K.T. Thakore, Accountant Member -
(1.) THIS appeal, which relates to the assessment year 1977-78, is filed by the assessee. The assessee is a firm which has been treated as URF by the [TO. During the accounting year relevant to the year under appeal one of the partners of the firm, Shri Mafatlal, expired on 2-3-1977. The original deed of partnership, vide Clause (9) thereof, provided that the heir of the deceased was to become a partner in place of the deceased, if such heir was willing to join the partnership which came into existence by a partnership deed dated 19-7-1975. The partnership would not stand dissolved in the event of death of the partner. Now on death of the partner Mafatlal, his wife Babuben was taken as partner and for this purpose a new deed was executed on 19-5-1977 and the same was made effective from 3-3-1977. An application in form No. 11A was filed on 30-7-1977. As the application was not accompanied by the original deed of partnership or the copy thereof the ITO held that the requirements of Section 184(3), (4) and (5) of the Income-tax Act, 1961 ('the Act'), were not fulfilled. He, accordingly, refused to grant registration to the assessee-firm for the year under appeal.
(2.) Being aggrieved, the assessee carried the matter in appeal before the AAC and contended that Babuben, the wife of the deceased, was in mourning for a period of about three months and according to the custom she could not communicate with any outsider. It was for this reason that the deed of partnership could not be executed earlier. It was next pointed out that a copy of the partnership deed had been filed in the course of the assessment proceedings. The assessee had in substance complied with the requisite conditions for registration and as such registration ought not to have been refused. The AAC examined the above contention with reference to provisions of Section 184(3), (4) and observed that the requisite conditions for registration has not been fulfilled and, therefore, in the absence of any sufficient cause which could have prevented the assessee from complying with the requisite conditions, the ITO was justified in refusing registration.
Being aggrieved, the assessee has come up in appeal before us. Shri Patel on behalf of the assessee submitted at the outset that the deed of partnership which governs the relations between the partner Mafatlal and the others provided that the firm shall not stand dissolved on the death of a partner. It further provided that the legal heir had a right to become a partner in the event of the death of the partner. Now on the basis of the deed of partnership, as was drawn up after the death of Mafatlal, admitting his wife Babuben as a partner, was registered for the year 1978-79. There was thus no dispute about the genuineness of the firm. The only dispute centered around the question that the copy of the deed of partnership was not filed and that there was a delay in filing the application in Form Nos. 11 and 11 A. The copy of the deed of the partnership, however, was duly filed in the course of assessment proceedings. The main stay of Shri Patel's contention was that the delay in complying with the formalities was due to certain constraints placed on the widow of the deceased partner which prevented her from executing the deed earlier. It was true that compliance with the conditions for registration was not an ideal formality; at the same time the conditions could not be looked at in isolation ignoring the realities of the situation. He next pointed out that a reply was sent to the JTO on 7-3-1980 which was not considered by the ITO as the said reply was filed later. All the same in view of the reasonable cause which prevented the assessee from filing the applications in time the delay should be condoned and registration be granted. Shri Mittal, on the other hand, pointed out that according to the agreement between the partners, the firm was not to be dissolved. He next pointed out that there was no deed of partnership in existence which could be registered in the end of the assessment year as the deed itself was executed on 19-5-1977. Relying on the decisions reported at CIT v. Joseph & George  77 ITR 292 (Ker.), N.T. Paid & Co. v. CIT  42 ITR 224 (SC) and R.C. Milter & Sons v. CIT  36 ITR 184 (SC), the learned departmental representative submitted that the decisions of the authorities below did not call for any interference.
(3.) WE have carefully considered the rival submissions. There is no dispute about the genuineness of the firm, but the dispute centres around, as pointed out earlier, the question whether the delay in filing the applications in Form Nos. 11 and 11A could de condoned on the facts of the case. Thus the dispute centres round the fulfilment of the statutory requirements for grant of registration. In this connection the following provisions of Section 184(3), (4) and (5) of the Act are relevant :
(3) The application shall be made to the Income-tax Officer having jurisdiction to assess the firm, and shall be signed-
(a) by all the partners (not being minors) personally ; or
(b) in the case of a dissolved firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased.
Explanation : In the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf or, as the case may be, by a person entitled under law to represent him.
