NAVARATHINA MALIGAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Tribunal referred the following question for our opinion under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") :

(2.) THE partnership firm, Navarathina Maligai, was originally constituted under a partnership deed dated April 1, 1974, consisting of four partners. With effect from April 1, 1979, under a deed bearing the same date, they agreed to admit into the partnership two more partners. THE assessee-firm also filed an application in Form No. 11A on the basis of the deed dated April 1, 1979, together with a copy of the deed on March 27, 1980. Hence, the application for registration was filed four days before the close of the year. On April 30, 1980, a letter was filed by the assessee-firm before the Income-tax Officer, whereby the assessee claimed that since the excise authorities have objected to the admission of the two partners as prior intimation was not sent to them the deed dated April 1, 1979, and the application filed in Form No. 11A may be treated as cancelled and that they are closing the accounts of the relevant year in the same manner as in the earlier previous year.

(3.) IN the case of Ratanchand Darbarilal v. CIT [1985] 155 ITR 720, the Supreme Court, while considering section 26A of the INdian INcome-tax Act, laid down the conditions for considering a firm as genuine in the following manner (headnote) :