Patna High Court
Bhuramal Paluram vs Commissioner Of Income-Tax on 6 January, 1955
Equivalent citations: AIR1955PAT342, 1955(3)BLJR76, [1955]28ITR62(PATNA), AIR 1955 PATNA 342
JUDGMENT
1. In this case the assessee is a partnership firm consisting of two partners, Bhuramal Tewari and Paluram Agarwal, having equal shares. The partnership was registered under Section 26A of the Income-tax Act for the assessment years 1945-46, 1946-47 and 1947-48. For the assessment year 1948-49, the partnership firm filed an application for renewal of the registration. The application was made on 8-9-1948. Together with the application the assessee. produced a partnership deed dated 29-7-1944. The application was signed . by one of the partners Paluram. The other partner Bhuramal did not sign the application personally but one Surajmal signed on his behalf. On 31-7-1949, a second application was filed on behalf of the assessee firm, The application was accom-pained by another partnership deed dated 29-6-1949. This time the application was signed by Paluram and also by one Jutaram who held a power of attorney from Bhuramal. The application was rejected by the Income-tax Officer who refused registration on three grounds, one of which was that Bhuramal did not personally sign the application. An appeal was taken on behalf of the assessee to the Appellate Assistant Commissioner. The appeal was allowed by the Appellate Assistant Commissioner and the Income-tax Officer was directed to register the firm. The Department preferred an appeal to the Appellate Tribunal who allowed the appeal taking the view that the assessee firm was not entitled to registration under Section 26A as Bhuramal did not sign personally the application form.
2. In this state of facts the Appellate Tribunal has submitted the following questions of law for the opinion of the High Court;
"(1) Whether Rule 6, Income-tax Rules, 1922, which requires that an application for renewal of re-
gistration should be signed personally by the partners is 'ultra vires ?' and (2) Whether the word 'personally' in Rule 6, Income-tax Rules would exclude the duly authorised agent of a partner , from signing the application for renewal of registration under Section 26A of the Act, read with Rule 6, Income-tax Rules on behalf of a partner?"
3. As regards the first question Mr. Dutt on behalf of the assessee put forward the "argument that Rules 2 and 6, Income-tax Rules were repugnant to the Powers-of-Attorney Act and, therefore, these rules were in excess of the statutory power conferred on the Central Board of Revenue and should be held to be "ultra vires'. Learned counsel pointed out that Section 26A of the Act does not itself provide that the application for registration of the partnership firm must be signed personally by each of the individual partners. Learned counsel referred to Section 26-A which is in the following terms:
"(1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-tax or super-tax, (2) The application shall be made by such person or persons and at such time and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed; and it shall be dealt with by the Income-tax Officer in such manner as may be prescribed."
Counsel also referred to Rules. 2 and 6 framed by the rule-making authority under Section 59, Income-tax Act. Rule 2 states:
"Any firm constituted under an instrument of Partnership specifying the individual shares of the partners may, under the provisions of Section 26A, Income-tax Act, 1922 (hereinafter in these rules referred to as the Act), register with the Income-tax Officer, the particulars contained in the said Instrument on application made in this behalf. Such application shall be signed by all the partners (not being minors) personally, or in the case of a dissolved firm by all persons (not being minors) who were partners in ' the firm immediately before dissolution and by the legal representatives of any such partner who is deceased and shall, for any year of assessment up to and including the assessment for the year ending on 31-3-1953, be made before 28-2-1953, and for any year of assessment subsequent thereto, be made....."
Similarly, Rule 6 requires that an application for -renewal of the registration should be signed personally by all the partners. Rule 6 reads as follows:
"Any firm to whom a certificate of registration has been granted under Rule 4 may apply to the Income-tax Officer to have the certificate of registration renewed for a subsequent year. Such application shall be signed personally by all the partners (not being minors) of the firm, or, where the application is made after dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before dissolution and by the legal representative of any such person who is deceased; and ac-
companied by a certificate in the form set put below........."
The argument of Mr. Dutt is that these rules are repugnant to Section 2 of the Powers-of-Attorney Act which states:
"The donee of a power-of-attorney may, if he thinks fit, execute or do any assurance, instrument or thing in and with his own name and signature, and his own seal, where sealing is required, by the authority of the donor of the power; and every assurance, instrument and thing so executed and done, shall be as .effectual in law as if it had been executed or done by the donee of the power in the name, and with the signature and seal, of the donor thereof.....".
In support of his argument Mr. Dutt referred to the principle that in making rules under the power conferred by a particular statute the rule-making authority must exercise the power not merely within the limits laid down by the statute but the rules framed must not ' entrench on other legislative enactments. Counsel referred in this connection to passage from Craies on Statute Law at page 299:
"A by law to be valid, says Sir John Comyns (Digest, tit,. By law, B. 1), must, be 'legi fidei ration! consona'. This is in accordance with the proposition stated in 5 Co. Rep. 63 namely, that 'all by laws are allowed by the law which are made for the true and due execution of the laws or statutes of the realm, or for the well government and order of the body incorporate. And all by-laws which are contrary or repugnant to the laws or statutes of the realm are void and of no effect.' It is sometime expressly stated in a statute that a bylaw must riot be repugnant to the statute or the general law; but whether so stated or not a bylaw which in whole or in part is not confined to the particular circumstances contemplated by the statute or is repugnant to the general law is invalid. From this rule it follows, as was said by Lush J., in --'Hall v. Nixon', (1875) 10 QB 152 at p. 159 (A), 'obedience to a bylaw cannot be enforced by the imprisonment of the offender or by the forfeiture of his goods, because these are both against Manga Charta'."
