M/S BALDEV SINGH & CO vs. COMMISSIONER OF INCOME TAX

ITA/202/2013HC Punjab & HaryanaPHHC01105057201330 January 2015Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ARUN MONGA15 pages
AI SummaryDismissed

What were the facts?

The appeals concern M/s Baldev Singh & Co. and the Commissioner of Income Tax for assessment years not explicitly stated but related to financial years 1984-85 and 1985-86. The core dispute revolves around whether Baldev Singh was a partner in the firm M/s Baldev Singh & Co., a liquor contractor. The Assessing Officer, CIT(A), and ITAT have all held Baldev Singh to be a partner, relying on documents signed by him in auction proceedings for liquor vends. The assessee contends Baldev Singh was merely an employee of Pritam Singh and his name was used. The procedural history involves an earlier ITAT order remanding the matter to the Assessing Officer, which the assessee accepted, and subsequent proceedings leading to the current appeals before the High Court.

What did the High Court hold?

The High Court held that the question of whether Baldev Singh was a partner is a pure question of fact, and the ITAT's findings were based on a considered appraisal of the evidence on record, particularly the documents signed by Baldev Singh before the excise authorities. The court found no perversity or arbitrariness in the ITAT's conclusion that Baldev Singh was a partner. The assessee's plea that he was merely an employee or lent his name was unsubstantiated by any relevant record. The onus to prove his status as an employee lay on Baldev Singh, which he failed to discharge. The absence of a partnership deed was considered irrelevant as the firm bore Baldev Singh's name and was based in his residential area. The court noted that Baldev Singh admitted his signatures on relevant documents pertaining to the allotment of vends and failed to adduce evidence to support his claim of being an employee. The court also found that the first five questions related to an earlier order which the assessee had accepted and participated in subsequent proceedings, thus he could not challenge it. The remaining questions were general and the ITAT was justified in holding Baldev Singh as a partner based on the requisitioned record from the Excise and Taxation Department. The finding of fact did not suffer from any legal flaw, and the questions of law were essentially questions of fact. Therefore, the appeals were dismissed.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was justified in reversing the CIT(A)'s order and holding Mr. Baldev Singh as a partner of the appellant firm without appreciating the modus operandi in the liquor trade and defying the judgment of the Hon'ble Supreme Court in M/s Berger Paints India Ltd. v. CIT (266 ITR 99)? (Question of law) 2. Whether, on the facts, the ITAT was justified in holding Mr. Baldev Singh as a partner by relying solely on the statement of Mr. Pritam Singh, the alleged actual beneficiary, without confronting material or documents, contrary to the principles laid down in CIT Patiala v. Radhey Sham Sita Ram (22 I.T Rep 667)? (Question of law) 3. Whether, on the facts, the ITAT was justified in reversing the CIT(A)'s order and holding Mr. Baldev Singh as a partner without appreciating the provisions of Section 184 and 185 of the Income Tax Act, 1961, and other evidence? (Question of law) 4. Whether, on the facts, the ITAT was justified in reversing the CIT(A)'s order and holding Mr. Baldev Singh as a partner without appreciating the provisions of the Partnership Act, as held in M.Rajgopal v. K.S.Imam Ali (AIR 1981 Ker 36) and M/s Mensa Ram & Saons v. M/s Janki Das Om Parkash (AIR 1984 All 267)? (Question of law) 5. Whether, on the facts, the ITAT was justified in holding Mr. Baldev Singh as a partner and confirming additions based on Mr. Pritam Singh's surrender, who was allegedly not a partner? (Question of law) 6. Whether the findings of the ITAT are perverse and against the evidence on record, thus unsustainable in law? (Question of law) 7. Whether the ITAT misdirected itself by being influenced by irrelevant factors and applying erroneous criteria? (Question of law) Assessee's Contentions: The revenue failed to prove the existence of a partnership firm or Baldev Singh's share. Baldev Singh was an employee of Pritam Singh and signed documents as such. The CIT(A)'s initial order was wrongly reversed. The ITAT erred in relying on Pritam Singh's statement without corroboration and in setting aside the CIT(A)'s order. Reliance was placed on S.R.Batliboi & Co. v. Department of Income Tax (Investigation), M.Rajgopal v. K.S.Imam Ali, and M/s Mensa Ram & Saons v. M/s Janki Das Om Parkash. Revenue's Contentions: The question of partnership is a question of fact. The ITAT's findings are based on a considered appraisal of documents signed by Baldev Singh. Baldev Singh has not denied his signatures. An adverse inference should be drawn for not producing the partnership deed. The findings do not give rise to substantial questions of law.

Which sections of the Income-tax Act were involved?

Section 184,Section 185

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH (1)

Date of Decision: 30th January, 2015 M/s Baldev Singh & Co. ...Appellant Versus Commissioner of Income Tax, Aayakar Bhawan, Rishi Nagar, Ludhiana, Punjab. ...Respondent (2) Income Tax Appeal No.203 of 2013 M/s Baldev Singh & Co. ...Appellant Versus Commissioner of Income Tax, Aayakar Bhawan, Rishi Nagar, Ludhiana, Punjab. ...Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE AMIT RAWAL Present:Mr. S.K.Mukhi, Advocate, for the appellant. Ms. Savita Saxena, Advocate, for the respondent. RAJIVE BHALLA, J. By way of this order, we shall decide Income Tax Appeal Nos.202 and 203 of 2013, as they pertain to the same assessee but to different assessment years. Counsel for the appellant submits that in the absence of any proof of the existence of a firm known as M/s Baldev Singh & Co. whether in the shape of a partnership deed or otherwise and any evidence about Baldev Singh's share in the firm, findings recorded on NARESH KUMAR 2015.02.16 12:06 I attest to the accuracy and authenticity of this document Chandigarh

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