The judgment of the court was delivered by
JAGDISH SAHAI J. - This is a reference made by the Income-tax Appellate Tribunal, Patna Bench, Patna (hereinafter referred to as 'the Tribunal') under section 66(1) of the Income-tax Act, 1922 (hereinafter referred to as 'the Act'), at the instance of the assessee, Messrs. Abdul Shakoor & Co. (hereinafter referred to as 'the assessee').
The statement of the case relates to the assessment years 1956-57 and 1957-58.
One Abdul Shakoor carried on business under the name and style 'Messrs. Abdul Shakoor & Co.'. Up to the year 1955-56 he was assessed in respect of the business that he carried on in the status of an individual. For the assessment year 1955-56 two returns were filed in the name of Messrs. Abdul Shakoor & Co. - one of the period January 1, 1955, to June 30, 1955 in the status of an individual and the other for the period July 1, 1955, to December 31, 1955, in the status of the firm.
It was alleged on behalf of the assessee that on July 30, 1955, Abdul Shakoor made a gift of Rs. 10,000 each to his sons Abdul Rauf, Mohd. Ayub, Mohd. Daud and Abdul Wadood (minor). It was further alleged that the aforesaid gifts were evidenced by transfer of the amount mentioned above from the account of Abdul Shakoor to the accounts of the sons mentioned above in the books of Messrs. Abdul Shakoor & Co.
The assessee alleged that Sarvsri Abdul Rauf, Mohd Ayub and Mohd. Daud formed a partnership with Abdul Shakoor with effect from July 1, 1955, to the benefits of which the minor son, Abdul Wadood, was also admitted. According to the assessees, the shares of the partners were as under :
1.Abdul Shakoor ..
2.Abdul Rauf ..
3.Mohd. Ayub ..
5.Abdul Wadood ..
The books of Messrs. Abdul Shakoor & Co. were shown to have been closed twice during the calendar year 1955, once on June 30, 1955, and second time on December 31, 1955.
On October 15, 1956, an application was made under section 26A of the Income-tax Act for the registration of the firm for the period July 1, 1955, to December 31, 1955.
The statement of the case is clear that the admitted position of the case was that this application was not accompanied by the original instrument of partnership but only with a carbon copy of the alleged instrument of partnership. The statement of the case is again clear on the point that the carbon copy did not bear the signatures of the alleged partners, i.e., Abdul Shakoor and his three sons. In the covering letter sent along with this application Abdul Shakoor wrote that the original instrument of partnership will be produced at the time of assessment. However, the original was not produced and on the Income-tax Officers asking the representative of the assessees to produce the original, he was informed by Sri Mohd. Mustafa, vakil of the assessees and the constituted attorney of Messrs. Abdul Shakoor & Co. that he was seriously ill and wanted time till March 27, 1957. The letter was silent on the point of partnership deed. The case was adjourned on the letter of Sri Mohd. Mustafa and the hearing was resumed on March 27, 1957, when Sri A.B.L. Srivastava, Advocate, appeared for the assessee before the Income-tax Officer and asked for time till March 29, 1957, in order to produce the original deed of partnership. The deed was not filed on March 29, 1957, also, and instead an affidavit was filed by Abdul Shakoor stating that the original deed of partnership as been lost by the lawyer of thefirm Sri Mohd. Mustafa Khan. An application was simultaneously made to the Income-tax Officer by Abdul Shakoor alleging that he came to know of the loss of the original deed of partnership only on March 27, 1957, and that for that reason the carbon copy be accepted as the required copy. A stamp folio of Rs. 100 along with Rs. 100 in cash was also filed. The Income-tax Officer rejected the claim for registration on the ground that the assessees application did not comply with the requirements of rule 3 of the Income-tax Rules. The assessee appealed to the Appellate Assistant Commissioner and then to the Tribunal but without any success.
