Case: M/s. Sher-E-Punjab Silk Stores Delh Vs. Commissioner of Income Tax, New Delhi

1. This is an appeal by special leave. The appellant is the assessee. In this case we are concerned with his assessment for the assessment year 1958-59. The relevant previous year ended on March 31, 1958. The assessee firm applied for renewal of its registration under Section 26A of the Indian Income Tax Act 1922 (in short the Act) before the Income Tax Officer on May 26, 1958. In that application he mentioned that the previous years income had been divided among the partners. The Income-tax Officer rejected that application. He did not believe the version of the assessee that the previous years income had been divided. In appeal, the Appellate Assistant Commissioner agreed with the conclusion reached by the Income-tax Officer. On a further appeal being taken to the Income-tax Appellate Tribunal the Tribunal agreed with the conclusions reached by the lower authorities. Before the Tribunal yet another contention appears to have been taken. That contention was that at any rate the partners having divided the income of the previous year as evidenced by the balance sheet before the assessment was made, the assessee firm was entitled for its registration under Section 26A. The Tribunal did not go into that question. The High Court agreed with the view taken by the Tribunal.

Reasoning: 3. From a reading of these provisions it is clear that in the case of an application for renewal it is incumbent on the part of the assessee to have divided the previous years profits. This conclusion appears to be obvious from Section 26A read with Rules 2, 3, 6 and the forms set out earlier.The contention of Mr. Sharma, the learned counsel for the assessee, that if the relevant provisions are interpreted in the manner that we have done it leads to hardship to the assessee, is not relevant in view of the plain language of the provisions.Our conclusion in this regard receives support from the decision of Madras High Court in Surajmal v. Commr. of Income-tax, Madras, (1961) 43 ITR 491 (Mad)  and that of the Allahabad High Court in Ganesh Lal Laxmi Narain v. Commr. of Income-tax, U. P. (1968) 68 ITR 696.  In Khanjan Lal Sewak Ram v. Commr. of Income-tax, U. P. 83 ITR 175  = (AIR 1972 SC 61 ) this Court had ruled that para 3 of Rule 6 (supra) is mandatory.