Case: Messrs Pratapmal Luxmichand Vs. Commissioner Of Income-Tax, Madhyapradesh

2. The appellant, a firm of Messrs. Pratapmal Laxmichand of Betul consisted of 7 Partners, viz., Misrilal Goti, Meghraj Goti, Panraj Goti, Phulchand, Basantibai, Rantanbai and Gokulchandi Goti. A deed of partnership was executed on the 12th February 1944 by all the partners except Gokulchand Goti who happened to be in the Seono Jail being a security prisoner under the Defence of Indiawas unable to sign the same in spite of all efforts to obtain his signature in prison. An application for registration of the firm under section 26-A of the Act for the assessment year 1943-44 was made on the 24th March 1944 personally signed by the other 6 partners of the firm and was accompanied by the deed of partnership which also had been signed by those 6Special Income-tax Officer, Nagpur, rejected the application on the ground that the deed itself was not valid inasmuch as it had not been signed by all the partners mentioned in the body and there was no signature of Gokulchand on the deed and the application. An appeal was taken to the Appellate Assistant Commissioner against this decision of the Special Income-tax Officer on the 24th Aprilappended his signature to the deed of partnership in Seoni Jail on the 9th JanuaryThe appeal was heard before the Appellate Assistant Commissioner on 20-3-1947 and he passed an order on the 17th February 1948 cancelling the order of the Special Income-tax Officer had directing him to register the firm after obtaining the signature of Gokulchand both on the application for registration and the deed ofthe instance of the Commissioner of Income-tax, C. P. and Berar, an appeal was filed against this order of the Appellate Assistant Commissioner by the Income-Tax Officer, Spl. I. T. cum E. P.T. Circle, Nagpur, before the Income-tax Appellate Tribunal.The Tribunal allowed the appeal by its order dated 1116 October 1948 observing that the Special Income-tax Officer was justified in refusing to register the firm as the application for registration was not signed by Gokulchand, that Rule 2 (c) of the Indian Income-tax Rules, 1922, on which the Appellate Assistant Commissioner seems to have relied did not apply and the Appellate Assistant Commissioner was not justified in directing the Income-tax Officer "to register the firm after obtaining the signature of Seth Gokulchand both in the application for registration and the deed of partnership."The appellant applied for a reference to the High Court under section 66 (1) of the Act and the Tribunal referred the following question arising out of its order for the opinion of the Highon the facts and in the circumstances of the case the Appellate Assistant Commissioner was legally competent to direct the Income-tax Officer to register the firm after obtaining the signature of Seth Gokulchand both in the application for registration and in the deed ofthe statement of the case was being drawn up by the Tribunal, counsel for the appellant suggested that the words appearing in para 6 of the statement viz,. "No application was submitted to the Appellate Assistant Commissioner seeking his permission under Rule 2 (c) of the Indian Income-tax Rules" bealso suggested that the concluding words in the question referred to the High Court, viz. "after obtaining the signature of Seth Gokulchand both in the application for registration and in the deed of partnership" beregard to the latter suggestion the Tribunal observed that they were unable to delete the same inasmuch as the words sought to be deleted were the concluding words appearing in the Appellate Assistant Commissioners order dated the 17th February 1948 giving directions to the Income-tax Officer and were words which were material to the question before the Highregard to the first suggestion counsel for the appellant had stated that the appellant had submitted three applications to the Appellate Assistant Commissioner all dated 20th March 1947 and that it would be wrong to state that no application was submitted to the Appellate Assistantallegation made by the appellant was properly investigated subsequently and the Tribunal was satisfied that the appellant did not appear to have put in the application dated 20th March 1947 as alleged. This being the position the Tribunal stated that no change in the statement of case was called for as suggested by the appellant.It was on this statement of case by the Tribunal that the referred question came to be determined by the High Court. Before the High Court the appellant had applied on the 27th November 1950 that the three certified copies of the three applications dated 20th March 1947 made by the appellant to the Appellate Assistant Commissioner with their originals should be sent for by the High Court from the Income-tax Tribunal and an order had been madeHigh Court was of the opinion that the Appellate Assistant Commissioner should have ordered registration of the firm provided there was an application before him duly signed by all the partners. As, however, there was no such application, he could not have directed the Income-tax Officer to register the firm after obtaining the signature of Gokulchand on the application and also in the partnership deed. The High Court accordingly answered the referred question in the negative.An application under section 66-A (2) of the Act for a certificate for leave to appeal to this Court against that order was dismissed by the High Court but the appellant obtained special leave to appeal against the same from this Court on the 6th December 1954.

Reasoning: In the first instance, it was not open to the appellant to urge any point which was not taken in the statement of case and even if it was open to him to urge that contention we do not think it necessary to express any opinion on the correctness or otherwise of the statement above referred to in view of the construction which we put on Rule 2 of the Indian Income tax Rules, 1922.We are not impressed with this argument. As appears abundantly clear from the terms of the order made by the Appellate Assistant Commissioner himself and also from the statement of case prepared by the Tribunal, the application signed by all the partners personally including Gokulchand was not before the Appellate Assistantmust, therefore, decide this appeal on the facts stated in the statement of case by the Tribunal and on the basis that the application for registration dated the 20th March 1947 signed by all the partners personally including Gokulchand was not before the Appellate Assistant Commissioner.10. If that was the position, the only power which the Appellate Assistant Commissioner had under Rule 2(c) was to accord permission to the appellant to make the application in proper form to the Income-tax Officer signed by all the partners personally including Gokulchand before the assessment was confirmed, reduce, enhanced or annulled. The Appellate Assistant commissioner had, under the Rule, no power to direct the Income-tax Officer to register the firm after obtaining the signature of Gokulchand both in the application for registration and in the deed of partnership as heattempt, however, failed and no steps were taken by the appellant before the High Court at the hearing of the reference to either have the referred question amended or reframed in order to bring into prominence his contention in regard to the powers of the Appellate Assistant Commissioner.11.On the question as framed, the only answer which the High Court could give was that the Appellate Assistant Commissioner was not legally competent to direct the Income-tax Officer to register the firm after obtaining the signature of Gokulchand both in the application for registration and in the deed of2(c) above-quoted did not empower the Appellate Assistant Commissioner to do anything of the sort and we are of the opinion that the answer given by the High Court in the negative was, therefore,fail to understand what bearing these clauses have on the determination of the referred question.