Section 263 limitation and power of attorney execution supported valid partnership registration and defeated cancellation

Revision under section 263 was treated as within the applicable two-year limitation period, so the limitation objection failed. The note also states that a partnership deed and registration papers are not invalid merely because one partner did not personally sign where a duly authorised power of attorney holder signed on her behalf. On that reasoning, the partnership registration was validly granted and could not be cancelled under section 263, as the firm's registration was otherwise lawful and not shown to be prejudicial to the Revenue.

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Issues: (i) Whether the Commissioner's revision under section 263 was barred by limitation; (ii) Whether cancellation of registration was justified on the ground that the partnership deed and registration papers were not personally signed by all partners, especially where one partner had authorised a power of attorney holder to act on her behalf.

Issue (i): Whether the Commissioner's revision under section 263 was barred by limitation.

Analysis: The original registration order was passed on 18-5-1983, the show-cause notice under section 263 was issued on 22-1-1986, and the revisional order was passed on 25-3-1986. In view of the amendment governing the period of limitation and the Tribunal's earlier view on a similar question, the revisional power was exercisable within two years from the end of the financial year in which the original order was passed.

Conclusion: The revision was not barred by limitation and this objection failed.

Issue (ii): Whether cancellation of registration was justified on the ground that the partnership deed and registration papers were not personally signed by all partners, especially where one partner had authorised a power of attorney holder to act on her behalf.

Analysis: Section 184 required the application for registration to be signed personally by the partners, but contained an exception where a partner was absent from India and the application was signed by a duly authorised person. The power of attorney executed by the absent partner expressly authorised the attorney holder to sign tax documents and partnership deeds. The earlier Supreme Court decision dealing with personal signature of an application for registration concerned the validity of the application under the 1922 Act and did not decide that a partnership deed could not be executed through an authorised agent. The Partnership Act did not require each partner to sign personally, and section 2 of the Powers of Attorney Act permitted valid delegation.

Conclusion: The partnership deed was validly executed, the registration was rightly granted, and the Commissioner had no jurisdiction to cancel it under section 263.

Final Conclusion: The revisional order was set aside and the original registration of the firm was restored.

Ratio Decidendi: Where a partner validly authorises an agent by power of attorney, the partnership deed is not invalid merely because the partner did not personally sign it, and revision under section 263 cannot stand when the original registration is otherwise valid and not prejudicial to the Revenue.

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