COMMISSIONER OF INCOME TAX PATIALA Vs. JAGANNATH PYARELAL

JUDGEMENT

(1.) - Special Leave is granted in the abovementioned two petitions.

(2.) These appeals by special leave arise out of the judgment and order of the Punjab and Haryana High Court in respect of the assessment year 1960-61, under Indian Income-tax Act, 1922 holding that the registration of the firm was wrongly refused. A reference was made under S. 66(2) of the Indian Income-tax Act, 1922 to the High Court in respect of the following question :-

(3.) Originally there were 10 partners who were members of two families and a firm came into existence under the instrument dated 27-3-1952, when Padam Kumar was a minor. When he attained majority on 1-10-1956, he opted to continue as a full-fledged partner and a fresh instrument of partnership was executed on 8-10-1956 by 11 partners including Shri Rabinder Kumar. A fresh deed was executed to that effect on 1-4-1959 and an application dated 2-9-1959 for registration of the said firm under S. 26A of the said Act was filed on 30-9-1959. Shri Rabinder Kumar had left India for United States. of America for prosecuting his studies on 29-1-1959. It. was found by the Tribunal that Rabinder Kumar had not signed the application as indeed he was away to U.S.A. from 29-1-1959. This finding was not challenged by the assessee before the High Court. The Tribunal held that the firm was not genuine and the application was not proper as Rabinder Kumar had not signed and the application for registration of partnership was not in accordance with the rules. These findings were not challenged before the High Court. The High Court, however, was of the opinion that another opportunity should have been given to show whether the firm was actually in existence or not. The High Court held that Rabinder Kumar had acquiesced in the constitution of the firm and had accepted the position and as such the firm was entitled to be registered. The conditions required to be fulfilled have been laid down by this Court in the case of R. C. Mitter and Sons v. Commr. of Income-tax, Calcutta 36 ITR 194: (AIR 1959 SC 868). This Court held that