Seth, J. - (1.) THE Income-tax Appellate Tribunal, Delhi Bench 'D', has referred the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order of the Income-tax Officer assessing the firm as registered was prejudicial to the interest of the revenue merely because one of the partners signed on behalf of the other partners under specific authority and no opportunity having been given to remove the defects, if any, when admittedly the Income-tax Officer had knowledge of the fact prior to the assessment ?"
(2.) THE assessee-firm consisted of four partners, namely, Brij Rattan Lal, Bhoop Kishore, Ram Swamp and Jado Saran. THE firm was initially registered under Section 185(1) of the I.T. Act (hereinafter referred to as "the Act") for the assessment year 1964-65. THE constitution of the firm remained unchanged till the assessment year 1968-69 to which this reference relates. For the assessment year 1968-69, the relevant previous year ended on March 31, 1968, but the firm was dissolved on January 31, 1968, under a deed of dissolution duly executed by the four partners. THE firm filed its return of income for the assessment year 1968-69 along with Form No. 12 as required by Section 184(7) of the Act. THE assessment proceedings were completed by the ITO on March 29, 1969. Before the completion of the assessment the ITO was informed through a letter by Sri Jado Saran that he had not personally signed Form No. 12 for the assessment year 1968-69, but the letter was not put up before the ITO at the time of completing the assessment. Acting on the information contained in the letter the ITO issued summons to Sri Jado Saran to appear before him. Sri Jado Saran personally attended and filed written submissions to the effect that there had arisen some misunderstanding between him and the other partners of the firm which prompted him to send the aforesaid complaint. His statement on oath was also recorded, wherein he stated, that he had gone to Alwar and had asked his partner, Sri Bhoop Kishore, to sign the declaration under Section 184(7) on his behalf and that it was with a view to bring pressure on the other partners that he had sent the complaint. The Commissioner in exercise of powers under Section 263 of the Act, after notice to the assessee, cancelled the registration allowed by the ITO and directed that tax on the firm and the partners may be calculated afresh treating the firm as an unregistered firm. The assessee preferred an appeal against the order of the Commissioner. The Tribunal upheld the view taken by the Commissioner. There is no dispute about the facts of the case. The application for renewal of registration was not personally signed by Jado Saran. He had, however, authorised his partner, Bhoop Kishore, to sign on his behalf. The ITO obviously felt satisfied about the genuineness of the firm and its constitution as specified in the instrument of partnership and, consequently, allowed renewal of registration.
(3.) RULE 24 of the I.T. RULEs prescribes that the declaration to be furnished under Sub-section (7) of Section 184 shall be in Form No. 12 and shall be verified in the maner concerned in accordance with Sub-rule (5) of RULE 22. Sub-rule (5) of RULE 22 prescribed that the application shall be signed personally by all the partners (not being minors) in the firm as constituted at the date of the application. On the admitted facts, the application was not signed by one of the partners personally which rendered the application defective. Sub-section (3) of Section 185 provides that where the ITO considers that the declaration furnished by a firm in pursuance of Sub-section (7) of Section 184 is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the declaration within a period of one month from the date of such intimation ; and if the defect is not rectified within that period, the ITO shall, by order in writing, declare that the registration granted to the firm shall not have effect for the relevant assessment year. In the present case, when the defect in the application was brought to the notice of the ITO, he summoned Jado Saran and examined him on oath and felt satisfied with the explanation furnished. He, however, did not call upon the firm to rectify the defect since he did not entertain any doubt about the genuineness of the firm and its constitution. Section 26A of the 1922 Act did not contain any provision similar to the provisions contained in Sub-sections (2) and (3) of Section 185 of the present Act. The intention of the Legislature appears to be that registration to a firm should not be refused on account of defects which may be cured and the law now enjoins that an opportunity should be afforded to the assessee-firm to remove the defect, if any, and not to reject the application for registration without affording an opportunity to the assessee.;