BAHREEN FOUNDRY & WORKSHOP, GUJRANWALA Versus COMMISSIONER OF INCOME-TAX, RAWALPINDI

ORDER

---SHAFI‑UR‑REHMAN, J. ‑‑‑The petitioner applied on 6th January 1973, under section 26‑A of the Income‑tax Act for registration as a firm. The Assistant Income‑tax Officer by his order dated 3rd January, 1974 rejected the application. The grounds given were that four of the partners were out of the country on the date when the deed was shown to have been executed in Pakistan. They were found to be residing in Qatar State. It was claimed that the documents had been sent abroad for their signatures. The officer found that there was no material at all to sustain that claim and additionally the partnership deed had no folds to indicate that it had been placed in a cover despatched and again received from abroad. The officer held "sit was not possible for the partners within the country and the partners out of the country to sign the documents on the same date, i.e. 10th August 1972, nor there is any mention ire the partnership deed regarding the fact that some of the partners were out of country and had to sign separately". On these factual findings he held tract the partnership was not genuine and proceeded to assess as association of persons. Before the Appellate Tribunal the claim made was that there was already a registered partnership doing the business and what was sought to be done by the new partnership was only a change in the proportion of the profit of the each partner. The petitioner, therefore, as constituted earlier continued and registration could not be refused on the ground that the partners had not subscribed or were not present in the country. Additionally it was urged that sufficient opportunity had not been afforded to show that in fact they had subscribed to the decd, as shown by the documents. The first contention did not prevail with the Tribunal m view of the decision Rivoli Theatre, Karachi v. C. I. T. (1975) 31 Taxation 55 (S C). As regards the second ground it was held that as even today no evidence was available with him to establish that the four persons residing out of Pakistan were available on 10th August, 1972 for signing the partnership deed", Tb, Tribunal was moved then by the practitioner for referring the three questions formulated by it to this Court, but it was rejected on the ground that all the findings were of fact and did not give rise to any of the three questions of law proposed for reference.

2. The points raised by the petitioner are as follows:

(1) Whether on the facts and in the circumstances of the case the learned Members of the Appellate Tribunal misdirected themselves in holding that the Deed of Partnership dated 10th of August 1972 created a new firm within the meaning of Rivoli Theatre v. Commissioner of Income‑tax (1975) 31 Taxation 55 (S C) and whether its judgment has been vitiated on that score?

(2) Whether on the facts and in the circumstances of the case it was open to the Income‑tax Appellate Tribunal to uphold the Income‑tax Officer's order based upon the examination of the solitary document executed on the 10th of August, 1972 overlooking the fact that the profits were, in fact, being distributed in accordance with the altered ratio of the partners and the deed was being implemented from year to year and that none of the partners had repudiated his share in the firm?

(3) Whether on the facts and in the circumstances of the case the Appellate Tribunal was right in refusing to grant registration to the firm under section 26‑A of the Income‑tax Act 1922?

3. The petitioner had applied for registration of a firm under section 26‑A of the Income‑tax Act. It was the bounden duty of the Registering Officer, under section 26‑A as well as under rules 5 and 7 of the Income‑tax Rules to satisfy himself about the genuineness of the firm. He conducted such an inquiry and on facts none of which is irrelevant be held that it, was not genuine. On that view he has refused registration. The first question of law that is sought to be raised is an essentially new question. If it was not a new partnership, it did not require the registration under section 26‑A. No such application was required to be made by the petitions. He cannot now turn the tables and question his own act by contending that what he did was a mere redundancy and that he should' be deemed not to have done it at all. If there is an application for registration under section 26‑A it is the statutory duty of the Registering Officer to inquire and to satisfy himself about the genuineness of the firm shown to have been constituted by the documents furnished. The Income‑tax officer, therefore, discharged his duty in accordance with law and on finding that four partner subscribed to it he had no option but to reject the registration.

4. There is no question of affording an opportunity. Ordinarily an applicant for registration is expected to furnish all the relevant documents and material which may be of assistance in getting the relief and determining the question of fact required to be determined. There is nothing on record to show that any opportunity was asked for by the petitioner at any stage, or any material was indicated which could he determinative of the question involved. We agree with the Tribunal that there is only a question of fact involved in the case and mere reference to the Rivoli Theatre's ruse could not benefit the petitioner in raising a question not arising directly out of the proceedings. The reference is, therefore, refused in limine.

Reference refused in limine.