4. In our opinion the argument addressed by. Mr. Dutt on behalf of the assessee cannot be accepted as correct. It is no doubt true as a matter of general principle that the rules made under statutory power should not be repugnant to general principles of 'common law or statute law. But that principle has no application to the present case. The reason js that Section 59 of the Income-tax Act which confers the rule-making power on the Central Board of Revenue has also provided that the "rules made under this section shall be published in the Official Gazette, and 'shall thereupon have effect as if enacted in this Act'. It is not suggested on behalf of the assessee that Rules 2 and 6 of the Income-tax Rules are 'ultra vires' of any provisions of the Income-tax Act. On the contrary, Section 26A read with Section 59 of the Income-tax Act confers power on the Central Board of Revenue to. make rules "prescribing the person or persons- by whom an application for registration of firm should be signed and made and the form, verification and other particulars of such application. Section 26A(2) states that sthe application shall be made by such person or persons and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed. ' The expression "prescribed" has been defined in Section 2(10) of the Act to mean "prescribed by rules made under this Act. "Section 59(2)(e) confers power on the Central Board of Revenue to enact rules in order to "provide for any matter which by this Act is to be prescribed." It is therefore clear that . Rules 2 and 6 which have been made by the Central Board of Revenue in exercise of the rule-making authority are in consonance with the provisions of the Income-tax Act and they are intra vires of the said Act. Section 59(5) of the Income-tax Act states that the rules made under the section shall be published in the Official Gazette and "shall thereupon have effect as if enacted in this Act." It follows therefore that these rules have same effect and force as if they are a part of the Income-tax Act as it was originally enacted. Rules 2 and 6 are no more statutory rules but they have become by the force of Section 59(5) a part of the Income-tax Act itself. If that is the correct position it is not open to the assessee to challenge these rules on any of the grounds upon which subordinate legislation can be challenged. .For instance, the rules cannot be Challenged on the ground that they are unreasonable or on the ground that they contravene any principle of common law or . any provision of statute law.
It is true, as contended on behalf of the as sessee, that Rules 2 and 6 are repugnant to some extent to Section 2 of the Powers-of-Attorney Act. But in such a case the principle applicable is embodied in the legal maxim 'leges posterioris priores coritraria abrogant'. If this principle is applied, it is clear that Rr. 2 and 6 must override the provisions of the Power-of-Attorney Act so far as the registration of a 'firm under the Income-tax Act is concerned. We cannot, therefore, accept the argument of Mr. Dutt that Rules 2 and 6 of the Income-tax Rules are "ultra vires' or invalid on the ground that there is repugnancy between these rules and the provisions - of the Powers-of-Attorney Act.
5. The view that we have expressed is borne out by the decision of the House of Lords in --'Institute of Patent Agents v. Lockwood', 1894 AC 347 (B). The question at issue in that, case was whether certain rules made by the Board of Trade under the statute of 1883. were "ultra vires'. Section 101 of the Patents, Designs, and Trade Marks -Act, 1883, empowered the Board of Trade to make such general rules as they thought expedient subject to the provisions of the Act for regulating the practice of registration under the Act. Sub-section (3) of Section 101 enacted that general rules made under the statute shall "be of the same effect as if they were contained in this Act, and shall be judicially noticed". It was argued on behalf of the respondent'in that case that the rules were 'ultra vires' as the Board of Trade had no 'express, statutory power to. impose taxation and if the Legislature had intended to give the Board the power of imposing fees such power would have been expressly given. It was held by the House of Lords that the provisions of Section 101(3) of the statute which enacted the rules shall be of the same effect as if they were contained in the Act precluded any kind ot enquiry as to whether the rules were 'ultra vires' or not. Lord Herschell was indeed of opinion that the formula "as if enacted in this Act" had the effect of "making the subordinate legislation as completely exempt from judicial review as the statute itself. There is a decision of the Madras -High Court also on the same point -- 'Kandasami Pillai v. Emperor', AIR 1919 Mad 24 (C).
6. Counsel (sic) on behalf of the assessee re ferred also in the course of his argument to --
"Subba Kao v. Commr. of Income-tax', AIR 1952 Mad 127 (D). Counsel based his argument upon the dissentient judgment of Satyanarayana Rao J.
in that case. For the reasons we have already given we are unable, with great respect, to accept as correct the line of reasoning followed by Satya narayana Rao J, We prefer the judgment of Viswanatha Sastri J. in this case and we consider that the law on this point has been correctly stated in his judgment. We accordingly answer the first .
question referred to the High Court in favour of the ' Income-tax Department and against the as sessee.
7. As regards the second question Mr. Dutt conceded that in view of the decision of the Supreme Court in -- 'Commr. of Agricultural Income-tax v. Keshab Chandra Mandal', AIR 1950 SC 265 .(E) and of the. Madras High Court in -- Commr. of Income-tax v. Ravula Subba Rao', AIR 1946 Mad 411' (F) , the word "personally" in Rules 2 and 6 of the Income-tax Rules would exclude a duly authorised agent of a partner from signing an application under Section 26A of the Act on behalf of the partner himself. The second question referred to the High Court must also be answered against the assessee and in favour of the Income-tax Department.
8. The assessee must pay the cost of this reference; hearing fee Rs. 250.