COMMISSIONER OF INCOME TAX Vs. S CHIDAMBARATHANU

JUDGEMENT

(1.) IN pursuance of the order of this court dated October 27, 1981, the Tribunal referred the following question of law for the opinion of this court under section 256(2) of the INcome-tax Act, 1961."Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was correct in law in directing the INcome-tax Officer to grant continuation of registration, even though Form No. 12 was not really signed by all the partners?"The assessee-firm was constituted originally under a deed of partnership dated January 1, 1964, and was reconstituted as per the deed dated August 16, 1973. The assessee-firm consisted of three partners, viz., (1) Shri Chidambarathanu, (2) Smt. J. Parvathy, and (3) Shri C. Sivarajan. Partners Nos. 2 and 3 are the daughter and son of the first partner.

(2.) THIS firm was granted registration in prior years. For the assessment year 1977-78 corresponding to the previous year ended August 15, 1976, an application for continuation of registration was filed on June 30, 1977, in Form No.12. It was not signed by all the three partners. Since the partner, Shri Chidambarathanu, died on March 17, 1977, his widow, Smt. Rajammal, had signed the declaration as his legal heir. Partner No. 2, Smt. J. Parvathy, had also signed the declaration. But the third partner, Shri C. Sivarajan, had not signed it since his whereabouts were not known and he was absconding. Smt. Parvathy, had, therefore, signed the declaration on his behalf also. On enquiry, the Income-tax Officer was satisfied that Chidambarathanu had died and that Sri Sivarajan, was not to be found. He held that the declaration in Form No. 12 was not in order since it was not signed by the three partners and, therefore, registration could not be continued. On appeal, the Appellate Assistant Commissioner accepted the declaration and directed the continuance of the registration. Aggrieved, the Revenue filed an appeal before the Tribunal. The Appellate Tribunal found that the firm had been dissolved at the close of the accounting year ended August 15, 1976, and the business was continued as a proprietary concern of Chidambarathanu till his death.

(3.) THEREFORE, Form No. 12 was not signed by one of the partners. Registration is only a privilege which a firm gets on satisfying certain conditions prescribed under sections 184 and 185 and rules 22(5) and 24 of the Income-tax Rules. There is no provision for anyone else to sign on behalf of a partner in the renewal application form. Under rule 22(5) the renewal application form should be signed by all the partners as stated in the partnership deed. Since there was a defect in Form No. 12 filed in the present case, the Income-tax Officer gave a notice under section 185(2) for modification of the mistake.