(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 certified in writing by all the partners (not being minors), or, where the application is made after the dissolution of the firm, by all the persons referred to in Clause (b) of Sub-section (3), to be a correct copy or a certified copy of the instrument ; and in such cases the application shall be accompanied by a duplicate copy of the original instrument." Other provisions are not necessary for our purpose. Section 184(3) provides the manner in which the application has to be made to the ITO and the requirements in regard to the signature on the application. Section 184(4) deals with the period during which an application for registration has to be made. It shall be made before the end of the previous year for the assessment year in respect of which the registration is sought. However, the proviso empowers the ITO to entertain an application 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. Sub-section (5) makes it obligatory that the application shall be accompanied by the original instrument evidencing the partnership together with a copy thereof. The proviso empowers the ITO, for good and sufficient reasons, to accept a copy of the instrument certified in writing by all partners, etc. Now the facts of the case clearly show that the application in Form No. 11A was filed on 30-6-1977 along with a new deed of partnership which was executed on 19-5-1977. Both, the dates of the application as also the date of the new deed are beyond the end of the previous year which had ended on 31-3-1977. Now in this connection the following observations in case of Ramamohan Motor Service v. CIT  120 ITR 434 (AP) are relevant:
. . . Section 184 provides for application for registration. Sub-section (1) says that an application for registration of a firm for the purposes of the Act may be made to the ITO on behalf of any firm if the partnership is evidenced by an instrument and the individual shares of the partners are specified in that instrument. Sub-section (4) requires that the application should be made before the end of the previous year for the assessment year in respect of which registration is sought. The proviso enables the ITO to entertain an application made after the end of the previous year if he is satisfied that there was sufficient cause for not making the application before the end of the previous year. Sub-section (5) is very material. It requires that the application shall be accompanied by the original instrument evidencing the partnership together with a copy thereof. The proviso to the subsection once again confers power on the ITO to accept a copy of the instrument if he is satisfied that for sufficient reason the original instrument cannot conveniently be produced. Then Section 185 lays down the procedure to be adopted by the officer on receipt of application. Sub-section (2) requires the ITO to intimate to the firm any defects in the application.
The year for which the business was done by the partnership and for which the assessment was made in the year 1962-63 expired with 31st of December, 1961. Therefore, according to Sub-section (4) of Section 184, the application should have been made on or before 31st of December, 1961, for the assessment year 1962-63. However, the firm applied for registration on 30th June, 1962. Apart from this delay, there is the fatal defect in the application for registration, viz., the absence of any other instrument of partnership, other than the invalid one of 1955, in existence, by that time. The new partnership deed came into existence on 28th of June, 1962. Therefore, there was no possibility of complying with the mandatory requirement of Sub-section (5) by the assessee, by filing the original valid instrument along with the application on or before 31st of December, 1961. What the ITO can do under Section 184(4) is only to entertain an application even at a late stage if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year. But he has no jurisdiction to grant registration on a partnership deed which was not in force during the relevant period, namely, the calendar year 1961. He has no power or jurisdiction to condone the delay in filing the partnership deed or its copy. In fact, as we pointed out, by 31st December, 1961, the new partnership deed curing the defects did not come into being and the old partnership deed was still in force. Therefore, the ITO was very much right in refusing to grant registration on the basis of the old partnership deed, without taking into account the partnership deed which came into existence after the expiry of the accounting year of 1961. The Tribunal is very much right in upholding this decision. . . .
[Exphasis supplied] (p. 438)
The above observation clearly explains the scope of the above cited provisions. According to the above decision the application for registration has to be filed on the last day of the previous year which in the instant case, as pointed out earlier, had ended on 31-3-1977. The ITO is empowered to accept a belated application on sufficient cause being shown. Now there is an in-built constraint in regard to the exercise of power for condonation of the delay. If a reasonable cause is shown, the ITO can accept the application along with the deed even beyond the end of the previous year. But the exercise of this power requires that the assessee could have filed an application for registration along with the deed on 31-3-1977 but could not do so due to a reasonable cause. It is, therefore, postulated that the application as also the deed must be in existence on the last day of the previous year. If the deed itself was not in existence on the last day of the previous year, but the same was drawn up on a later date, then the question of condoning the delay will not arise because the assessee could not have filed the application along with the deed on the last date. In other words, the delay could be condoned only if the deed was in existence on the last day of the previous year but could not be filed due to some reasons beyond the control of the assessee. But the power to condone the delay could not extend to a case in which the deed of partnership itself was drawn up beyond the last date of the previous year. In the above circumstances, therefore, the delay in drawing up the document of partnership could not be excused and the provisions of Section 184(4) do not contemplate such a contingency. This view was also taken by the Kerala High Court in Joseph & George (supra).;