H.N. Seth, J. - (1.) AT the instance of the applicant-firm, P.C. Kapoor and Brothers, the Appellate Tribunal, Allahabad, has referred the following question arising in respect of assessment years 1962-63 and 1963-64 for the opinion of this court: " Whether, on the facts and in the circumstances of the case, the refusal of registration or the continuance thereof was legally valid in terms of Section 184/185 of the Income-tax Act, 1961 ? "
(2.) THERE was a partnership-firm carrying on business in the name and style, P. C. Kapoor and Bros. This firm consisted of five partners, viz., (1) Shyam Kishore Kapoor, (2) Nawal Kishore Kapoor, (3) Prem Chand Kapoor, (4) Om Prakash Kapoor, and (5) Ragho Kapoor. It was registered under the provisions of the Income-tax Act for the assessment year 1961-62. On 9th April, 1961, the aforementioned persons and Sarvashri Debi Prasad and Badri Prasad entered into a partnership agreement and stipulated that the assets and liabilities of P.C. Kapoor and Bros, were to be taken over by the new partnership-firm, hereinafter referred to as the firm, which was to continue the business in the same firm-name. The agreement further provided that the new partnership-firm will be deemed to have come into existence with effect from 1st of April, 1961, and that it was to do business of excise contract which may be taken in the name of any partner or partners. So long as the firm continued, any contract taken in the name of an individual partner or in the names of more than one partner will be deemed to be the business of the firm. Badri Prasad obtained an excise licence, in Form CL 5-A, dated March 24, 1961, for the retail sale, for consumption "on and off" the premises of country liquor under auction system. This licence was issued in the names of Badri Prasad Debi Prasad. Names of Shyam Kishore, Nawal Kishore, Prem Chand and Om Prakash, aforesaid partners, along with Bedesi Prasad and Lakshman Prasad were entered in the licence as salesmen. This licence was valid for the period April 1, 1961, to March 31, 1962. Similarly, for running the same country liquor business during the period April 1, 1962, to March 31, 1963, a licence was obtained in the names of Sarvshri Shyam Kishore Kapoor and Prem Chand Kapoor. In this licence names of Shyam Kishore Kapoor, Nawal Kishore Kapoor, Bedesi Prasad, Om Prakasb, Badri Prasad and Prem Chand Kapoor were shown as salesmen.
(3.) THIS firm applied for its registration under the provisions of the Income-tax Act, 1961, for the assessment year 1962-63. It further filed a declaration under Section 184(7) of the Income-tax Act, 1961, and claimed continuance of its registration for the assessment year 1963-64. Both the applications, i.e., for registration of the firm and for its continuance, were disposed of by the Income-tax Officer on January 18, 1967, by two separate orders. Although the licence for the year 1961-62, relevant for the assessment year 1962-63, stood in the names of Sarvashri Debi Prasad Badri Prasad, the firm claimed that the licence had been obtained by these two persons as representing it and, therefore, it was entiled to claim registration. The Income-tax Officer did not accept this contention. After discussing various provisions of the Excise Act, he held that under the provisions of the Act only such person, in whose name the licence stands, can deal with the sale and purchase of country liquor. No other person can be associated with the licensee. Sarvashri Debi Prasad and Badri Prasad, therefore, could not enter into a partnership agreement with others. The partnership so constituted was illegal and as such it could not be registered under the provisions of the Income-tax Act. For the same reason it was not entitled to claim continuance of its registration for the subsequent assessment year 1963-64.;