1956 (5) TMI 2 - SC - Income Tax

Whether the word 'personally' in the Income-tax Rules, as framed under section 59 of the Income-tax Act would exclude a duly authorised agent of a partner from signing an application on behalf of the partner under section 26A of the Income-tax Act ? Whether rules 2 and 6 are ultra vires the rule making authority ? Held that - The signature which is prescribed by the rules is that of the partner himself, and that they are not complied with by the agent signing on his behalf. Rules 2, and 6 are intra vires the powers of the rule-making authority, and dismiss the appeals.

Issues Involved:

1. Whether the word "personally" in the Income-tax Rules excludes a duly authorized agent of a partner from signing an application on behalf of the partner under section 26A of the Income-tax Act.
2. Whether rules 2 and 6 of the Income-tax Rules are ultra vires the rule-making authority.

Issue-wise Detailed Analysis:

1. Exclusion of Authorized Agent for Signing Applications:

The primary issue is whether the term "personally" in the Income-tax Rules excludes a duly authorized agent from signing an application on behalf of a partner under section 26A of the Income-tax Act. The Supreme Court referenced the Madras High Court's decision in Commissioner of Income-tax v. Subba Rao, which interpreted "personally" to mean that the partner must sign the application himself, excluding the principles of agency under general law. The appellant's counsel did not contest this interpretation, and the Supreme Court upheld the view that the signature required by the rules must be that of the partner himself, not by an agent. This interpretation aligns with the precedent set in Commissioner of Agricultural Income-tax v. Keshab Chandra Mandal, where it was held that statutory requirements for personal signatures exclude the rule of agency.

2. Ultra Vires Nature of Rules 2 and 6:

The second issue concerns whether rules 2 and 6 are ultra vires the rule-making authority. The appellant argued that under common law and section 2 of the Powers-of-Attorney Act, a person can act through an agent unless expressly prohibited by statute. Since section 26A does not explicitly require personal signatures, the appellant contended that the rules prohibiting agent signatures exceed the authority conferred by section 26A. The appellant also argued that such rules effectively repeal section 2 of the Powers-of-Attorney Act, which cannot be done by delegated legislation.

The Court examined the intention of the legislature, the scheme of the Act, and the nature of the right conferred by section 26A. It concluded that the Indian Income-tax Act is a self-contained code, exhaustive of the matters it deals with, and intended to exclude the common law rule of agency. The Court emphasized that section 26A confers a statutory right that must be exercised strictly according to the statute and rules. As such, the rules requiring personal signatures are within the mandate given to the rule-making authority by section 26A.

The Court further clarified that section 2 of the Powers-of-Attorney Act is procedural, protecting acts done by agents in their own names but does not confer the right to act through agents. Therefore, there is no conflict between section 26A and section 2 of the Powers-of-Attorney Act, and the rules are not ultra vires.

Conclusion:

The Supreme Court concluded that the rules requiring personal signatures are valid and intra vires the rule-making authority. The appeals were dismissed with costs, affirming that the Indian Income-tax Act intends for applications under section 26A to be signed by partners personally, excluding the use of agents.

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