Law:

Section:

Section 256 of the Income-tax Act, 1961, read with rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963 - Reference - Question of law - One L was a partner in a firm LC holding 33 per cent share in said firm - In respect of his aforesaid share, a sub-partnership deed was executed on 1-4-1972 amongst L, D and H to share profits of L in said firm LC - Said sub-partnership, the assessee, applied for registration under Act and to prove its genuineness it filed affidavits of D and H dated 27-8-1976 and 23-8-1976, respectively - ITO did not require presence of D but examined H and ultimately concluded that H was only a benamidar of L, and thus refused registration of assessee - AAC, however, accepted assessee's claim, inter alia , observing that H was not a benamidar of L - On further appeal before Tribunal, revenue filed a copy of statement dated 6-1-1977 of D recorded by ITO wherein D had stated that he was benamidar of L - A copy of guarantee bond executed by L on 23-12-1974, according to which he had agreed to pay whatever liability on account of income-tax would fall on D, was also filed by revenue - Tribunal, by making a reference to rule 29 admitted aforesaid documents and remitted matter back to ITO to pass a fresh order - Whether any question of law arose from Tribunal's order accepting aforesaid documents - Held, yes Facts One L was a partner in a firm LC holding 33 per cent share in the profits and losses of the said firm. In respect of his aforesaid share, a sub-partnership was allegedly executed on 1-4-1972 amongst L, D and H to share the profits of L from the said firm LC. The partners of the said sub-partnership, the assessee here, applied for registration under the Act and in order to prove the genuineness of the firm, it filed affidavits of D dated 27-8-1976 and H dated 23-8-1976. The ITO did not require the presence of D. He, however, examined H. He noticed that H had gifted a certain sum to the son of L and that though H had three children of his own he had not given any such gift to his children. From the statement of H, the ITO inferred that H was only a benamidar of L. He, therefore, held that the assessee was not a genuine firm and hence,…

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