9911796707
TMI Blog1998 (7) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... nine partners, one Shri Behari Lal had not personally signed, (1) the deed dated February 19, 1962, (2) the Form No. 11 application for the assessment year 1962-63, and (3) the Form No. 12 declarations for the assessment years 1963-64, 1964-65 and 1965-66. After issuing a show-cause notice and considering the objections and also on conducting an inquiry the registration for the assessment years 1964-65 and 1965-66 came to be cancelled under section 186(1) of the Income-tax Act, 1961. The registration pertaining to the earlier assessment years apparently could not be touched in view of the eight-year period of limitation provided in the proviso to the said provision in the Act. In coming to such a conclusion that there was no signature of one of the partners, Shri Behari Lal, on any one of those documents, the Income-tax Officer relied upon his own observation, the expert opinion of the Government examiner of questioned documents, the testimony of the manager of the State Bank of India, Mandi Branch, and consequently rejected the testimony of the witnesses suggesting a contrary version. The finding recorded by the Income-tax Officer in this regard was also affirmed on appeal at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the question referred, fall for our consideration. Learned standing counsel for the Income-tax Department while inviting our attention to section 184(7), as it stood prior to its amendment on April 1, 1993, rule 22 of the Income-tax Rules, 1962 and Forms No. 11 and 12, contended that the Tribunal committed a grave error, despite the fact that neither the finding relating to the genuineness of the signature of the partner, Behari Lal, arrived at by the Income-tax Officer and the first appellate authority was successfully challenged nor was it found to be also erroneous in proceeding to undertake a further exercise on the irregularity or otherwise of the manner of inquiry that has been conducted by the Income-tax Officer with reference to the genuineness of the firm and that such exercise at the instance of the Tribunal was uncalled for and wholly impermissible. Argued learned counsel further that unless the statutory requirement of section 184(1) has been shown to have been meticulously complied with not only the registration could be denied but by virtue of the provisions contained in section 186, there is every right in the Department to refuse to continue the benefit of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AIR 1967 SC 1326, in support of his above submissions. Learned counsel was fair enough not to place much reliance upon the decision in Jagan Nath Pyare Lal v. CIT [1973] 92 ITR 207 (P H) strongly relied upon by the Tribunal below, alive to the fact that the said decision, on appeal came to be reversed by the apex court in the decision in CIT v. Jagannath Pyare Lal [1985] 156 ITR 220. Before actually considering and expressing our view, it would be appropriate to refer to some of the decisions relied upon before us by the respective counsel on either side. In the decision in Steel Brothers and Co. Ltd. v. CIT [1958] 33 ITR 1 (SC) it was held while considering the effect of section 26A of the Indian Income-tax Act, 1922, and the rules made thereunder that in order that an application for registration could be entertained by the Income-tax Officer and the partnership registered for the purpose of section 26A read with relevant rules, it was necessary that the application should be signed by all the partners of the firm and it should specify the individual shares of the partners and unless that is done it would not be competent to the Income-tax Officer to entertain the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sted during the relevant year was not a genuine firm but that the word "genuineness" in their opinion appears to have been used in contradistinction to the words "sharm", "bogus or not real". With respect we cannot subscribe to the limitations read into the provisions by this Division Bench. In the decision in CIT v. Scientific Refractories [1996] 218 ITR 424, a Division Bench of the Madhya Pradesh High Court held that an application for registration cannot be rejected simply because it is not in order and that the Act enjoins that an assessee should be given an opportunity to rectify the defect in the application and if the application was not personally signed by some of the partners, the Income-tax Officer ought to have afforded an opportunity to the assessee-firm to rectify the defect. It was also held therein that the decision of the Tribunal in rejecting the application for reference under section 256(1) of the Act with reference to the defective nature of Form No. 12 and such defect being a curable one and was, in fact, found to have been cured also by furnishing fresh Form No. 12, signed by all the partners, there was no question of law to be really referred to the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion that requires to be considered by us is as to whether the Tribunal was right in law in coming to the conclusion that the assessee-firm was entitled to continuation of registration for the assessment year under question for the reason that the Department has not gone into the question whether Beharil Lal had or had not assented to the partnership in question, as noticed earlier, On the facts it has now become final, as a finding of fact that the deed of partnership as also the application in Form No. 11 or declarations in Form No. 12, did not contain the signature of Behari Lal, as such, or was actually signed by him. To an assessee seeking to have the right of registration as a firm, it is obligatory as also mandatory as per the law declared, to satisfy that the firm has been constituted under an instrument of partnership specifying the individual shares of the partners, that the application and declaration on behalf of and signed by all the partners and containing all the particulars as set out in the rules have been made, and that the application and declaration should be made before the assessment of the firm under section 23 of the Act for that particular year, besides s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case is no infirmity or reason at all in the eye of law and consequently could not have been the basis to record any finding in favour of the assessee or grant relief in their favour. Consequently, we cannot approve the conclusion arrived at by the Tribunal in favour of the assessee in this case. We are also unable to agree with the submissions of learned counsel for the assessee that the question of genuineness of a firm is a pure question of fact and no question of law being involved, the reference itself could not have been made out. Apart from the fact that the reference came to be made in this case on the directions of this court under section 256(2), when the Tribunal is found to have recorded a finding or assigned a reason to grant relief in favour of a party before it without sufficient basis on facts or on law and it proceeded merely on surmises and purports to adopt a perverse approach in utter disregard of the law declared by the apex court, there is no impediment for making such a dispute to be the subject-matter of a reference and such question, in our view, is a question of law too. For all the reasons said above, we overrule the objections of learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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