CHANDRA REDDY C.J. - The question to be answered by us in this reference is :
'Whether on the facts and in the circumstances of the case the refusal to register the firm under section 26A of the Indian Income-tax Act, 1922, was justified ?'
The assessee is a firm consisting of five partners constituted under the instrument of partnership, dated November 9, 1946, carrying on business in turmeric. It was registered under section 26A of the Indian Income-tax Act, 1922, for the assessment year 1946-47 for which the account year was the financial year ended March 31, 1947. The firm applied for renewal of registration. However, the application was signed only by four of the partners personally. The fifth partner, Venkatasubba Rao, did not sign this application but it was signed by another partner, Ramalingam, who held a general power of attorney from him. Thus, this application was not signed by all the partners personally. For this reason the proper Income-tax Officer refused to renew the registration.
The appeal by the assessee to the Appellate Assistant Commissioner proved unsuccessful and the same fate awaited the further appeal to the Income-tax Appellate Tribunal.
On the request of the assessee, the Tribunal referred the above-mentioned question for the opinion of this court under section 66(1) of the Income-tax Act.
The first point to be considered by us is whether on an application of the present kind the firm could be registered under section 26A. That section recites :
'(1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under 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.'
It is manifest that sub-section (2) contemplates rules being made prescribing the manner in which the application should be signed. Accordingly, in exercise of the powers conferred by section 59 of the Indian Income-tax Act, the Board framed the Rules among which is rule 2 :
'Any firm constituted under an instrument of partnership specifying the individual shares of the partnership specifying the individual shares of the partners may, under the provisions of section 26(A) of the Indian Income-tax Act, 1922 (hereinafter in these Rules referred to as the Act), register with the Income-tax Officer, the particulars contained in the said instrument on application made in this behalf.
Such application shall be signed by all the partners (not being minors) personally and shall be made....
(e) before or after the dissolution of the firm in respect of the assessment or assessments to be made on its income up to the date of dissolution :
Provided that where an application is made under clause (e) after dissolution of the firm, it shall be signed by all person (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased.'
It is seen that sub-section (2) of section 26A and the relevant rule are expressed in mandatory words. The application must be signed by the partners themselves if the request for registration is to be complied with. The partnership, in order to bring itself within the terms of that section, must satisfy the requirements of that section and the Rules made thereunder. It is beyond doubt that the statutory provisions do not permit any agents signing on behalf of the partners. If a partnership is to get the advantage of section 26A, it is incumbent on all the partners to sign personally.
This position is well established by the authoritative pronouncement of the Supreme Court in Rao Bahadur Ravulu Subba Rao v. Commissioner of Income-tax, apart from the plain language of the section and the Rules. Since, in the application for renewal of registration suffered from that vice, it was properly rejected by the Income-tax Officer.
This takes us to the controversy whether the concerned Income-tax Officer has to return the application for compliance with the requirements of section 26A and the relevant rule. It is contended by Sri Kuppuswami, learned counsel for the assessee, that it was obligatory on the part of the Income-tax Officer to afford an opportunity to the assessee to rectify the defect. Out attention was not drawn to any provision of law which casts such an obligation on the Income-tax Officer. On the other hand, the indications in the section and the Rules are that in the absence of a proper application it is open to the department to reject the application of the assessee to rectify the defect. If the Income-tax Officer returned it to the assessee to conform to the requirements of the section, it is only as an act of grace. But failure to do it will not vitiate the order rejecting the application. For these reasons, we think that this argument is inadmissible.
It was lastly maintained by Sri Kuppuswami that the Appellate Assistant Commissioner should have accepted the application of the assessee for renewal of registration made by him under rule 2(c), which, as it existed at the relevant time, is in these words :
'Such application shall be signed by all the partners (not being minors) personally and shall be made........
(c) with the permission of the Appellate Assistant Commissioner hearing an appeal under section 30 of the Act, before the assessment is confirmed, reduced, enhanced or annulled.'
It is suggested by Sri Kuppuswami that the Appellate Assistant Commissioner refused to entertain the application of the assessee on an untenable ground, namely, that the partnership itself was not signed by all the partners. Since the request of the assessee was refused for reasons, which cannot stand the test of scrutiny, he wants us to direct the Appellate Assistant Commissioner to reconsider the application under rule 2(c). We do not think that we can give effect to this argument for the reason that this is not one of the questions referred to us by the Income-tax Appellate Tribunal under section 66(1) of the Indian Income-tax Act. The assessee also did not invoke the jurisdiction of this court under section 66(2) for referring such a question for the opinion of this court. It may be mentioned that this matter was not even raised in the application made by the assessee under section 66(1) as appears from the statement of the case made by the Income-tax Appellate Tribunal. The Tribunal observed :
'At the time of the hearing of this application, the assessee sought to raise a new question as below :
Whether, on the facts of the case, the Appellate Assistant Commissioner has exercised his discretion properly under rule 2(c) on the petition filed before him on 12th April, 1952; and, if not, whether it cannot be judicially corrected by the Appellate Tribunal ?'
The Tribunal refused to refer this question to this court for the reason that such a question of law could not be allowed to be raised at the time of arguments, this not having been included in the application under section 66(1) of the Indian Income-tax Act. Be that as it may, since the Tribunal specifically adverted to this question and refused to refer it to this court, we cannot deal with that matter in this reference under section 66(1).
In the result, the question referred to us is answered in the affirmative, i.e., against the assessee. The assessee will pay the costs of this reference. Advocates fee Rs. 50.
Question answered in the affirmative.