bangalore firm with that of the assessee-firm and the Ahmedabad Bench of the Tribunal upheld the addition by relying upon the subsequent order of the Madras Tribunal holding that the Bangalore firm was not genuine. On reference: Held Neither the assessee-firm nor any of its partners was a party to the proceedings before the Madras Bench of the Tribunal. Therefore, the…

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