S.K. Mal Lodha, J. - (1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur ("the Tribunal" herein), has referred the following question for the opinion of this court: "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in holding that there was no contravention of the provisions of the Rajasthan Excise Act and that the assessee-firm was validly constituted and was entitled to registration ? "
(2.) THE assessment year involved is 1973-74. THE assessee is a partnership concern which during the relevant assessment year derived income from sale of country liquor. In the relevant previous year it had three partners, Svs. Rooplal Danchand, Ladharam Murandmal and Khemchand Tekchand. THE licences of the three main shops of the assessee-firm were in the names of all the three partners. Besides these three shops, there were, however, two other shops of which the licences were not in the names of all the three partners. THE Income-tax Officer held that the assessee-firm had contravened the provisions of the Rajasthan Excise Act, 1950 (No. XXIV of 1950) (which will for the sake of brevity hereinafter be referred to as " the Excise Act "), and also the licence issued thereunder to the assessee. He also found that the assessee had not filed the application for registration in Form No. 11A which was the proper form and instead, application for continuation has been filed in Form No. 12 on June 25, 1973. He, therefore, vide his order dated February 21, 1976, passed under Section 185 of the Income-tax Act, 1961 (Act No. XLIII of 1961) (" the Act " herein), made the assessment of the assessee-firm in the status of an unregistered firm. An appeal was filed before the Appellate Assistant Commissioner. THE Appellate Assistant Commissioner was of the view that the filing of the application for continuation of registration in Form No. 12 instead of Form No. 11A for registration constituted an irregularity which could be cured. By his order dated July 20, 1976, he directed the Income-tax Officer to give the assessee a month's time for filing the proper application for registration in Form No. 11 A. While disagreeing with the Income-tax Officer, the Appellate Assistant Commissioner held that there was no contravention of the provisions contained in the Excise Act and the Rajasthan Excise Rules, 1956 (" the Rules "), and the assessee-firm was valid in law and was entitled to registration. He also followed his earlier order which he passed in the assessee's case in respect of the assessment years 1971-72 and 1972-73. THE Revenue filed further appeal before the Tribunal. Before the Tribunal on behalf of the assessee as well as of the Revenue, it was submitted that the order passed by the Tribunal in respect of the assessment years 1971-72 and 1972-73 may be adopted. The Tribunal was of the opinion that as the order in respect of the assessment years 1971-72 and 1972-73 was passed in identical circumstances, the order of the Appellate Assistant Commissioner dated July 20, 1976, should be maintained. It may be stated here that the Tribunal, vide Income-tax Appeal No. 79/JP/1975-76 regarding the assessment year 1971-72 and Income-tax Appeal No. 1106/JP/1975-76 in respect of the assessment year 1972-73 in its order dated February 28, 1978, opined that the order of the Appellate Assistant Commissioner in directing the Income-tax Officer to grant registration to the firm for the assessment year 1972-73 was correct. It further held in that order that the Appellate Assistant Commissioner was justified in holding that the Income-tax Officer was not correct in not granting continuation of registration to M/s. Rooplal Danchand for the assessment year 1972-73. The Tribunal, in respect of the assessment year 1973-74, took the view that the assessee-firm was validly constituted and was entitled to registration. In these circumstances, the aforesaid question of law arising out of Income-tax Appeal No. 602/JP/1976-77 in respect of the assessment year 1973-74 has been referred. We had the advantage of hearing Mr. B. R. Arora, learned counsel for the Revenue only, as nobody has appeared on behalf of the assessee. The question of law referred to above will have to be determined on the basis of the following points which are not in dispute. Rooplal was granted a license for carrying on liquor business. A partnership firm, namely, M/s. Rooplal Danchand, was formed by him. In that firm, the partners were Rooplal, Khemchand and Ladharam. The aforesaid firm carried on the business for the assessment years 1971-72 and 1972-73 under the licence granted in the name of Rooplal. No permission in writing was obtained by Rooplal from the excise authorities for carrying on liquor business in partnership with others. Now, we may notice the relevant provisions contained in the Rules. Chapter VII-A of the Rules deals with licence under the guarantee system. According to rule 67A, licence for retail shop of country liquor under the guarantee system can be granted to persons guaranteeing to draw from a Government warehouse and sell in a financial year or part thereof country liquor of a specified value which is called the amount of guarantee. The licences under the guarantee system can be granted : 1. by inviting tenders, or 2. by auction, or 3. by negotiation.
(3.) WHEN the licence under the guarantee system is granted by inviting tenders, the amount of the tender accepted for the grant of license is payable by the licensee. The most important rule for our purpose is Rule 72B relating to transfer of a licence. It will be relevant to read Rule 72B, which is as under: " 72B. Transfer of licence.--(a) Every licence shall be deemed to have been granted or renewed personally to the licensee and no licence shall be sold or transferred without obtaining previous permission iu writing from the licensing authority. (b) if during the currency of a licence, the licensee desires to transfer his business to new premises, he shall intimate his intention to the licensing authority at least 15 days in advance, and get his licence suitably amended. The licence shall thereupon hold good in respect of the new premises." Section 62 of the Excise Act provides for penalty for offences not otherwise provided for. If any person is guilty of any act or intentional omission in contravention of any of the provisions of the Excise Act or any rule or order made under the Excise Act and not otherwise provided for therein he can be punished for each such act or omission with fine which may extend to two hundred rupees. It is clear from Section 62 of the Excise Act that, amongst others, contravention of any provision of the Act or any rule or order has been made punishable. Section 23 of the Contract Act makes mention of the consideration and objects that are unlawful arid what not. From the facts regarding which there is no dispute, it is clear that the licence was issued in the name of Rooplal alone. That licence was not transferred by him. What Rooplal did was that he entered into an agreement of partnership with other persons to carry on the business regarding which the licence was granted to him in his exclusive name. The Income-tax Officer passed an order under Section 185 of the Act, refusing to register the firm. The jurisdiction of the Income-tax Officer in dealing with an application for grant of registration is confined to the ascertainment of two facts: (1) whether the application for registration is in conformity with the Act and the rules made thereunder, and (2) whether the firm shown in the document presented for registration was a bogus one or has no real existence or has no existence in terms of the deed of partnership. In other words, he has to go into the question of the genuineness of the firm. Rooplal had formed the partnership with other persons. One of the questions which the Income-tax Officer was required to determine was whether the partnership formed by Rooplal was in accordance with law or not. It is well settled that the essentials for the formation of a partnership are : 1. that there should be an agreement between the persons forming the partnership, 2. that the agreement should be for carrying on business, 3. that the profits or losses of the business are to be divided, and 4. that all the partners should be equally engaged in the business or one of them should act on behalf of the others. ;