1965 (12) TMI 142 - HC - Income Tax

Tribunal Upheld Decision to Refuse Registration to Firm: Key Points and Ruling

Bela Singh Daulat Singh Versus Commissioner of Income-Tax, U.P.

The court upheld the Tribunal's decision to refuse registration to the assessee-firm under section 26A. The application for registration was deemed ... - Issues Involved:1. Whether the instrument of partnership was executed within the accounting period relevant to the assessment year 1957-58Rs.2. Whether the application filed by the assessee for registration was made beyond limitationRs.3. Whether there was material for the Tribunal to come to a finding that the firm was not genuine because the assessment was made on the assessee as an unregistered firm, which implies that there was a genuine firm in existenceRs.4. Whether, in the circumstances, the Tribunal was legally right in refusing registration to the assessee-firm under section 26ARs.Issue-wise Detailed Analysis:Issue 1: Execution of Partnership InstrumentThe court refrained from answering this question as it was agreed by both parties' counsel that it was a pure question of fact and did not arise out of the Tribunal's order. The Tribunal never held that the deed of partnership was, or was not, executed within the accounting year ending on November 27, 1956.Issue 2: Timeliness of Registration ApplicationThe answer to this question depends on rule 2 of the Income-tax Rules. Rule 2 specifies the time limits for filing an application for registration under section 26A. The application must be made within six months of the constitution of the firm or before the end of the previous year, whichever is earlier, if the firm was constituted in that previous year. In any other case, it must be made before the end of the previous year. The application for renewal must be made before June 30 of the assessment year unless the Income-tax Officer extends the time for sufficient cause.The court concluded that the assessee's application for registration for the assessment year 1957-58 was not within time as it was made on March 23, 1957, after the relevant accounting year ended on November 27, 1956. The application for renewal was also not competent as no certificate of registration had been granted previously. The Tribunal's rejection of the application was upheld as it was barred by time.Issue 3: Material for Tribunal's Finding on Firm's GenuinenessThe court found that there was material for the Tribunal to conclude that the firm was not genuine. The application for registration was not accompanied by the deed of partnership as required by rule 3, and the deed was filed only on February 20, 1957. This delay and non-compliance with rule 3 provided sufficient material for the finding that the firm did not exist as constituted by a deed of partnership prior to that date. The court noted that assessing the assessee as a firm does not contradict the finding that the firm constituted by the deed of partnership did not exist.Issue 4: Legality of Tribunal's Refusal to Register the FirmThe Tribunal's refusal to register the firm was legally justified on two grounds: the application for registration was barred by time, and the Tribunal found that the firm as constituted by a deed of partnership did not exist during the relevant accounting year. The court upheld the Tribunal's decision, answering the question in the affirmative.Conclusion:The court answered the questions as follows:- Question 1: Not answered.- Question 2: In the affirmative and against the assessee.- Question 3: In the affirmative.- Question 4: In the affirmative.A copy of the judgment was ordered to be sent to the Income-tax Appellate Tribunal, and the assessee was directed to pay the costs of the reference assessed at Rs. 200, with counsel's fee also assessed at Rs. 200.