TMI Blog1978 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... . On these facts, the ITO refused to grant registration to the firm on the ground that the application was not accompanied with the original partnership deed. It is an admitted position in the present case that the I.T. authority did not not issue any notice as required under s. 185(2) of the Act of 1961. It is relevant to quote s. 185(2) of the Act of 1961, which runs as follows: "Where the Income-tax Officer considers that the application for registration is not in order, he 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; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, reject the application. On a perusal of s. 185(2) of the I.T. Act, 1961, it is clear that if an application for registration is not in order, the ITO shall intimate the firm to remove the defect in the application and, as such, the ITO shall allow an opportunity to the firm to rectify any defect in the application within a period of one month from the date of such intimation. The short question for decision is: "Whether the ITO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this view of the matter, I hold that the ITO erred in law in not issuing a notice under s. 185(2) of the I.T. Act of 1961. In the present case, the ITO asked the petitioner to show cause as to why the registration should not be refused on the basis of a decision of the Allahabad High Court in Abdul Shakoor Co. v. CIT [1968] 69 ITR 467. While replying to the show-cause notice, the original partnership deed was enclosed to the show-cause application. The show-cause application was filed on February 28, 1973 (annexure 1). The learned ITO was of opinion that the principle laid down in Abdul Shakoor's case [1968] 69 ITR 467 (All) applies to the facts of this case. In my opinion, the decision in Abdul Shakoor's case [1968] 69 ITR 467, does not apply to the present case. That was a decision under the Act of 1922. Under the Act of 1922, an application for grant of registration was to be filed under s. 26A of that Act. Under the provisions of the Act of 1922, if the registration application was not accompanied with the original instrument of partnership or a certified copy thereof, the ITO was justified in refusing to grant registration. There was no such provision like s. 185(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-s. (2) of s. 185 read with the provisions of s. 184(5) of the 1961 Act. Before, however, proceeding to analyse the different relevant provisions of ss. 184 and 185 and the corresponding rules for registration or renewal of registration of firms, namely, rules 22 to 25 of the I.T. Rules, 1962 (hereinafter to be referred to as "the Rules") and Form 11 as prescribed under the Rules, I think it worthwhile to make reference to some portions of the impugned order of the ITO in annexure 2. In paragraph 2 of that order, the learned ITO has expressed the view that: "Although the decision of Abdul Shakoor Co. v. CIT [1968] 69 ITR 467 (All) is under the old Act yet there has not been any difference in the procedure of registration in the new Act. Therefore, the case cited above is applicable in toto under the new Act." The ITO has proceeded to observe that the non-accompaniment of the original partnership deed with the application in Form 11 read with rule 22 of the Rules amounts to non-fulfilment of a substantive mandatory requirement of law entitling the revenue to reject an application on this ground simpliciter, especially in the absence of any certified copy of the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted under an instrument" for, it is not necessary to be gone into in the instant case. (iii) The instrument should specify the individual shares of the partners, and (iv) The partnership should be a valid and genuine one and should actually be constituted as specified in the instrument. If the aforesaid conditions are satisfied, the ITO has no authority to refuse the registration of a firm. The substance of the matter, therefore, is that there should be a genuine and valid partnership and that such a partnership should be evidenced by an instrument. It may not be necessary always and invariably that the instrument evidencing partnership should be one instrument only. The terms of such partnership may be gathered from a series of correspondence, all of which cumulatively taken may be said to constitute an evidence of instrument of partnership. If these are the substantive essential requirements of the 1961 Act and if a firm has made an application specifying therein the individual shares of the partners constituting the firm, substantial requirements of law have already been fulfilled. In my view, it is hair splitting argument to contend that s. 185(2) of the 1961 Act cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent evidencing partnership along with the copy or duplicate thereof with the application, has already been given both in the form prescribed and the Schedule attached to Form 11. It is nobody's case that the Schedule to Form 11 which the petitioner had filed before the revenue authority, had not been duly filled in. For all practical purposes, therefore, the substantive requirements of law had already been complied with. Under the 1961 Act, an application for registration cannot be rejected simply because it is not in order. S. 185(2) of that Act enjoins that the assessee be given an opportunity to rectify the defects in the application. The non-accompaniment of either the original or a certified copy of the instrument evidencing partnership with the application does not go to the root of the matter and, there is conceivably no reason as to why it should not be held that the opportunity to rectify the defect--and the non-filing of the instrument evidencing partnership along with the application I treat merely as a defect under s. 185(2)--is not fatal to the application. The 1922 Act contained no such express provision. There is a purpose and intent behind this legislative express ..... X X X X Extracts X X X X X X X X Extracts X X X X
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