M.C.DESAI, J. -
(1.)THE Income-tax Appellate Tribunal, Allahabad Bench, has submitted under section 66(2) of the Indian Income-tax Act, 1922, this statement of case inviting this court to answer the following questions :
1. Whether the instrument of partnership was executed within the accounting period relevant to the assessment year 1957-5 ?
2. Whether the application filed by the assessee for registration was made beyond limitatio ?
3. Whether there was material for the Tribunal to come to a finding that the firm was not genuine because the assessment was made on the assessee as an unregistered firm, which implies that there was a genuine firm in existenc ?
4. Whether, in the circumstances, the Tribunal was legally right in refusing registration to the assessee-firm under section 26 ?
(2.)THE facts, as we find from the statement, are as follows : THE business that the assessee is carrying on now was previously carried on by a registered firm known as Bela Singh Daulat Singh consisting of five partners. THE firm was dissolved on November 27, 1953, and the assessee-firm is said to have been constituted and to have continued the business. A deed of partnership, however, was said to have been executed on November 25, 1954, and come into effect on November 28, 1954. THE assessee-firm has not been registered under the Partnership Act and the deed of partnership also has not been registered under the Registration Act. THE assessee has selected the year commencing on November 28 and expiring on November 27 of the next year as its accounting year. THE first assessment year in which the assessee-firm became liable to be assessed to income-tax was 1955-56 and it was assessed on November 16, 1955, but not as a registered partnership. For that assessment year it could not and did not apply for registration at all. For the next assessment year 1956-57, it applied for registration on July 2, 1956, but the application was not accompanied by the deed of partnership, though said to be in existence, and a copy of it. THE application could not be disposed of before the end of the assessment year and the next assessment year 1957-58 commenced during its pendency. So the assessee applied on March 23, 1957, for registration and, in the alternative, for renewal of registration for 1957-58. Since the application for registration for 1956-57 was pending, it was in a quandary and did not know whether the application for the next assessment year was to be for registration or for renewal; it made applications for both. On February 20, 1957, it filed the deed of partnership in the proceeding for registration for 1956-57; by that date the relevant accounting year had already ended. Since the deed had not been filed before the end of the relevant accounting year, the Income-tax Officer held that there was no genuine firm in existence during the accounting year and rejected the application for registration on August 31, 1957. His order was maintained on appeal by the Appellate Assistant Commissioner on December 30, 1957. Subsequently, the applications for registration and renewal for the assessment year 1957-58 came up for orders before the Income-tax Officer. By that date the deed of partnership had already been before him. THE relevant accounting year had ended on November 27, 1956. Though the deed of partnership had been filed before the Income-tax Officer before the date on which the applications for registration and for renewal were made, it had been filed after the expiry of the relevant accounting year. THE Income-tax Officer rejected the applications on December 23, 1957, because the deed had not been filed before the close of the accounting year, the applications for registration had not been filed before the close of the accounting year and it could not be held that the assessee-firm existed during the accounting year. An appeal from the order was dismissed by the Appellate Assistant Commissioner for the reasons given by him in his order dated December 30, 1957, in the appeal against the rejection of the application for registration for the assessment year 1955-56. He confirmed the Income-tax Officers finding that the assessee-firm did not exist during the accounting year and that its application under section 26A for the assessment year 1957-58 was barred by time and there was no justification for treating it as within time under the proviso to rule 2 of the Income-tax Rules. THE Tribunal dismissed a second appeal. THE contentions advanced before it were that rule 2 applies to the first application under section 26A for any assessment year and not to any subsequent application even if for a subsequent assessment year, that no period of limitation is prescribed for a subsequent application for a subsequent assessment year, that there was sufficient cause within the meaning of the proviso to rule 2, because the application for the assessment year 1957-58 was made while the earlier application for the assessment year 1956-57 was still pending, that under a circular letter issued by the Central Board of Revenue, registration should have been ordered on the second application made during the pendency of the first application and that the assessee-firm really existed during the accounting year. All these contentions were rejected by the Tribunal. THE assessee applied under section 66(1) for referring the case to this court but the Tribunal rejected the application. THEn this court called for the reference.
Question No. 1 not only is a pure question of fact but also does not arise out of the Tribunals order. The Tribunal never held that the deed of partnership was, or was not, executed within the accounting year ending on November 27, 1956. Sri Gulati as well as Sri Das agree that the question be not answered and we, therefore, refrain from answering it.
The answer to question No. 2 depends upon rule 2 of the Income-tax Rules which reads as follows :
2. Any firm constituted under an Instrument of Partnership... may, under... section 26A... register with the Income-tax Officer...
Such application... shall, for any year of assessment up to and including the assessment for the year ending on the 31st day of March, 1953, be made before... and for any year of assessment subsequent thereto, be made -
(a) Where the firm is not registered under the Indian Partnership Act... and the application for registration is being made for the first time under the Act,
(i) within a period of six months of the constitution of the firm or before the end of the previous year of the firm, whichever is earlier, if the firm was constituted in that previous year,
(ii) before the end of the previous year in any other case;
(b) where the firm is registered under the Indian Partnership Act... before the end of the previous year of the firm, and
(c) where the application is for renewal of registration under rule 6 for any year, before the 30th day of June of that year :
(3.)PROVIDED that the Income-tax Officer may entertain an application made after the expiry of the time-limit specified in this rule, if he is satisfied that the firm was prevented by sufficient cause from making the application within the specified time.
Rule 3 requires that an application referred to in rule 2 must be made in the prescribed form and be accompanied by the original instrument of partnership together with a copy thereof. Rule 4 lays down that if the Income-tax Officer, on receiving an application under rule 3, is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership and that the application has been made properly, he should grant a certificate of registration or otherwise refuse to recognise the instrument of partnership. A certificate of registration granted under rule 4 has effect only for the assessment year mentioned in it. Rule 6 lays down that any firm to whom a certificate of registration has been granted under rule 4 may apply to the Income-tax Officer to have the certificate... renewed for a subsequent year and that the application must be made before the 30th day of June of the assessment year unless the Income-tax Officer extends the time on being satisfied that the firm was prevented by sufficient cause from making it before that date.