Mahavir Industrial Works vs Commissioner of Income Tax

Sohani, J.—The order in this case shall also govern the disposal of Misc. Civil Cases No. 104, 105 and 100 all of 1981 as these applications u/s 256(2) of the I.T. Act, 1961 (hereinafter referred to as " the Act"), arise out of a common order passed by the Tribunal. The assessment years in question are 1973-74, 1974-75, 1975-76 and 1976-77. The applicant-firm had submitted an application for registration, which was rejected by the ITO. On appeal, the order of the ITO was reversed by the AAC, who held that the applicant-firm was a genuine firm. Aggrieved by that order, the Department preferred an appeal before the Tribunal. The Tribunal came to the conclusion that no genuine firm came into existence in view of the fact that a general power-of-attorney con- taining sweeping powers was executed by the p ners of the firm in favour of one Kailashchandra and that conferring of such wide powers on an attorney was contrary to the provisions of Section 4 of the Indian Partnership Act, 1932. In this view of the matter, the Tribunal allowed the appeal filed by the Department and restored the order passed by the ITO. Aggrieved by that order, the applicant-firm sought a reference, but that application was rejected. Hence, the applicant has filed these applications.

Having heard learned counsel for the parties, we have come to the conclusion that the question as to whether, on the facts and in the circumstances of the case, there was any material before the Tribunal for holding that no genuine firm had come into existence, is a question of law. The applications are, therefore, allowed. The Tribunal is directed to state the case and refer the following question of law to this court for its opinion :

" Whether, on the facts and in the circumstances of the case, there was any material before the Tribunal for holding that no genuine firm had come into existence ? "

Parties shall bear their own costs of these applications.