2004 (11) TMI 42 - HC - Income Tax

Registration of the firm - forged signatures - petitioner is challenging revisional order of the CIT, issued under section 264 confirming the cancellation of registration of the firm by the AO u/s 186(1) - the Commissioner of Income-tax rightly pointed out that the partnership deed should be the result of consensus among the partners and unless it is signed by all the partners, it is no partnership at all. Therefore, the defect of the original document, i.e., partnership deed, containing forged signatures of all the partners except one, is not a defect that could be cured. - I do not think a firm whose main partner forged the signatures of all, other partners, though such partners are his sons, is entitled to any relief from this court. Therefore, the firm as constituted vide partnership deed dated December 3, 1993, is not entitled for registration for the assessment year 1972-73 and renewal for later years.

Summary

Issues:
Challenge to revisional order confirming cancellation of firm's registration under section 186(1) of the Income-tax Act, 1961.

Analysis:
The petitioner challenged the cancellation of the firm's registration, granted based on a partnership deed with forged signatures. The Assessing Officer found the original deed invalid due to one partner being a minor and the other partner forging signatures. The Tribunal and subsequent appeals upheld the cancellation. The High Court previously remanded the case for the petitioner to rectify the defects in the application for registration. The petitioner submitted a new partnership deed in compliance with the court's directions, but registration was again declined for the year 1971-72 and subsequent years. The Commissioner of Income-tax rejected the revision petitions against the declined registration, leading to the current writ petition challenging the revisional order.

The petitioner argued that the new partnership deed and forms were free from defects, as per the court's previous judgment. However, the Department contended that the opportunity to cure defects did not permit substituting all documents. The court analyzed the original deed's defects, including a minor partner and forged signatures, rendering the firm ineligible for registration. The court emphasized that a partnership deed must reflect consensus among all partners and cannot be based on forged signatures. The petitioner's claim of disability to rectify the deed due to the original flawed registration was dismissed, as a firm with forged signatures is not entitled to relief. Consequently, the court found the firm ineligible for registration for the assessment year 1972-73 and subsequent years, leading to the dismissal of the petition for lacking merit.

In conclusion, the court upheld the cancellation of the firm's registration due to significant defects in the original partnership deed, including a minor partner and forged signatures, rendering the firm ineligible for registration. The petitioner's attempt to rectify the defects with a new deed was rejected, as consensus among partners and authenticity of signatures are essential for a valid partnership deed. The court dismissed the petition, affirming the Commissioner's decision to reject the revision petitions against the declined registration for the firm.