The rejection of registration must be based on valid legal grounds as per the Act and Rules.

V.P. Gopalan Nambiyar, C. J.

1. These two references, by the Deputy Commissioner of Agricultural Income Tax and Sales Tax, North Zone, Kozhikode, are in respect of the same assessee for two different assessment years 1968-69 and 1969-70. The questions of law referred for our determination are:

(1) Whether, on the facts and in the circumstances of the case the Deputy Commissioner was correct in holding that the firm was not entitled, for the registration under S.27 of the Agricultural Income Tax Act, 1950;

and

(2) Whether, on the facts and in the circumstances of the case the Deputy Commissioner was competent to exercise his suo motu powers of revision to set aside the finding of the officer that the requirements of S.27 have been satisfied by the Applicant.

The assessee applied for registration of a firm constituted by the deed of partnership dated 15th September 1966. The accounting period for the year during which the partnership was constituted was to run out on 30th June 1967. The registration was applied for under S.27 of the Agricultural Income Tax Act, 1950, which reads as follows:-

"27. Procedure in registration of firms.-- (1) Application may be made to the Agricultural Income Tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to agricultural income tax or super tax.

(2) The application shall be made by such person or persons and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed, and it shall be dealt with by the Agricultural Income Tax Officer in such manner as may be prescribed."

The rules providing for particulars of the application and the manner of dealing with it are rules 2, 3 and 4 of the Agricultural Income Tax Rules, 1951. Rule 2 of the Rules, in so far as that is material, reads:-

"2. Any firm constituted under an instrument of partnership specifying the individual shares of the partners may, under the provisions of S.27 of the Agricultural Income Tax Act, 1950 (hereinafter in these rules referred to as the Act) register with the Agricultural Income Tax Officer the particulars contained in the said instrument on application made in this behalf.

xxxx xxxx xxxx

(rest omitted)

2. In the light of the above provisions, registration of the firm was allowed by the Agricultural Income Tax Officer. The Deputy Commissioner of Agricultural Income Tax, in exercise of his suo motu powers of revision, under S.34 of the Act, disallowed registration of the firm on two grounds: (1) that no accounts had been kept by the firm; and (2) that the share of the profits shown in the application for registration did not correspond to the state of affairs disclosed by the partnership deed.

3. The first of these grounds in manifestly untenable. Not only is there no warrant for importing the requirement of the keeping of accounts by the firm or by the partnership into the provisions of the section or the terms of the Rules we have extracted above, but, judicial decisions are also against such a requirement being posited. It is enough to refer to the ruling of a Division Bench of this Court in Kurien and George v. Commissioner of Income Tax, 1966 KLT 771 rendered with reference to the analogous provisions of the Indian Income Tax Act, 1922.

4. In regard to the second ground given by the Deputy Commissioner, we have been taken carefully and elaborately through the provisions of the Act and the Rules. We have also been taken through the provisions of the deed of partnership, a copy of which, is Appendix 3 of the statement of the case. Clauses 4 and 6 of the deed are as follows:-

"4. The capital of the partnership shall be Rs. 1,00,000 (Rupees one lakh) of which the amounts as shown