For the assessment year 1957-58 two applications were made by the assessee under section 26A of the Act for the registration of the firm. These applications were also rejected by the Income-tax Officer on the ground on which the application for the year 1955-56 had been rejected and also on the additional ground that the application had not been signed by all the partners. The assessee at first appealed to the Appellate Assistant Commissioner and then to the Tribunal but without success. The Tribunal has now, at the instance of the assessee, referred the following question to this court for its decision :
'Whether, on the facts and circumstances of the case, the Tribunal was wright in holding that the application of the assessee for registration for the assessment year 1956-57 and 1957-58 had been rightly rejected ?'
It is clear from the statement of the case submitted by the Tribunal that the applications made by the assessee were not signed by all the partners and that the carbon copy did not bear the required certificate.
Rules 3 and 4 of the Indian Income-tax Rules, 1922, are relevant for the decision of the question referred to us. We were reproducing them here :
'3. The application referred to in rule 2 shall be made in the form annexed to this rule and shall be accompanied by the original Instrument of Partnership under which the firm is constituted, together with a copy thereof; provided that if the Income-tax Officer is satisfied that for some sufficient reason the original Instrument cannot conveniently be produced, he may accept a copy of it certified in writing by all the partners (not being minors) or, where the application is made after dissolution of the firm, by all the persons referred to in the said rule, to be a correct copy, and in such a case the application shall be accompanied by a duplicate copy.'
Paragraph 2 of Form I under rule 3 is as follows :
'The original/a certified copy of the Instrument of Partnership under which the firm is constituted specifying the individual shares of the partners together with a copy/duplicate copy is enclosed. The prescribed particulars are given in the Schedule below.'
Rule 4 reads as under :
'4. (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, as the case may be, a certificate in the following form, namely :-
This instrument of partnership/certified copy of an instrument of partnership has this day been registered with me, the Income-tax Officer for .....in the State of.....under section 26A of the Indian Income-tax Act, 1922, and this certificate of registration shall have effect for the assessment for the year ending on the 31st day of March 19......'
It is clear from rule 3 of the rules that the application for registration must be accompanied by the original instrument of partnership. The Income-tax Officer has, however, been given the discretion which he is to exercise after being satisfied that for some sufficient reasons the original instrument cannot conveniently be produced, to accept a copy of it certified in writing by all the partners. It is clear from rule 3 that the insistence is upon the original instrument of partnership being filed. It is only in an exceptional case when the Income-tax Officer is satisfied that the assessee has some good reasons for not being able to produce the original instrument of partnership that he (the Income-tax Officer) may accept a copy. But that copy must be one which is certified in writing by all the partners.
The expression 'certified in writing by all the partners' in our opinion means bearing an endorsement by all the partners to the effect that the copy is a correct one and that the partners do certify that it is correct. Whether or not such a certificate can be endorsed on a separate document appended to the copy is a question which need not engage us in the present case because the statement of the case is clear that no such certificate was endorsed either in the copy or written out on another piece of paper appended to the copy. We are, therefore, satisfied that in view of the facts stated by the Tribunal it must be held that the copy was field along with the application was not a certified copy within the meaning of rule 3 of the Rules.
That the copy should have a certificate endorsed on it is also clear from rule 4 of the rules because that rule clearly provides that if the Income-tax Officer is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership he shall enter in writing at the foot of the instrument or the certified copy a certificate which we have already reproduced. In order to meet the requirement of rule 4 the Income-tax Officer must have before himself either the original instrument of partnership or a certified copy of it. He has to endorse a certificate on either of the two. It may also be noticed that paragraph 2 of the form under rule 3 mentions two things (1) the original, and (2) the certified copy, of the instrument. If the original is filed, then the words 'a certified copy of the' would be struck off, and if, on the other hand a certified copy is filed, then the word 'original' would be struck off. This shows that either the original or the certified copy must be filed.
Inasmuch as in the present case neither the original instrument of partnership nor a certified copy thereof had been filed, the answer to the question referred to us has to be against the assessee.
We, therefore, answer the question referred to us in the affirmative against the assessee and in favour of the department. The assessee shall pay to the Income-tax Commissioner a sum of Rs. 200 by way of costs of these proceedings. We fix the fee of the learned counsel for the department at the same figure.
Question answered in the affirmative.