COMMISSIONER OF INCOME TAX Vs. ARVIND JEWELLERS

JUDGEMENT

(1.) FOLLOWING two questions have been referred by the Tribunal, Ahmedabad Bench 'C', under Section 256(2) of the IT Act, 1961 (the Act), at the instance of CIT : Question No. 1

(2.) THE assessment year is 1981 -82 and the relevant accounting period is Samvat year 2036. The assessee, a partnership firm, sought registration in terms of provisions of Section 185 of the Act. The AO passed an order on 17th Nov., 1983 granting registration to the assessee -firm in the following words :

(3.) THE assessee carried the matter in appeal before the Tribunal. The Tribunal allowed the appeal vide its order dt. 19th Sept., 1986 holding that the order made by the CIT was bad in law. That CIT had referred to only certain questions out of the statement recorded of the partners to draw the inference that the firm may not be genuine. In other words, according to Tribunal, the CIT had doubted the genuineness of the firm by reading the statement of the partners in a truncated manner. The Tribunal has held that a document has to be read as a whole in order to decide its importance instead of picking up answers to one or two questions, which may favour one party or the other. The Tribunal has further found on reading the various statements of the partners that, when the said documents are read as a whole, it was difficult to concur with the view taken by the CIT while initiating proceedings under Section 263 of the Act.