Regarding closure of firm
Ravitej
(Querist) 26 July 2014
This query is : Resolved
Sir,
I have a firm (proprietory concern)registered in my name, established by my father when i was 4 years old. My firm is also registered under Karnataka VAT. When i was 18, my father got docs signed from me, the power of attorney, from then has he has been managing the business as he was doing prior to that. My father is managing all the business affairs, including managing bank accounts, recruting, marketing etc. He has just created this firm to get TAX BENEFITS that's all. Bank accounts are in my name but for some accounts he is a joint holder.All passbooks & cheque books related to the firm is held by my father I neither receive nor pay a penny from/to this unit.
I am an employee outside in some distanct town and in reality i am nowhere related to the firm. Recently i felt that
it's better to close this firm because all transactions are carried out in my name but i am completely ignorant of it. Also, the relationship with my father in recent times has not been well, so i have lost the trust in him. He has kept me ignorant, by hiding the facts related to the business such as what's the profit? who are the debtors & creditors? what's the total sales? etc. Even the employees have been instructed by my father not to provide me any details regarding the business unit. All i know is it's a trading firm? Please guide me in this regard.
malipeddi jaggarao
(Expert) 27 July 2014
First of please understand the there is no registration provision for Proprietorship concern. Anybody can tag a name and start business as Proprietor. VAT Registrations, CST Registrations, Registrations under Shops & Establishment Act, Registration with Municipal Authorities (if applicable in the area) can be taken by the person who is the proprietor under the firm's rubber stamp.
How can you say it is registered in your name when your father is managing the business. There is no profit sharing as it is individual concern.
You say that when you were 18, your father got documents signed by you, power of attorney etc. What are those documents and for what purpose. A minor cannot be a proprietor. He can not be a partner in a partnership firm and if he is included, his liability is limited to his share and accured profits if any.
According to me you do not have knowledge in whose name the proprietorship is being conducted.
If it is partnership firm and you were admitted as partner when you are minor, and when you attained majority if your father obtained Power
of Attorney on your behalf and conducting the business, you are entitled to ask for the books of accounts and demand for your share of profit etc.
This can be easily known if you inquire with the Sales Tax People by referring the firm's name. The rubber stamp on the cheque books will indicate whether the authorised signatory signed in the capacity of partner or proprietor.
You can take pains to verify at least to this extent instead of entertaining unnecessary doubts.
P. Venu
(Expert) 27 July 2014
Generally, people trust their parents. Why not in your case?
ajay sethi
(Expert) 27 July 2014
proprietary concern does not require registration . if POA has been executed by you then you can revoke POA .
Ravitej
(Querist) 27 July 2014
Sir, I am the Proprietor and i got it verified by the balance sheet provided to me by my IT auditor.
malipeddi jaggarao
(Expert) 27 July 2014
Revoke POA granted earlier.Take possession of the business in your hands. If your father does not give the assessibility, send a lawyer notice that you are the proprietor, you have cancelled the POA given to your father and he is legally required to handover the business to you.
The above is legal procedure. What made you to develop this much serious differences with your father?
T. Kalaiselvan, Advocate 
(Expert) 29 July 2014
The experts have properly addressed your query, you may follow their advise or consult a local consultant.
Anirudh
(Expert) 29 July 2014
Please do not do anything in a fit of anger or dejection.
You say that the trading business was started when you were 4 years old. NATURALLY YOU CANNOT BE THE OWNER OF THE SAME AT 4 YEARS.
The business may be in your name, that does not necessarily mean that you are the proprietor.
You say that when you were 18 years of age your father got some papers (POA etc.,) signed from you. What for? When earlier when you were minor he could do it, what was the need for him to get any papers signed from you.
In any case, you say that you are an employee outside in some distanct town and in reality you are nowhere related to the firm.
If that be so, why are you now trying to do something which will be harmful. What will you gain.
Further more, it appears that you have not put any money of your own. Therefore, it appears that all that has angered you is that your father has not revealed anything about the business to you.
Please also indicate whether you are the only son to your father or are there any other brother(s) and sister(s).
Are you a married man or a bachelor.
Ravitej
(Querist) 29 July 2014
Sir Anirudh, I am the only son to my father & I am still bachelor. I have 2 younger sisters.My father wanted to me to be in the business all these days, I did it. But, I was taken advantage of (for 7 years 2007 till now, neither salary nor profits only blames and bullying using his friends), that's what i feel. Now i don't want to be in business and i don't want any transactions to be carried out in my name. All transactions in books of a/c's are carried out in my name but i am not made aware of it.
Anirudh
(Expert) 29 July 2014
Yes, I could sense it.
Ravitej
(Querist) 29 July 2014
Sir Mallipeddi Jagaarao, the cause for the indifference with my father is his arrogance. When I went through my IT returns for 2013-14, 2012-13, 2011-12, I was astonished to find huge amount liable to be paid to many sundry debtors by me. When I asked this to my father, he said it's all adjustments made when there was negative cash.
But, sir please tell me why should i agree to be liable to parties for huge amount (by signing IT returns),where in reality I have not even know them. Just because, he is my father, should i go on signing documents whenever he asks for & land myself in trouble in future. Neither i get profits, nor salary but all liabilities are
in my name.
I am 26 years old right now, and as per law
I am wholly responsible for all my undertakings. The court does'nt agree that i have just signed because my father asked me to do so.
