Income-tax---

----Reference---Firm---Registration---Assessment---Two firms alleged to be controlled by same persons---Finding by High Court on application for directing reference by one of the firms that the firms were separate entities-- Identical questions cannot be raised by the other firm---Income Tax Act, 1961, Ss.185 & 256.

Held: that the Income-tax Officer had held that the applicant-firm and another firm were controlled by the same persons. However, the High Court had held on an application for reference by the other firm that the two firms were separate entities. It had rejected the application for directing reference. An identical question could not, therefore, be referred in the case of the applicant firm.

G.S. Bapna for the Commissioner.

P.K. Kasliwal for the Assessee.

JUDGMENT

We have heard learned counsel for the Department.

This application is in respect of assessment year 1975-76 and has arisen out of the Income-tax Appeals Nos. 526/JP of 1987 and 527/JP of 1987 dated January 13, 1988. The Tribunal rejected the petitioner's application under section 256(1.) of the Income Tax Act, 1961, vide its order dated August 26, 1988.

The department's case is that Messrs Jaipur Oil Company is a bogus firm though it was floated with the following partners, namely, Shri Chetandas Smt. Vani Bal, Shri Dilip Kumar, Sheri Miss Lajwanti De vi, vi, Miss Maya Devi and Kishan Kumar. The Income Tax Officer had come to the conclusion that there is no partner who could be said to be considered to exercise any control over the affairs of Messrs Jaipur Oil Company and such control was in fact exercised by Chula Ram who was the father of the four minor sons admitted to the benefits of partnership. He also came to the conclusion that Messrs Jaipur Oil Company existed only on paper and the real control vested with Messrs Daulatram Vasudev & Co. The appeal filed by the assessee was rejected by the Commissioner- However, the Tribunal came to the finding that on the evidence on record including the statements of the brokers and dealers taken by the Revenue authorities, it was improper to include the, income of Messrs Jaipur Oil Company in the hands of Messrs Daulatram Vasudev & Co. It may also be observed that subsequent to the assessment year, Jaipur Oil Company was allowed registration. The department moved an application for reference raising the following two questions of law:

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal. was right in holding that Messrs Jaipur Oil Company and Messrs Daulatram Vasudev & Co. are two independent firms and that the inclusion of income of Jaipur Oil Company in the hands of Messrs Daulatram Vasudev & Co. was not justified?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that Messrs Jaipur Oil Company was an independent and genuine firm entitled to registration under section 185 of the Income Tax Act, 1961?"

This application was refused. Thereafter, this application has been filed as mentioned above.

It may be observed here that an, application was also made by the Commissioner of Income-tax for making a reference on the following two questions in the matter of Messrs Daulatram Vasudev & Co.":

"(1) Whether, on the facts and in the- circumstances of the case, the Tribunal was right in holding that invoking of the provisions of section 147(x) of the Income Tax Act, 1961, was not proper?

(2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that Messrs Jaipur Oil Company was not a Benami of Messrs Daulatram Vasudev & Co. and the inclusion of income of Messrs Jaipur Oil Company in the hands of the assessee was not justified?"

The Division Bench of this Court consisting of the Chief Justice K.C. Agrawal and Mr. Justice I. S. Israni, on the second question, came to the conclusion that, from the statements of Chetan Dass and Dhula Ram, there is a clear indication of the existence of the firm, Messrs Jaipur Oil Company, and the theory of the Revenue is disproved that Messrs Jaipur Oil Company was a Benami firm. The assessment year being the same and also the subject-matter, in our opinion, it is a question of fact which stands decided in identical cases referred to above inasmuch as the Tribunal's finding is the same in both the matters and if the application is refused in the matter of CIT v. Daulat Ram Vasudeo & Co., necessarily the application in this case deserves to be dismissed as a corollary to the same.

The application is, therefore, dismissed.

M.B.A./194/T.F.Application dismissed.