1978 (7) TMI 61 - HC - Income Tax

Summary

Issues:
- Refusal of registration to the firm for the assessment year 1961-62
- Delay in filing the application for registration
- Compliance with the provisions of s. 26A of the Indian I.T. Act, 1922 and Rule 2 of the Indian I.T. Rules, 1922
- Consideration of sufficient cause for condonation of delay

Analysis:
The judgment by the High Court of BOMBAY pertains to a reference made by the assessee against the refusal of registration to the firm for the assessment year 1961-62. The firm, reconstituted in 1959, had initially filed an application for registration in 1960, which was found deficient as it was not signed by all partners personally. Subsequently, a corrected application was submitted in 1965, signed by all partners, including the absent partner. The Income Tax Officer (ITO) refused registration citing non-compliance with the rules and failure to show sufficient cause for the delay. This decision was upheld by the Appellate Authority and the Tribunal.

The Court highlighted the strict compliance required for registration of a partnership firm under s. 26A of the Indian I.T. Act, 1922 and Rule 2 of the Indian I.T. Rules, 1922. It was emphasized that the application must be signed by all partners personally, and filed before the end of the previous year. The Court noted that the delayed application in this case was not presented within the stipulated time, and no sufficient cause for the delay was demonstrated. The Court reiterated that the provisions for registration must be strictly adhered to, and any deviation could lead to refusal of registration.

The assessee's reliance on a circular issued by the Board was dismissed by the Court, as it pertained to the I.T. Act, 1961, and not the relevant legislation. The Court concluded that the application for registration was rightly refused, given the non-compliance with the statutory requirements and the absence of a valid reason for the delay. Therefore, the Court ruled in favor of the revenue, holding the assessee liable for the costs of the reference.

In essence, the judgment underscores the importance of strict adherence to statutory provisions governing the registration of partnership firms, emphasizing the need for timely and compliant submission of applications to avoid refusal of registration.