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TMI Blog1974 (9) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... f the four partners of the firm, retired from the partnership and the remaining three partners under a mutual agreement continued the partnership business and a fresh partnership deed of the remaining three partners effective from the 1st June, 1961, was executed on the 24th August, 1961, a copy of which has been filed as annexure " 1 " to the first writ application. (Reference to the annexures hereafter will be to the annexures to Civil Writ Jurisdiction Case No. 615 of 1971). It is common ground that under both the partnership deeds the " financial year " had been and has been the "accounting year". After the Income-tax Act, 1961 (hereinafter referred to as " the New Act "), came into force with effect from the 1st April, 1962, the petitioner, on the 30th June, 1962, filed an application for registration of the firm as a partnership firm under the new Act in Form No. 11 as prescribed under the Income-tax Rules, 1962 (hereinafter referred to as " the 1962 Rules "), along with a copy of the deed of partnership dated the 24th August, 1961, before the Income-tax Officer, Ward " B ", Patna. The Income-tax Officer rejected the application on the 17th February, 1964, as it was filed aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l appearing on behalf of the petitioner, has submitted that in view of the order of the Tribunal, it was not open to the Income-tax Officer to go into the question that the application should have been in Form No. 11A, the matter having proceeded in the first instance, on the footing that the application for registration filed in Form No. 11 was on proper form, which in his submission also was the proper form. In the alternative, learned counsel also submitted that under section 185(2) of the new Act, the income-tax authorities were bound to afford an opportunity to the petitioner to rectify the defects, if any, in the application for registration and their failure to do so vitiates the impugned orders. Mr. Shambhu Sharan, learned standing counsel appearing on behalf of the department, on the other hand, urged that the proper form for filing the application for registration was Form No. 11A and not Form No. 11, and the defect being not of a formal character, could not be permitted to be remedied. According to the submission of the learned counsel, provisions of section 185(2) of the new Act were only meant for removing formal defects and the defect as to form was not a formal de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a firm " evidenced " by an instrument of partnership specifying individual shares of the partners, signed by its partners or even their agent in certain specified cases can be filed before the Income-tax Officer having jurisdiction to assess the firm, as provided under sub-sections (1), (2) and (3) of section 184 of the new Act. The time, mode and manner of filing such an application and the renewal of registration have been mentioned in sub-sections (4), (5), (6), (7) and (8), which may usefully be quoted : " (4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought : Provided that the Income-tax Officer may entertain an application made after the end of the previous year, if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year. (5) The application shall be accompanied by the original instrument evidencing the partnership, together with a copy thereof : Provided that if the Income-tax Officer is satisfied that for sufficient reason the original instrument cannot conveniently be produced, he may accept a copy of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication is made before the end of the relevant previous year-- (i) and where no change in the constitution of the firm or the shares of the partners has taken place during the previous year before the date of the application-- (a) the application shall be made in Form No. 11, and (b) it shall be accompanied by the original instrument evidencing the partnership at the date of the application together with a copy thereof. A certified copy of the instrument together with a duplicate copy thereof may be attached to the application if, for sufficient reason, the original instrument cannot be produced ; (ii) and where any change or changes in the constitution of the firm or the shares of the partners have taken place during the previous year before the date of the application-- (a) the application shall be made in Form No. 11A ; and (b) it shall be accompanied by the original instrument or instruments evidencing the partnership as in existence from time to time during the previous year up to the date of the application together with copies thereof. A certified copy of the instrument or instruments together with a duplicate copy thereof may be attached to the applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itution of the firm or the shares of the partners during the previous year up to the date of the application, the application shall be in accordance with the provisions of sub-clauses (a) and (b) of clause (i) of sub-rule (2), in Form No. 11, and, in case of change or changes, it will be according to the provisions contained in clause (ii) of sub-rule (4) made in Form No. 11A. The question for consideration is whether there has been any change in the constitution of the firm or the shares of the partners during the previous year, that is to say, between the 1st April, 1961, and the 31st March, 1962, in relation to the assessment year 1962-63. The Income-tax Officer in this regard has observed as follows : " At the beginning of the accounting year relevant to the assessment year 1962-63, that is, on and from 1st April, 1961, Sri Lagandeo Singh walked out of the partnership and.... So, on the facts as set forth, there was a change in the constitution of the firm as defined in section 187 of the Act and not the coming of an at once fresh partnership firm into existence. In the situation, the prescribed form in which the assessee should have applied for registration was Form No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer himself has condoned it, as there was a note in the body of the application that the original would be presented at the time of the hearing, but from the non-filing of the certified copy of the instrument along with the application for registration, he has doubted the very existence of the deed of partnership on the date on which the application was made, i.e., on the 30th June, 1962, the reason being that the deed of partnership was not registered under the Indian Registration Act, to which he has added the absence of the date below the signatures of the partners. He has attached no authenticity to the endorsement as to the date on the back of the stamp-paper on which the instrument of partnership was drawn up. The deed of partnership (annexure " 1 ") is dated the 24th August, 1961, and, above the signatures of the partners and witnesses, it is mentioned : " IN WITNESS WHEREOF THE PARTIES HERETO HAVE SIGNED THESE PRESENTS THE DAY MONTH AND YEAR, FIRST ABOVE WRITTEN." From the order of the Income-tax Officer it appears that the endorsement of the stamp-vendor on the back of the stamp-paper also bore the same date, if not earlier. The ordinary presumption is that a docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, it has been urged that the Income-tax Officer was bound to grant time in case the application for registration was defective in view of the mandatory provisions of section 185(2) of the Act, which reads as follows : (2) The Income-tax Officer shall not reject an application for registration merely on the ground that the application is not in order, but shall intimate the defect to the firm and give it an opportunity to rectify the defect in the application within a period of one month from the date of such intimation. " Section 184 of the Act itself provides for accepting a certified copy which is a copy of the original document certified in writing by all the partners to be a correct copy or certified copy of the instrument. It is contended on behalf of the petitioner that if the Income-tax Officer found that the copy was not certified, he could not have rejected the application and was bound to intimate this defect and give opportunity to the applicant to rectify the same by the partners certifying the copy of the document. If the defect was not removed within the period of one month, as provided in sub-section (2) of section 185, quoted above, sub-section (3) of that se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to produce the deed of partnership, but no document was produced. On the other hand, the interpretation put by us on sub-section (2) of section 185 of the Act gains some support from a later Bench decision of the Allahabad High Court in the case of Kanhaiya Lal Motilal v. Commissioner of Income-tax [1969] 72 ITR 507 (All) in which section 185(2) of the new Act has been noticed. The Income-tax Officer and the Additional Commissioner of Income-tax both were labouring under a misconception of the legal position that the registration of a firm under section 26A of the old Act for the assessment year 1961-62 or earlier might continue for the assessment year 1962-63 with which the new Act was concerned and a fresh registration for the first time under section 185 of the new Act was not necessary, in view of clauses (2) and (3) of the Income-tax (Removal of Difficulties) Order, 1962. This view is wholly wrong and clauses (2) and (3) of the said Order, read with sections 297 and 298 of the new Act does not admit of any such construction. The view we have taken gains support from a Bench decision of this court in the case of Amar Singh Gowamal and Sons v. Commissioner of Income-tax [197 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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