Ajit Kumar Sengupta, J.
1. At the instance of the Commissioner of Income-tax, the following question of law has been referred to this court under Section 256(1) of the Income-tax Act, 1961, for the assessment years 1968-69 and 1969-70 :
'Whether, on the facts and circumstances of the case and in view of the fact that the business was carried on by the receiver appointed by theHigh Court, the Tribunal was justified in holding that the assessee-firm was entitled to continuation of registration ?'
2. In the assessment of the assessee, Ghosh & Sons, for the assessment year 1961-62, the Income-tax Officer had adopted the status as Hindu undivided family as against the status of registered firm claimed by the assessee. The Appellate Assistant Commissioner, however, granted registration to the assessee which was confirmed by the Tribunal by the order dated June 1, 1970. The registration was allowed to the assessee till the assessment year 1967-68. In 1967, a receiver was appointed to run the business of the assessee in the suit instituted in the High Court being Suit No. 2619 of 1967 (Pannalal Ghose v. Smt. Sarojini Ghosh). The receiver filed the returns for the assessment years 1968-69 and 1969-70 showing the status as registered firm. The applications for continuation of registration of the firm in Form No. 12 were filed on behalf of the assessee by the receiver under his own signature. The said applications were, however, rejected as the applications were not signed by the partners of the firm. Thus, the claim for registration was rejected and the assessee was assessed in the status of a Hindu undivided family for the aforesaid assessment years. The Income-tax Officer in treating the assessee as Hindu undivided family followed the order for the assessment year 1961-62.
3. On appeal before the Appellate Assistant Commissioner, the Appellate Assistant Commissioner held that since the receiver appointed by the High Court was running the business and was handing over a portion of the income to the parties to the suit, the firm was not legally permitted to do any business and there cannot be any firm in the eye of law. The Appellate Assistant Commissioner held :
'Where a court intervenes and deprives the owner of the right to carry on his own business, he is not the legal owner of the business. A partnership can exist only for carrying on the business and if there is no business, there cannot be any partnership either. For these reasons, the assessee is not entitled to registration or continuation of the registration. The Income-tax Officer was, therefore, right in refusing to grant registration. '
4. Although the Income-tax Officer rejected the continuation of registration on the ground that the applications in Form No. 12 were signed by the receiver and not by the partners, the Appellate Assistant Commissioner proceeded on the footing that no business was carried on by the firm.
5. The assessee went to the Tribunal. The Tribunal found that up to the assessment year 1967-68, registration was allowed to the assessee. The income assessed in both the said years included income from business; It cannot, therefore, be said that the assessee carried on no business during the relevant previous years. But for the defect in the application formsthe assessee was entitled to the continuation of registration. The Tribunal held that under Section 185(3) of the Act, the Income-tax Officer should have pointed out the defect in the application and allowed an opportunity to the assessee to rectify the mistake. Accordingly, the Tribunal set aside the order of the Income-tax Officer and directed the Income-tax Officer to allow an opportunity to the assessee to rectify the defect in the application forms and to allow continuation of registration for both the years under consideration.
6. It is contended by the learned advocate for the Revenue before us that since the receiver was appointed over the business, no business was carried on by the assessee-firm and as such no registration should have been allowed. We are, however, not impressed by the submission made on behalf of the Revenue. It is nobody's case that the assessee-firm stood dissolved during the relevant previous years. Because of disputes and differences amongst the partners, a receiver was appointed who was carrying on the business on behalf of the partners. The receiver was appointed by the High Court to receive and preserve the property or fund in litigation pendente lite. The receiver has no personal right in the assets of the firm. The possession of the receiver is on behalf of and for the benefit of all the parties to the suit in which he was appointed. 'The possession is of all the parties to the proceedings according to their titles. The receiver was appointed over the business and he carried on the business for and on behalf of the partners. It cannot, therefore, be said that the assessee-firm did not carry on the business during the relevant previous years.
7. However, the receiver was not competent to apply for continuation of registration in Form No. 12. Section 184(7) of the Act provides that where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year if the conditions prescribed therein are satisfied. One of the conditions is that a declaration in the prescribed form and in the prescribed manner has to be filed before the Income-tax Officer. Such declaration is to the effect that there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted. Rule 24 of the Income-tax Rules, 1962, provides that the aforesaid declaration has to be furnished in the prescribed form being Form No. 12 and shall be verified in the manner indicated therein and shall be signed by the persons concerned in accordance with Sub-rule (5) of Rule 22. Sub-rule (5) of Rule 22 provides as follows :
'(5) The application shall be signed personally by all the partners (not being minors) in the firm as constituted at the date of the application and, in the case of a dissolved firm, personally by all the persons (not beingminors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased so, however, that in the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf, or, as the case may be, by a person entitled under law to represent him.'
8. Form No. 12, therefore, has to be signed by the partners. The receiver who carries on the business of a firm is neither a partner nor a person competent to sign the said form. In that view of the matter, the Tribunal was right in holding that the applications for continuation of registration were defective. Section 185(3) provides as follows :
'185. (3) Where the Income-tax Officer considers that the declaration furnished by a firm in pursuance of Sub-section (7) of Section 184 is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the declaration within a period of one month from the date of such intimation ; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, declare that the registration granted to the firm shall not have effect for the relevant assessment year.'
9. The Income-tax Officer, therefore, should have intimated the defect to the firm and given it an opportunity to rectify the defect in the declaration filed by the receiver. In spite of the opportunity given, if the defect is not rectified within the specified time, the Income-tax Officer will then be empowered to declare that the registration granted to the firm shall not have any effect for the relevant assessment years.
10. Having regard to the facts and circumstances of the case and the relevant provisions of the Act and the rules referred to above, we are of the view that the Tribunal was right in directing the Income-tax Officer to allow an opportunity to the assessee to rectify the defect in the declaration made under Section 184(7) of the Act.
11. In the premises, we answer the question in the affirmative and in favour of the assessee.
12. There will be no order as to costs.
Dipak Kumar Sen, J.
13. I agree.