RARAACHANDRA GINNING AND OIL MILLS GOLLAPROLU Vs. COMMISSIONER OF INCOME TAX ANDHRA PRADESH HYDERABAD

JUDGEMENT

(1.) The Income-tax Appellate Tribunal, Hyderabad Bench; under Section 66(1) of the Income Tax Act, 1922, (hereinafter called the Act) referred the following two questions for the opinion of this Court.

(2.) Sri Ramacbandra Ginning and Oil Mills, Gollaprolu (herein after referred to as the assessee) was a firm which claimed registration under Section 26 A of the Act on the strength of a partnership deed executed on February, 24, 1955 a deed of rectification dated March, 29, 1955 (Annexure A & C to the statement of the Case) for the assessment year 1955-56 as the firm was purported to have been formed on April, 1, 1954, The Income-tax officer, Kakinada granted registration to the assessee, firm by bis order dated June 29, 1956 which was allowed to become final.

(3.) Thereafter the application for renewal of the registration of the assessee-firm for the assessment veair 1956-57 corresponding with the accounting year ending with March, 31, 1956, was granted by him by his order dated March. 18, 1961. The Commissioner of Income-Taken a consideration of clause 11 of the Partnership deed, was of the opinion that the "minors described as partner Nos. 9 and 16 wore made liable for both profits and losses, thereby disentitling the firm for the grant of registration under Sec. 26-A of the Act. As the original order of registration had been passed earlier than two years, the Commissioner could not revise that order. But he issued a notice under Sec.33-B of the Act on Feb. 16, 1963, which was served on the assessee on Feb. 21, 1963. catling upon the assessee to show cause why the renewal of registration granted on March, 18, 1961 should not be set aside as, in his opinion, it was erroneous and prejudicial to the interests of the revenue. Rejecting the objections of the assessee that the firm was valtdly constituted' under the deed of partnership read with the rectification deed and that the minors were admitted only for benefits, "though the assessee had modified the application made to the Registrar of Firms on March, 30, 1955 for registration under the Indian Partnership Act' specifically mentioning that the minprs were admitted only for bene fits, the Commissioner revised the order of the Income-tax Officer granting renewal of registration for the assessment year 1956-57 and directed him to pass consequential orders thereon. On appeal to the Income-tax Appellate Tribunal, it was found that the deed of rectification was sent by the assessfe to the Income-Tax offcer on March, 30, 1955, relying, upon the certificate of posting produced by the assessee. However, the Tribunal agreed with the Commissipner that the rectification deed did not improve the case of the assessee" as the partners 9 and 16. who were minors, were considered to be full partners in the firm and the losses were to be borne by the respective guardians. The Tribunal reiving upon the decision of the Calcutta High Court in COMMISSIONER OF INCOME-TAX, WEST BENGAL V.KHETAN AND Co.,(1) and that of the Bombay High Court in COMMISSIONER OF INCOME-TAX BOMBAY SOUTH V. MD.KHALID FAQUIH & CO.,(2) held that a guardian cannot purport to enter into a partnersbip on behalf of a minor, and confirmed the order of the Commissioner, The objections of the assesee that the Commissioner is not empowered to exercise his powers under Section 33-B of the Act which was repealed by the Income Tax Act, 1961 subsequent to 1-4-1962, also did not find favour with the Tribunal At the instance of the assessee, the afore said two questions have been referred for the opinion of this court. The question No. 1 has to be answered in favour of the Department in view of the decision of the Supreme Court in KALAWATI DEVI HARLALKA V. COMMISSIONER OF INCOME TAX- WEST BENGAL AND OTHERS(3) where in it was held that the expression "proceedings for the assessment" in Section 297 (2) (a)of the Income Tax Act, 1961, had a comprehensive meaning and included the whole procedure for ascertaining and imposing liability upon the taxpayers. In the case Sikri, J who spoke for the Court, ruled.