Law:

Section:

Section 185 of the Income-tax Act, 1961 - Firm - Registration - Genuineness of - Assessment year 1976-77 - Assessee-firm filed along with its return an application in Form No. 11 for registration - ITO refused registration on ground that in absence of books of account which were not produced by assessee it could not be verified as to whether profits were actually divided in particular manner between partners - Whether refusing firm's registration was a necessary consequence of ITO's said finding - Held, yes Facts For the assessment year 1976-77, the assessee-flrm filed its return, showing certain loss. Along with the return, an application in Form No. 11 was also filed seeking registration of the firm. The ITO refused registration on the ground that since the assessee had failed to produce the books of account on the plea, that they were lost, there was no proof or material on record to know that profits were actually divided in the particular manner between the partners. On appeal, both the AAC and the Tribunal upheld the ITO's orders. On reference : Held The ITO, evidently with a view to verify the correctness of figures shown in the accounts filed along with the return, called upon the assessee to produce the account books. The assessee pleaded loss of books which was not accepted by the ITO as a fact, which meant that he was entitled to draw an adverse inference against the assessee. Refusing the registration of the firm was a necessary consequence of the said finding. It was not disputed that the registration could be refused if the firm failed to satisfy the ITO that the profits and losses of the firm were apportioned between the partners in the manner specified in the partnership deed. The Tribunal was, therefore, justified in refusing registration to the assessee. Y. Ratnakar for the Applicant. M.S.N. Murthy and Krishna Koundinya for the Respondent. JUDGMENT Reddy, J. - The Tribunal, Hyderabad has referred the following question under section 256(1) of the Income-tax Act, 1961 ('the Act'): "Whether, on the facts and in the circumstances of the case, the Tribunal is justified in upholding the refusal of registration of the firm by the lower authorities…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492