Back
1998 Supreme(HP) 101
High Court Of Himachal Pradesh
D.RAJU,KAMLESH SHRAMA
COMMISSIONER OF INCOME-TAX, PATIALA - Appellant
Versus
DILLO RAM & CO., MANDI, H.P. - Respondent
I.T.R. No. 3 of 1991
Decided On : 07/02/1998
Mr. Inder Singh, Advocate, for the Applicant; M/s. Ankush Sood and D.Dadwal, Advocates, for the Respondent.
The genuineness of a firm is not a pure question of fact and a question of law arises when the Tribunal records a finding or assigns a reason to grant relief in favor of a party without sufficient basis on facts or on law.
Headnote:
INCOME TAX - REGISTRATION OF FIRM - CONTINUATION OF REGISTRATION - GENUINENESS OF FIRM - SIGNATURE OF PARTNER ON PARTNERSHIP DEED, FORM NO. 11 APPLICATION AND FORM NO. 12 DECLARATIONS - REQUIREMENT OF SIGNATURE OF ALL PARTNERS - MANDATORY - NON-SIGNATURE OF ONE PARTNER - FINDING OF FACT - TRIBUNAL'S CONCLUSION THAT ASSESSEE-FIRM ENTITLED TO CONTINUATION OF REGISTRATION BASED ON DEPARTMENT NOT GOING INTO QUESTION OF ASSENT OF NON-SIGNING PARTNER TO PARTNERSHIP - NOT PERMISSIBLE - QUESTION OF LAW - REFERENCE VALID.
Fact of the Case:
The assessee-firm, consisting of nine partners, was granted registration for the assessment year 1962-63. The registration was also effective for the assessment years 1963-64, 1964-65, and 1965-66. However, the Income Tax Officer (ITO) learned that one of the partners, Shri Behari Lal, had not personally signed (1) the deed dated 19.2.1962, (2) the Form No. 11 application for the assessment year 1962-63, and (3) the Form No. 12 declarations for the assessment years 1963-64, 1964-65, and 1965-66. After issuing a show-cause notice and considering the objections, the ITO cancelled the registration for the assessment years 1964-65 and 1965-66 under Section 186(1) of the Income-tax Act, 1961. The Tribunal, on appeal, confirmed the ITO's finding that Shri Behari Lal had not personally signed the said documents. However, the Tribunal concluded that the assessee-firm was entitled to continuation of registration for the assessment years under consideration since the Department had not gone into the question of whether Shri Behari Lal had or had not assented to the partnership in question.
Finding of the Court:
The High Court held that the Tribunal erred in allowing the assessee's claim for continuation of registration. The Court found that the Tribunal's conclusion was based on surmises and a perverse approach in utter disregard of the law declared by the Supreme Court. The Court held that the genuineness of a firm is not a pure question of fact and that a question of law arises when the Tribunal records a finding or assigns a reason to grant relief in favor of a party without sufficient basis on facts or on law.
Issues: 1. Whether the Tribunal was right in law in holding that the assessee-firm was entitled to continuation of registration for the assessment years under consideration?
Ratio Decidendi: 1. The requirement of Section 184(7) of the Income-tax Act, 1961, is mandatory and contemplates registration to have effect for every subsequent year provided the two conditions mentioned therein are satisfied.
Final Decision: The High Court answered the question referred to it in the negative, holding that the assessee-firm was not entitled to continuation of registration for the assessment years 1963-64, 1964-65, and 1965-66.
D. Raju, CJ.—The above Reference arise out of a question referred to for the decision of this Court, on the directions made by an order dated 11.10.1990 by this Court in IT. Applications No. 3 and 4 of 1976 referring the following question: "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee-firm was entitled to continuation of registration for the assessment years under consideration ?” The necessary facts relevant for the purpose of answering the question are that the firm consisting of nine partners was said to have been constituted as per deed dated 19.2.1962 which had been accorded registration for the assessment year 1962-63. The said registration had also been effective for the assessment years 1963-64, 1964-65 and 1965-66. While that be the position, the Income Tax Officer learnt that out of nine partners, one Shri Behari Lal had not personally signed (1) the deed dated 19.2.1962, (2) the Form No. 11 application for the assessment year 1962-63 and (3) the Form No. 12 declarations for the assessment years 1963-64, 1964-65 and 1965-66. After issuing a show-cause notice and considering the objections and also on conducting an inquiry the registration for the assessment years 1964-65 and 1965-66 came to be cancelled under Section 186(1) of the Income-tax Act, 1961. The registration pertaining to the earlier assessment years apparently could not be touched in view of the eight years1 period of limitation provided in the proviso to the said provision in the Act. In coming to such a conclusion that there was no signature of one of the partners, Shri Behari Lal on any one of those documents, the Income-Tax Officer relied upon his own observation, the expert opinion of the Government examiner of questioned documents, the testimony of the Manager of the State Bank of India, Mandi Branch and consequently rejected the testimony of the witnesses suggesting a contrary version. The finding recorded by the income-Tax Officer in this regard was also affirmed, on appeal at the instance of the assessee by the Appellate Assistant Commissioner. As a matter of fact, as could be noticed hereinafter, no infirmity in the said finding was pointed out to the Tribunal by the assessee. Shri Behari Lal when the controversy arose, also died on 25.10.1965 and there was no scope for getting admission or denial from him of his signature said to be on the documents. The Tribunal necessarily confirmed the finding that Shri Behari Lal had not personally signed the said documents.
2. When the matter was pursued by the assessee before the Tribunal, it appears to have been contended for the assessee that even if, as suggested by the Department, some one also had signed Behari Lai partners name in the partnership deed, form No. 11 application, and form No. 12 declarations, the said fact was irrelevant for determining the question as to whether there had been during the previous years concerned in existence a genuine firm "as registered", as contemplated under Section 186(1) of the Act. The Tribunal in dealing with the appeal and the objections of the assessee specifically recorded in paragraph 3 of its order dated 24.7.1975 as follows: "The finding of the Income-tax Officer in this regard was sustained by the Appellate Assistant Commissioner on appeal. No infirmity in the said finding was pointed out to us. Shri Behari Lal died on 25.10.1965 and was thus not available to admit or deny his signature on the said documents. We confirm the finding that Behari Lal had not personally signed the said documents." Proceeding further with reference to the other objections of the assessee and purporting to apply the principles laid down in the decision of a Division Bench of Punjab and Haryana High Court in Jagan Nath v. C.I.T., (1973) 92 I.TR. 207, the Tribunal came to the conclusion that since the Department has not gone into the question whether Behari Lal had or had not assented to the partne
