B. VENKATASWAMI, J. -
(1.)THIS is a reference under s. 256(1) of the IT Act, 1961, to be hereinafter referred to as the "Act ". The question referred for our answer is :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in refusing to grant renewal of registration to the assessee-firm for the year 1963-64 ?"
(2.)THE assessee was a partnership firm consisting of 5 partners previous to the asst. yr. 1963-64. It had been registered as such under the relevant provisions of the Act. For the asst. yr. 1963- 64 a declaration in Form No. 12 in accordance with s. 184(7) of the Act had been filed for the purpose of continuation of registration as required by s. 184(7) and the relevant Rules. But, the declaration in question had been signed by only 4 of the 5 partners. According to the assessee, the partner, J. S. Venkatesh Rao, was absconding and, as such, his wife, Sharada Bai, had signed on his behalf.
The ITO refused to act on this declaration and extend the benefit of the continuation of registration to the assessee as envisaged in s. 184(7) of the Act. The assessment was accordingly made on the basis that the assessee was an unregistered firm. Before the ITO, the assessee, apart from contending that there was substantial compliance with the requirements of s. 184(7) of the Act r/w rr. 22(5) and 24 of the IT Rules, 1962, to be hereinafter referred to as the " Rules ", seems to have also claimed that the absconding partner had retired from the firm on September 30, 1962, and a new firm was formed with 4 partners. The question referred to us, however, is not concerned with this aspect of the assessee's case. The matter was taken up in appeal before the AAC in Appeal No. 1313/63-64. The AAC allowed the appeal of the assessee and directed the continuation of the registration of the firm in accordance with s. 184(7) of the Act. The AAC, after contrasting the provisions of s. 184(3) and s. 184(7) of the Act, came to the conclusion that a declaration by any person who is authorised to act on behalf of the firm would amount to sufficient compliance with the requirements of the second proviso to s. 184(7) of the Act. According to him, while s. 184(3) provided for signature by all the partners (not being minors) personally, while making an application for registration of a firm, the provisions of s. 184(7) merely provided for continuation of such registration for the subsequent year and had not provided for signature by all the partners. This differentiation made by the legislature was deliberate and requirement of signature by all the partners cannot be said to fall within the mandate of sub-s. (7) of s. 184. It was, therefore, concluded that any partner or person, who was authorised to act on behalf of the firm, could sign the declaration, and any such declaration would be sufficient compliance with the requirements of proviso (ii) to sub-s. (7) of s. 184. It would, therefore, follow that the provisions of r. 22(5), r/w r. 24 of the Rules, were also fulfilled. The Department went up in appeal to the Tribunal, Madras Bench " B ", in ITA No. 10481 of 1964-65. The Tribunal allowed the appeal of the Revenue and sustained the order of the ITO relating to the refusal of continuation of registration to the assessee's firm for the asst. yr. 1963-64. The Tribunal held that on a combined reading of s. 184(7) of the Act and the rr. 22(5) and 24 of the Rules, a declaration under s. 184(7) of the Act has to be made in Form No. 12 and has to be signed by all the partners of the firm excepting in cases referred to in sub-rule (5) of r. 22 of the Rules.
The contention urged by Sri S. P. Bhat, the learned counsel appearing on behalf of the assessee, is two-fold : (1) The clear language of s. 184(7) of the Act does not provide for the requirement of signature by the partners personally. This omission to provide for that requirement on the part of the legislature is not unintentional as can be gathered by contrasting this provision with the provisions of s. 184(3), which specifically provides for the requirement of signature of all the partners personally. This being the position, any provision made in this behalf in the Rules, namely, r. 22(5) r/w r. 24, cannot prevail. He submits that r. 24 also does not in clear terms enjoin that a declaration should be signed by all the partners personally. It is also argued that the words " persons concerned " occurring in r. 24 will have to be construed as referring to " persons who are authorised " to act on behalf of a firm, meaning that, in the absence of such authorisation, any partner could so act. Therefore, it is only such " persons concerned " who will have to comply with the requirements of r. 22(5) as enjoined by r. 24 of the Rules. (2) While sub-ss. (1) to (6) of s. 184 of the Act provide for the making of an application for registration of a firm for the purpose of the Act, sub-s. (7) of that section merely provides that where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year, provided the conditions specified therein are satisfied. It is, therefore, urged that the provisions of sub-s. (7) of s. 184 were intended to be less stringent than the provisions of s. 184(3), which enjoins that an application made for registration of a firm shall be signed by all the partners, excluding minors, personally. It is, therefore, submitted that even if the legislative intendment was that the partners should sign personally, for the purposes of continuation of registration under s. 184(7) of the Act, such a requirement will only be directory in character. It, therefore, follows that what is required is substantial compliance with the requirements of s. 184(7) of the Act r/w rr. 22(5) and 24 of the Rules.
(3.)WE are unable to agree with any of the above contentions of Sri Bhat. Sec. 184(7) of the Act provides for furnishing of a declaration in the prescribed form and verified in the prescribed manner. The declaration is to the effect that there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted earlier. The relevant form is prescribed by r. 24 of the Rules. A reference to Form No. 12 would indicate that it had to be signed by more than one person, as could be seen by the use of the word " we " therein. The relevant portion of Form No. 12 reads thus :
"To The Income-tax Officer, ...................................................................... WE, on behalf of.................declare that............... WE further declare that the information given above is correct and complete."
If the argument of Sri Bhat that any person who is authorised to act on behalf of the firm could sign the declaration is assumed to be right, such authorisation should necessarily be in favour of more than one person in order to satisfy the requirement of verification as enjoined in Form No. 12. Further, it follows that no single partner could act in order to make the declaration in accordance with Form No. 12. Therefore, any single person or partner authorised to act cannot satisfy the requirements of such verification. We cannot also accept the interpretation placed by Sri Bhat on the words " persons concerned " occurring in r. 24 of the Rules. Under r. 22(5) of the Rules, persons other than partners could also sign an application for registration of a firm for the purposes of the Act in certain circumstances specified therein. The words " persons concerned " occurring in r. 24, in our opinion, are referable to such persons as are specified in r. 22(5). It follows from this conclusion of ours that the rule enjoins that persons other than partners can sign only in exceptional circumstances specified in r. 22(5). It is also clear from r. 22(5) that the principal requirement is that all the partners should sign personally.