(1) This reference under S. 66(2) of the Indian Income-tax Act 1922 relates to the claim of the assessees for registration of their firm for the assessment years 1953-1954 to 1955-56, and the question for our consideration is whether the Tribunal had drawn the proper legal inference as to the existence of a valid partnership entitling the applicants to the registration of the same under S. 26-A of the Income-tax Act. We have perused the order of the Tribunal as also the statement of the case submitted by it, and we have to hesitation in answering the question against the assessees.
(2) The partnership is said to have consisted of the father, P. D. Mani, and his three sons and been constituted from April 1951. The firm was not registered with the Registrar of Firms until 15-3-1955. The department declined registration for the assessment year 1952-53. The Tribunal has found that there was literally nothing to show that the sons ever participated in the business of the firm. The works contracts, which P. D. Mani had entered into with the Buckingham and Carnatic Co. Ltd. were in his personal name. Likewise, all the correspondence, bills drawn and payments made were in his personal name. It is true the firm's name itself was described as P. D. Mani. Even so, right through the period there was no intimation to the Buckingham and Carnatic Co. Ltd., that he was doing business as a firm from any particular date, except a communication dated 5-3-1952, to the Chief Engineer of the Company. But this communication has not been relied on by the Tribunal, though it adverted to it. The partnership deed contemplated that the firm should keep the accounts and divide the profits in particular proportion.
An amendment deed was drawn up, which was dated 30-3-1955, the effect of which was to enable or authorise estimation of the profits and sharing thereof. This amendment was made on the penultimate date of the last of the years under appeal before the Tribunal. The Tribunal also noted that there was no proper accounts for the business. When addressed to it, the company's reply to the department was that it had no intimation until 1956 that P. D. Mani was doing business as a firm. In the circumstances, the Tribunal came to the conclusion, that, although there was a deed of partnership there was no genuine partnership constituted between the parties.
(3) Before us it is urged for the assessees that in point of fact there was intimation, even as early as March 1952, as to the existence of the partnership, and the tribunal was not entitled to ignore it. It is also stated that the Tribunal was not justified in being led by the opinion of the company, as that would be irrelevant to the consideration whether the firm in fact existed. In the assessments, the assessees' status has been described as unregistered firm. This fact also is relied on for the assessees and it is contended that this shows that the department itself considered that the firm existed. We do not think that we can accept these contentions.
(4) Our power under S. 66 is not appellate in character. This court's jurisdiction is purely advisory and opinion is offered on the facts found by the Tribunal and stated in the statement of the case. Appreciation of evidence or review of factual findings of the Tribunal will be outside the purview of a reference under S. 66. It may be that courts by force of habit sometimes, if we may say so, overstep this limit and embark into factual investigation, appreciation of evidence and disposal as in an appeal. But we should guard ourselves against such a procedure.
(5) On the facts found by the Tribunal, in this case, it is not possible to say that it drew the improper legal inference as to the existence of a valid partnership. The Tribunal has relied upon the fact that no evidence of participation of the sons in the business has been produced and the method of estimating and sharing the profits also raises a doubt as to the real existence of the firm. The Tribunal in making that approach was on the right track. It is true that, when registration is asked for under s. 26-A, not always could it be refused on the ground that there is no evidence of physical participation of this or the other partner in the business of the firm. But, in a case like this, it is not a circumstance, which cannot legitimately be taken into account. In the case of a firm consisting of a father and sons, we should in our opinion give a large latitude to the father, who perhaps in the settings may be the dominus of the business and carry on the functions in his name. The fact, therefore, that there was no intimation of the existence of the firm or that the correspondence and the bills were carried on or drawn up in the personal name of the father could not be conclusive. But on these facts taken with the main circumstance that there is no evidence at all forthcoming as to the participation in any manner of the sons in the business of the firm over the years, the Tribunal cannot be said to have drawn an improper inference that the firm is not genuine.
(6) The question is answered against the assessee with costs. Counsel's fee Rs. 250.
(7) Answer accordingly.