M.C. Agarwal, J. - (1.) THESE are three applications by the assessee under Section 256(2) of the Income-tax Act, 1961, praying that the Income-tax Appellate Tribunal, Allahabad, be directed to state a case and to refer the following questions stated to be of law and to arise out of the Tribunal's common order dated October 30, 1995 passed in I. T. A. Nos. 1062, 1063 and 1064 (All) of 1999 for the assessment years 1981-82, 1984-85 and 1985-86 : "Assessment year 1981-82 : (i) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in confirming the order passed under Section 185(1)(b) of the Income-tax Act, 1961, refusing to grant regist- ration to the firm for the assessment year 1981-82, when there was a change in the constitution of firm ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order refusing to grant registration merely on technical grounds, which are procedural formalities ? (iii) Whether the Tribunal was justified in confirming the order of the assessing authority refusing to grant registration, without considering the provisions of Section 185(2) of the Income-tax Act, 1961, wherein opportunity to remove the defect in the application for registration is to be given ? (iv) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order refusing to grant registration on the ground that Forms Nos. 11 and 11A were filed at the close of accounting year on June 30, 1981, whereas the accounting year ended on June 30, 1981, and the filing of these forms is a procedural requirement ? (v) Whether the Tribunal was justified in confirming the order refusing to grant registration to the firm, whereas the partners have been assessed in their individual capacity on the determined share income from the firm ?" "Assessment years 1984-85 and 1985-86 : (i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in confirming the order refusing to grant renewal of registration on mere procedural discrepancy in Form No. 12 ? (ii) Whether, in the facts of the case, the Tribunal was justified in confirming the order of the assessing authority ignoring the provisions of Section 185(2) of the Income-tax Act, 1961 ? (iii) Whether the Tribunal was justified in confirming the order refusing the renewal of registration for the assessment years 1984-85 and 1985-86 without pointing out any legal discrepancy other than the procedural defect ?"
(2.) WE may mention that I. T. A. No. 142 of 1996 was a consolidated application for all the three years but by order dated October 27, 1997, a Bench of this court directed the petitioner to make separate applications for other assessment yearsr It was thereafter that I. T. A. Nos. 3 and 4 of 2000 were moved for the assessment years 1985-86 and 1984-85. We have heard Sri V. K. Rastogi, learned counsel for the petitioner and Sri Prakash Krishna, learned counsel for the respondent. The facts of the case are that there was a partnership firm which consisted of 13 persons. The partnership deed contained Clause 28 as under : "That on the death of a partner his share shall be dealt with and his heirs admitted to the partnership in accordance with his personal law."
(3.) THE accounting year of the firm ended on June 30 of every year. During the accounting period relevant to the assessment year 1981-82, i.e., on January 3, 1980, one of the partners, namely, Sri G. K. Singhania, died and in his place, his son, Sri Ramapati Singhania, joined the firm as a partner. A new partnership deed was drafted on or about May 19, 1980, but it remained unsigned. Another partnership deed was executed on August 2, 1980. For the assessment year 1981-82, Forms Nos. 11A and 12 were filed on June 30, 1981, i.e., after the close of the accounting period. THE Assessing Officer did not allow the registration to the firm for the reasons (a) that no partnership deed was executed during the accounting period ending on June 30, 1980 ; (b) Form No. 12 was not in a proper form ; (c) Form No. 12 was not signed by Sri R. P. Singhania as a legal representative of the deceased Sri G. K. Singhania for the period up to January 3, 1980 ; and (d) the information given in Form No. 12 was incorrect inasmuch as there was a change in the constitution of the firm with the introduction of a new partner Sri Ramapati Singhania. For the assessment year 1984-85, the Assessing Officer did not allow continuation of registration on the ground that registration had been refused for the assessment year 1981-82 and no fresh deed was filed although Form No. 12 was filed on June 30, 1984. For the assessment year 1985-86 also registration was refused. THE Assessing Officer observed that because of non-compliance of notices under sections 143(2) and 142(1), the assessment was made ex parte and, therefore, the genuineness of the partnership was in doubt. THE assessee appealed to the Appellate Assistant Commissioner who reversed the orders passed by the Assessing Officer holding that the firm was genuine and registration had already been granted to the firm for assessment year 1980-81 and there was no valid ground for declining the renewal of registration for the assessment year 1981-82, 1984-85 and 1985-86. THE Assessing Officer then appealed to the Tribunal and allowing the aforesaid appeals, the Tribunal restored the orders passed by the Assessing Officer and upholding the reasons given by the Assessing Officer for refusing to allow the registration to the firm for the assessment year 1981-82 and renewal of registration for the assessment years 1984-85 and 1985-86. Registration of firms is governed by sections 184 to 189 of the Income-tax Act. Section 184 as it stood at the relevant time was as under : "184. Application for registration.--(1) An application for registration of a firm for the purposes of this Act may be made to the Income-tax Officer on behalf of any firm, if- (i) the partnership is evidenced by an instrument ; and (ii) the individual shares of the partners are specified in that instrument. (2) Such application may, subject to the provisions of this section, be made either during the existence of the firm or after its dissolution. (3) The application shall be made to the Income-tax Officer having jurisdiction to assess the firm, and shall be signed- (a) by all 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. (6) The application shall be made in the prescribed form and shall contain the prescribed particulars. (7) Where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year : Provided that- (i) 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 ; and (ii) the firm furnishes, before the expiry of the time allowed under subsection (1) or Sub-section (2) of Section 139 (whether fixed originally or on extension) for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that where the Income-tax Officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made. (8) Where any such change has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section." ;