P L D 1965 Dacca 503 (PLP)

HASAN, J.‑

The Firm Messrs Sandwip Tanneries, Dacca filed an application for registration under section 26‑A of the. Income‑tax Act on 30th December 1958. The instrument of partnership was registered by the Sub‑Registrar on 17th March 1958 and thereafter the Firm filed an application for registration under section 26‑A of the Income‑tax Act on the date mentioned above. In the body of the document it was stated that it would be noted that the Firm had been in existence since 1955. The Income‑tax Officer rejected the registration on the ground that the instrument of partnership was not acted upon. His reasons for the above finding were that though, there was a provision in the partnership deed that the partner A. F. Mansoor Ahmed would contribute Rs. 20,000, Mohamed Tajal Alam Rs. 5,000 and Mohammad Razeul Islam Rs. 5,000 but Tajal Alam had an opening balance of Rs. 3,504 and from 3rd April to 18th June, he had further contributed Rs. 14,000; so his capital was Rs. 17,504 but curiously enough only 1/6th of the total profit had been allotted to him and Razeul Islam who had uniform credit balance of Rs. 3,504 in the capital account was also given 1/6th share which in the opinion of the Income‑tax Officer was in violation of the terms of the deed as the deed provided that the profit and loss would be borne by the partners in proportion to the share of the capital advanced by the partners ; that though the partnership deed provided that 25% of the profit would be deposited in the reserve fund, but the said fund‑ had been appropriated by the partners without putting the said amount in the reserve fund. In the aforesaid facts the Income‑tax Officer found that the deed of partnership was not acted upon and accordingly rejected the prayer for registration. On appeal by the assessee to the Appellate Assistant Commissioner, the assessee was not successful as the order of the Income‑tax Officer was affirmed by the Appellate Assistant Commissioner. On appeal to the Tribunal, the Assessee was successful. In the opinion of the Tribunal only for the reasons that the profits were not distributed among the partners in proportionate to the capital advanced by the partners to the Firm and that 25% was not put in the reserve fund, the prayer for registration could not be rejected. The Appellate Assistant Commissioner also found that the application for registration was filed in the wrong form and accordingly the Appellate Assistant Commissioner was also of the view that the Firm could not be registered. The Appellate Tribunal was of opinion that that was only a minor defect which could be rectified. On an application by the Commissioner of Income‑tax, East Pakistan, Dacca,. for reference to this Court under section 66(1) of the Income‑tax Act, the Tribunal formulated the following point: "Whether in the facts and circumstances of the case the Income‑tax Appellate Tribunal was justified in directing the Income‑tax Officer to allow registration under section 26‑A of the Income‑tax Act to the firm for the assessment year 1959‑60?" Section 26‑A of the Income‑tax Act runs: "(1) Application may be made to the Income‑tax Officer on behalf of any firm, constituted by an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income‑tax or super‑tax. (2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by the income‑tax Officer in such manner as may be prescribed. (3) Where the Income‑tax Officer is satisfied that the application is complete and that there is, or was, as the case may be, a genuine firm in existence constituted as shown in the instrument, or instruments, of partnership executed in writing and in force in the relevant previous year, he may register the firm for the purposes of this Act; or where the firm has already been registered for immediately preceding year, renew the registration. (4) If, after an order has been passed under subsection (3), the Income‑tax Officer is satisfied that such order was passed without there being a genuine firm in existence [constituted as shown in the instrument, or instruments, of partnership executed in writing and in force in the relevant previous year], he may cancel the registration Provided that the registration of a firm shall not be cancelled until fourteen days have elapsed from the issue of a notice by the Income‑tax Officer to the firm intimating his intention to cancel its registration." From the above section it appears that subsection (1) of section 26‑A provides that an application may be made to the Income‑tax Officer on behalf of the firm specifying the individual shares of the individual partners. Subsection (3) provides that where the Income‑tax Officer is satisfied that the application is complete and that there is, or was, as the case may be, a genuine firm in existence constituted as shown in the instrument, he may register the firm for the purpose of this Act. Subsection (4) provides for cancellation of the registration if the Income‑tax Officer is satisfied that such order was passed without there being a genuine firm in existence. Mr. Huda, the learned Deputy Attorney General, has contended that to grant registration is within the jurisdiction of the Income‑tax Officer and furthermore, on the facts disclosed the Income‑tax Officer was justified in refusing the registration and accordingly the question should be answered in the negative. In our opinion, it appears that the partners have no respect for the terms of the agreement. There is a clause for depositing 25% in the reserve fund which has not been done. There is also a provision in the document for change of any term by a written instrument which has also not been done and it also appears that the agreement for respective capital contribution and distribution of profits has not also been respected. We are of opinion, in these circumstances, that the Income‑tax Officer was right in refusing t registration. We, accordingly, answer the question in the negative. As there is no appearance on behalf of the assessee, we make no order as to costs. T. TALUKDAR, J.‑‑I agree. S. Q.??????????????????????????????????????????????????????????????????????????? Reference answered in the negative.