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Issues:
1. Registration of a business as a firm for income tax purposes under Section 26-A of the Income Tax Act. 2. Refusal of registration by the Income tax Officer and subsequent appeal process. 3. Allegations of gifts and bonus leading to the formation of a partnership. 4. Commissioner of Income tax's order based on surmise and speculation. 5. Validity of contributions to the capital of the alleged partnership. 6. Requirement of registration under the Registration Act for partnership deeds. 7. Effectiveness of the partnership deed in transferring capital to alleged partners. 8. Jurisdiction of the Income tax Officer to refuse registration under Section 26-A without a hearing. 9. Authority to require the Commissioner of Income tax to refer questions of law. Analysis: The case involved an application by Haji Abba Dada for the registration of his business as a firm for income tax assessment under Section 26-A of the Income Tax Act. Dada claimed to have formed a partnership with his sons and employees through gifts and bonuses, supported by a deed of partnership and book entries. However, the Income tax Officer, after an inquiry, refused registration, a decision upheld by the Assistant Commissioner of Income tax. Dada sought to have legal questions referred to the High Court, challenging the refusal based on alleged contributions to the partnership's capital. The Commissioner of Income tax's order was criticized for being speculative and making unfounded remarks. The court noted that the application for registration was in proper form and accompanied by necessary documents, including the unregistered partnership deed and registration certificate under the Partnership Act. However, the court found no evidence of valid contributions to the partnership's capital by Dada's sons and employees, as required by law. The court cited a previous ruling on gift requirements under the Transfer of Property Act, stating that no valid gifts were made, rendering the alleged partnership invalid. Additionally, the court highlighted the necessity of registration under the Registration Act for partnership deeds to be effective in transferring capital. The partnership deed, not being registered, was deemed ineffective in transferring capital to the alleged partners. The court emphasized the importance of specifying individual shares of partners in the partnership instrument for registration under Section 26-A. A key legal question arose regarding the Income tax Officer's jurisdiction to refuse partnership registration under Section 26-A without a hearing. The court acknowledged the lack of a precedent on this issue but noted the inability to require the Commissioner to refer the question due to existing authorities and the applicant's failure to raise the specific legal point earlier. Ultimately, the court dismissed the application, upholding the refusal of partnership registration and awarding costs to the respondent.
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