1972 PLP 362 (PTD)

Rules framed under the Act were amended in 1952. We are concerned with the rules before the amendment of 1952. Rule 2 dealt with applications for registration. Rule 3 laid down that the application referred to in rule 2 shall be made in the form annexed to rule

3. A form was prescribed in rule

3. Rule 4 ran thus: "(1) If, on receipt of the application referred to in rule 3, the Income‑tax Officer is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership and that the application has been properly made, he shall enter in writing, at the foot of the instrument or certified copy . . . a certificate . . . : and this certificate of registration shall have effect for the assessment for the year .... (2) If the Income‑tax Officer is not so satisfied, be shall pass an order in writing refusing to recognise the instrument of partnership . . . . . Rule 6 ran thus: "Any firm to whom a certificate of registration has been granted under rule 4 may apply to the Income‑tax Officer to have the certificate of registration renewed for a subsequent year . . . . ." Another form for application for renewal of registration was prescribed in rule

6. On comparing the two forms given in rules 3 and 6, we find much similarity. There was one important difference. Under the form given in rule 3, it was obligatory to attach the original instrument of partnership or a certified copy of it to the applica tion for registration. In the form under rule 6 it was sufficient to refer to the previous order for registration. The applicant had to certify that the constitution of the firm remained unaltered. Mr. Shanti Bhushan, appearing for the Department, points out that in the present case the applications by the assessee were not accompanied by the original instrument of partnership or certified copies of the instrument as required by the form given in rule

3. But we may point out that all the tine the original application for registration was pending before the Income‑tax Officer ; and the deed of partnership had been filed by the assessee with the application for registration. It is to be noted that the original application in the instant case remained undisposed of till the year 1951. When the firm applied for registration In the years 1947 and 1948, there was no order for registration in its favour. The question arises whether, tinder these circumstances, the application for renewal was competent. In Beta Singh Daulat Singh v. Commissioner of Income‑tax ((1966) 62 I T R 250) it was held by this Court that, so long as no certificate of registra tion has been granted to a firm, it cannot apply for renewal even if a prior application for a certificate of registration is pending before the Income‑tax Officer. The situation in the instant case was similar. When the assessee applied for renewal of registration in the years 1947 and 1948, there existed no order for registration in favour of the firm. Mr. Shanti Bhushan is right in his contention that it was not proper for the assessee to move an application for renewal at Oat stage. The next question for consideration is whether the defect noticed by the Tribunal was fatal. In Rao Bahadur Ravulu Subba Rao v. Commissioner of Income‑tax ((1956) 30 I T R 163) it was held by the Supreme Court that the intention of the Indian Income‑tax Act, 1922, is that a firm should be given the benefit of section 23(5)(a) only if it is registered under section 26‑A in accordance with the condi tions laid down in that section and the rules framed thereunder. As those rules require the application to be signed by the partner in person, the signature by an agent on his behalf is invalid. In R. C. Mitter & Sons v. Commissioner of Income‑tax ((1959) 36 I T R 194) the Supreme Court laid down on page 198 certain conditions that have to be fulfilled in order that a firm may be held entitled to registration. Condition No. 2 mentioned there is that an application on behalf of, and signed by, all the partners, contain ing all the particulars as set out in the Rules, has been made. Section 185 of the Income‑tax Act, 1961, lays down the procedure for the disposal of an application for registration. Subsection (2) of section 185 of the Income‑tax Act, 1961, states: "The Income‑tax Officer shall not reject an application for registration merely on the ground that the application is not in order, but shall intimate the defect to the firm and give it an opportunity to rectify the defect in the application within a period of one month from the date of such intimation: It is true that section 185(2) of the Income‑tax Act, 1961, does not, in terms, apply to cases governed by the Indian Income tax Act, 1922. But section 185(2) of the new Act recognises the broad principle that the Income‑tax Officer has to consider the substance of the application, and must not attach undue import ance to the form of the application. That broad principle is applicable to cases governed by the old Act also. Annexure E to the statement of the case is a copy of the order of the Appellate Assistant Commissioner. He observed : "Though it is often done, it is not mandatory on the part of the Income‑tax Officer to point out the irregularities in the application" That observation indicates that, in practice, the Income‑tax Officers do not attach much weight to such defects in form. In the present case, the defect in the application was this The assessee applied for renewal of registration, whereas the proper thing to do was to apply for registration. On examining the scheme of the Act and the rules, there is not much difference between registration and renewal of registration. In each case the authorities recognise that the firm is genuine, has a recognised constitution, arid is entitled to certain benefits under the Act. It, therefore, makes little difference whether an application is describ ed as an application for registration or as an application for renewal of registration. In .the present case, the assessee had applied for registration for the assessment year 1946‑

47. That application remained pending for several years. Under these circumstances, the assessee may well be excused if it applied for renewal of registration instead of registration as such. This defect in form should not have been treated by the Tribunal as fatal. The Income‑tax Officer gave three different reasons for rejecting the assessee's applications for renewal of registration. Out of those three reasons, the Tribunal selected one reason only. The reason was that the application for renewal was irregular. Whether an irregularity is curable or not depends upon the nature of the irregularity. As explained above, the irregularity commit ted by the assessee in the instant case was one of form, and not of substance. Under these circumstances, the Tribunal was not justified in dismissing the appeal merely because the assesses applied for renewal of registration. Our answer to the question referred to this Court is this: An application other than an application for renewal of registra tion could be filed in law. The Tribunal was not justified in dismissing the appeal of the applicant on the short ground that the two applications were for renewal of registration. Parties shall bear their own costs in this reference.