1. These two appeals filed by the assessee against the orders of the AAC, Range I, Kanpur, relating to the assessment year 1977-78 for the sake of convenience are disposed of by a consolidated order.
2. Smt. Pushpa Rani Garg, Shri Ashok Kumar Garg and Hemant Brothers (P.) Ltd. executed a partnership deed with effect from 15-7-1975, whereby Smt. Pushpa Rani Garg and Shri Ashok Kumar Garg contributed plots of land of the value of Is. 20,000 and Rs. 55,000, respectively, while Hemant Brothers (P.) Ltd. promised to contribute Rs. 55, 000 in cash as and when required. The ITO, however, found that no business of any kind was done, there was no mutation of any plot of land in favour of the firm and there was also no contribution in cash by Hemant Brothers (P.) Ltd. It was further found by the ITO that the firm came to an end on 6-1-1976 and, therefore, did not exist during the previous year relevant to the assessment year 1977-78. The ITO was not convinced with the assessee's reply that since according to Clause (8) of the partnership deed dated 15-7-1975, the final accounts of the partnership were to be drawn on 30th June, the final accounts could not be drawn till 30-6-1976 and, therefore, the firm should be considered to have existed till 30-6-1976. The ITO, therefore, refused the assessee's claim of registration by order under section 3. When the matter went up in appeal, the AAC held that since no business was carried on by the assessee, one of the essential requisites to constitute a partnership was not in existence and, therefore, the claim of registration was rightly not allowed by the ITO. The assessee, however, moved an application under Section 154 pointing out that since all the legal formalities in connection with the claim of registration have been complied with, the conclusion of the AAC that the claim of registration was not in order was a mistake apparent from the record and, therefore, the order of the AAC should be rectified. The AAC, however, rejected the assessee's application under Section 154. The assessee has, therefore, come up in the present appeals before us.
4. The appeal were fixed for hearing a number of times and on the assessee's requests by telegram and application the date of hearing was adjourned from 28-10-1981 to 30-11-1981, from 30-11-1981 to 14-12-1981, from 14-12-1981 to 25-1-1982, from 25-1-1982 to 18-2-1982, and from 18-2-1982 to 2-3-1982. There was, however, again a telegram requesting for adjournment on the ground of managing partner being out of station.
In view of so many adjournments granted earlier, the request for adjournments did not appear to be reasonable and was rejected. However, no one turned up on behalf of the assessee when the appeals came up for hearing on 2-3-1982. The appeals are, therefore, decided on the basis of the material on the record and the submissions of the learned departmental representative, Shri Jauhari.
5. The record shows that the order of the AAC confirming the action of the ITO in refusing to register the assessee-firm is attached on the ground that there was a proper partnership deed in which there was mention of capital contribution of the partners, their profit-sharing ratios and the nature of the business and all the other legal requirements for registration had been complied with and, therefore, simply because on account of some unfortune circumstances, the assessee-firm could not commence business there was not sufficient ground to refuse the claim of registration. The order of the AAC under Section 154 is challenged on the sole ground that the order was passed without giving to the assessee a proper opportunity of being heard.
6. On the other hand, the learned departmental representative, Shri Jauhari, submitted to us that one of the essential requirements, as laid down by the Indian Partnership Act, 1932, for the existence of a firm was the carrying on of a business and if no business was carried on, one of the three necessary elements of a partnership was absent and there was no question of either the existence of a firm or registration being granted to a firm. Reliance was also placed by him on the order of the AAC.7. We have carefully considered the material on record and the submissions of the learned departmental representative, Shri Jauhari.
The Bombay High Court in the case of Ramniklal Sunderlal v. CIT  36 ITR 464 has laid down that one of the three necessary elements of a partnership is the existence of a business which must be carried on and if no business was actually carried on, the assessee is not entitled to the benefits of registration. The Mysore High Court in the case of Sudarshan & Co. v. CIT  89 ITR 85 further laid down that even if a business was contemplated by the partnership deed but no business actually commenced or was in existence during the relevant accounting period, there was no partnership in existence which could be registered under the Income-tax Act. It is true that in the case of Mandsaur Starch & Chemicals v. CIT  127 ITR 727 their Lordships of the Madhya Pradesh High Court have taken a contrary view that simply because no business was carried on during the relevant previous year, it cannot be said that a valid partnership was not in existence and registration could not be refused on this ground alone. However, with great respect to their Lordships of the Madhya Pradesh High Court, we are more inclined to follow the rulings of the Bombay High Court and the Mysore High Court. We, therefore, hold that since the partnership did not carry on any business whatsoever till it ceased to exist on 6-1-1976 when it was dissolved, it cannot be said that there was a firm as contemplated by the Indian Partnership Act, 1932, and, there-fore, the claim of registration was rightly refused by the revenue authorities. The appeal against the order under Section 154 passed by the AAC, therefore, becomes infructuous and no more survives for consideration.
8. Both the appeals filed by the assessee, therefore, fail and are hereby dismissed.