COMMISSIONER OF INCOME TAX Vs. SHANTILAL KESHAVLAL

JUDGEMENT

(1.) THE assessee is an HUF ("assessee HUF" for short) and the assessment year under reference is 1972 73, the year of account being S. Y. 2027. The assessee HUF was carrying on the business of purchase and sale of gold and silver ornaments as well as bullion in the name of Shantilal Keshavlal. This business was taken over by a partnership firm consisting of

(2.) THE deed of partnership was executed on May 11, 1967. All the four partners are coparceners of the assessee HUF. Chokshi Vinodchandra Shantilal, Chokshi Rohitkumar Shantilal and Chokshi Krishnakant Shantilal are sons of Chokshi Shantilal Keshavlal, Karta of the assessee HUF. In other words, the assessee HUF consisted of the father and his three sons. The said partnership firm carried on business in the name and style of Chokshi Shantilal Keshavlal. Chokshi Shantilal Keshavlal, Karta of the assessee HUF, has a 40per cent share and his sons, Vinodchandra, Rohit Kumar and Krishnakant have a 20per cent share each in the profit and loss of the partnership firm. The partnership firm applied for registration under S. 185 of the IT Act, 1961 ("the Act" for short). The ITO assessing the partnership firm, however, held that the partnership firm was not genuine and that the business, which was alleged to be carried on by the partnership firm, belonged to the assessee HUF.

(3.) IT is not disputed that the decision of the Tribunal holding the partnership firm of Chokshi Shantilal Keshavlal to be genuine and directing the registration of the firm has become final. The Revenue did not seek reference challenging the view taken by the Tribunal. Once this decision has become final, it is not open to the Revenue to seek inclusion of the 60 per cent share in the income of the business of the partnership belonging to Vinodchandra, Rohitkumar and Krishnakant in the hands of the assessee HUF in the total income of the assessee HUF. It is clear from the orders of the ITO and the AAC that the only ground on which they included the entire income of the partnership business in the total income of the HUF was that the partnership firm was not genuine. It is not the case of the Revenue that even if the partnership firm is held to be genuine, shares which Vinodchandra, Rohitkumar and Krishnakant received from the business income of the partnership firm belonged to the assessee HUF. In other words, it is not the case of the Revenue that Vinodchandra, Rohitkumar and Krishnakant were mere benamidars and that their share in the partnership firm belonged to the assessee HUF.