TaxTMI 
TaxTMI 
1988 (3) TMI 101
X X X X Extracts X X X X
X X X X Extracts X X X X
....5(1) of the Income-tax Act, 1961 (in short, 'the Act'). In the assessment year 1982-83 for which the previous year ended on 31-3-1982, the said firm submitted an application for continuation of registration which was signed by five partners and it did not contain the signature of Shri Laxmidass Toolsidass. The said declaration in Form No. 12 was submitted by the assessee along with its return for the assessment year 1982-83 on 30-7-1982. The Income-tax Officer allowed continuation of registration to the firm in terms of section 184(7) of the Act vide his order under section 143(3) dated 7-5-1983. Subsequently, the Commissioner of Income-tax in exercise of his powers under section 263 issued a show-cause notice to the assessee under the said....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d on sometime in December 1983, in the declaration as per Form No. 12 was a vital defect which rendered the assessee-firm liable to be assessed in the status of U.R.F. The Income-tax Officer further held that the disputes between Laxmidass Toolsidass and the remaining partners existed during the relevant previous year affecting the day-to-day business activity of the assessee-firm which rendered the partnership firm ingenuine in the eye of law. The Commissioner of Income-tax (Appeals) upheld the ITO's order by observing, inter alia, that "even if the ITO had given an opportunity to obtain the signature of the partner Shri Laxmidass much before his death, it could not have been possible to rectify the lapse because the partner was not in a m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re the ITO along with return submitted for the assessment year 1983-84. The learned counsel relied on the Karnataka High Court in the case of Addl. CIT v. S.V. Ratnaswamy & Sons [1977] 106 ITR 154 as also the Tribunal's decision in the case of ITO v. Maddala Ramachandra Rao [1984] 9 ITD 896 (Hyd.) in support of his contention that the requirements of rules 24 and 22(5) had been satisfied notwithstanding the fact that the retired partner Shri Laxmidass Toolsidass after his expulsion had not signed the declaration in Form No. 12 for the assessment year 1982-83. An alternative submission made was that the ITO could not refuse continuation of registration without affording an opportunity to the assessee in terms of section 185(3) of the Act. Si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....3) of the Act. 3. In terms of rule 24 the declaration to be furnished under section 184(7) shall be in Form No. 12 and signed by the persons concerned in accordance with rule 22(5). Rule 22 (5) reads as follows : "(5) The application shall be signed personally by all the partners (not being minors) in the firm as constituted at the date of the application and, in the case of a dissolved firm, personally by all the persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased so, however, that in the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was sub judice before the Hon'ble High Court in Suit No. 354 of 1982. It is also on record that the Hon'ble High Court in the said suit issued an interim injunction restraining the deceased Laxmidass Toolsidass from asserting or representing or even holding himself as a partner of the assessee-firm. Considering the aforesaid facts, we are of the opinion that as at the end of the previous year relevant for the assessment year 1982-83 the deceased Laxmidass Toolsidass continued to remain as a partner. Accordingly, in terms of rule 24 read with rule 22(5) it was necessary for all the six partners to sign personally the declaration in Form No. 12. The CIT was, therefore, justified in invoking the provisions of section 263 of the Act. 4. Now....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have signed the application firstly due to dispute arising between himself and the remaining partners resulting in his expulsion from the partnership business and secondly on account of the injunction of the Hon'ble High Court restraining him to exercise his function as partner in the assessee-firm. It follows, therefore, that in terms of section 185(3) the legal heir of the deceased cannot be asked now to put his signature on behalf of the deceased. In terms of rule 22(5) the application is to be signed by legal representative of the partner who is deceased in case there is a dissolution of the firm. In the instant case the deceased Laxmidass Toolsidass has been expelled from the partnership firm and, therefore, the question of obtaining t....