Income Tax Appellate Tribunal - Cochin
Income-Tax Officer vs Aruna Industries on 6 May, 1987
Equivalent citations: [1987]22ITD261(COCH)
ORDER
A. Satyanarayana, Accountant Member
1. This appeal filed by the revenue is against the order of the CIT (Appeals) dated 10-8-1983 for the assessment year 1978-79 for which the previous year ended on 31-3-1978.
2. The firm M/s Aruna Industries consisting of four partners, namely (1) V. Narayana Pillai, (2) T.N. Arun Kumar, (3) T.N. Arunakumari, and (4) T.N. Ajit Kumar, came into existence on 1-4-1977 and was evidenced by a partnership deed of the same date. For the assessment year 1978-79 it applied to the Income-tax Officer for registration under the Income-tax Act, 1961 in form No. 11 dated 24-1-1978. The said application was accompanied by the original and a copy of the deed of partnership of the firm. The ITO found that the signatures of Smt. T.N. Arunakumari appearing in form No. 11 dated 24-1-1978 and in the deed of partnership dated 1-4-77 differed so widely that there was absolutely no semblance between the two. He summoned Arunakumari and recorded a statement from her. She stated that the signature in the application in form No. 11 dated 24-1-1978 was put by herself. Her explanation for the difference in the signatures was that it was due to shivering of her hand. The 1TO obtained the specimen signature of Arunakumari at the time of recording her statement on 11-11-80 and found that the said specimen signature tallied completely with her signature in the partnership deed but not with the signature in form No. 11. So the ITO came to the conclusion that the signature of Arunakumari appearing in the application in form No. 11 dated 24-1-78 was not put by herself. He noticed that Section 184(3) provided that the application for registration should be signed by all the partners personally. In these circumstances the ITO refused registration to the firm observing as under :-
Since in the instant case application is not signed by all the partners personally in so far as the signature purported to have been put by Smt. Arunakumari, I am satisfied, is not put by her, the assessee has not complied with the requirements of Section 184(7) and the application for registration is not a valid document which can be acted upon.
Aggrieved by the order of the ITO the assessee preferred an appeal before the CIT(A).
3. The CIT(A) directed the ITO to grant registration observing as under:
The partnership has been accepted as genuine by the Income-tax Officer. He has also no grievance against the legality of the deed evidencing the partnership. The Income-tax Officer's opposition is to the alleged signature of the partner, Smt. Arunakumari. After examination Smt. Arunakumari in person and on comparing certain documents which contain her signature, the ITO felt that her signature in the application form was not put by her. The Income-tax Officer has not referred the genuineness of the signature to any expert for his opinion. He has drawn his own inference from the variation in the signature of Smt. Arunakumari. Is it possible that the signature of a person may vary from one another. She herself has confirmed this variation and affirmed her signature in the application form. So long as there is no denial of the signature in the application form and further as long as there is no motive in manipulating the signature, it is to be presumed that the signature was affirmed by Smt. Arunakumari herself. Even assuming that it is possible to hold that the signature was put by some one else, still the ITO should have given an opportunity to the appellant to correct the mistake treating it only as a mistake within the meaning of Section 185(2). No such opportunity has been given in this case. It is also understood that the firm has been registered for the subsequent year onwards acting on a fresh application for registration by the partners including Smt. Arunakumari. Having regard to all these facts and circumstances, I am of the view that there is no case for refusing registration to the firm for the A.Y. 1978-79 on the mere ground that the signature of one of the partners could have been affirmed by some other person.
Against this finding of the CIT(A) the revenue has preferred the present appeal.
4. At the time of hearing the departmental representative filed photostat copies of partnership deed dated 1-4-77, form No. 11 dated 24-1-1978, partnership deed dated 16-3-84, form No. 11 dated 28-3-84, and copy of part of the statement by Arunakumari recorded by the ITO on 11-11-80 containing specimen signatures of Arunakumari. His arguments were to the following effect: According to Section 184(3)(a) of the IT Act, 1961 the application for registration of a firm shall be signed by all the partners personally. In the case of the assessee-firm the ITO found that the purported signature of Smt. Arunakumari appearing in the application for registration in form No. 11 dated 24-1-1978 was not put by her. In those circumstances, the ITO rejected the application and refused registration to the firm. The CIT(A) erred in directing the ITO to grant registration to the firm on the basis of the registration application filed on 28-1-1978. He ought to have found that the signature appearing in the deed of partnership and the registration application were totally different. The difference in the signatures of Smt. Arunakumari in the application in form No. 11 dated 24-1-1978 and the signatures of Arunakumari in the partnership deed dated 16-3-84 and form No. 11-A dated 28-3-84 filed for the assessment year 1984-85 and the specimen signatures obtained by the ITO on 11-11-1980 (photostat copy filed before the Tribunal) is visible to the naked eye. Where there was a patent and glaring difference the CIT(A) ought not to have insisted on the ITO's obtaining an expert opinion regarding forgery. He ought to have found that the ITO had duly considered the only explanation offered by the concerned partner that her signature changed due to shivering of hands. If the CIT(A) thought that an expert opinion was necessary in the matter he ought to have obtained the same without proceeding to hold the signature to be genuine. He ought to have found that the forged signature will not become a real signature if the concerned person ratified the same. The form of application could not be deemed to have been signed by all the partners as required by law. The CIT(A) erred in holding that the ITO ought to have allowed the assessee to correct the mistake as required in Section 185(2) of the IT Act. He ought to have found that a forged signature was not a 'mistake' on the meaning of Section 185(2) so as to entitle the assessee to an opportunity in the matter. He ought to have followed the decision in Matreja & Co. v. CIT [1977] 106 ITR 378 (All.) in the matter.
5. The arguments of the assessee's counsel were to the following effect : Smt. Arunakumari admitted before the ITO that she had herself signed the application for registration in form No. 11 dated 24-1-78. As held by the Punjab & Haryana High Court in the case of Jagan NathPyare Lal v. CIT [1973] 92 ITR 207 the fact that an instrument of partnership and the application for registration was not signed by one of the partners or that the signature of one of them is not genuine would not make the partnership illegal and registration cannot be refused to a partnership on that ground. Hence registration cannot be refused to the assessee firm. The CIT(A) is fully justified in directing the ITO to grant registration.
6. We have considered the rival submissions. The case of Matreja & Co. (supra) is distinguishable on the facts. In that case the firm consisted of the following partners :
1. Seth Suganchand
2. Sri Tarachand s/o Sri Suganchand
3. Smt. Mayadevi w/o Sri Jairamadass
4. Smt. Poonam Devi w/o Sri Veerbhan Das The firm had applied for continuation of registration in form No. 12. In an enquiry made by the ITO, it was admitted before the ITO by Shri Tara Chand that Smt. Maya Devi was out of station and that he had signed the declaration on her behalf. Further Smt. Maya Devi who appeared before the ITO also stated that she had not personally signed the declaration. The facts in the present case are different. In the case on hand Smt. Arunakumari admitted before the ITO that she herself had put the signature on the application for registration in form No. 11 dated 24-1-78. The ITO has not established the case of any forgery by some body. The case relied on by the assessee's counsel, namely Jagan Nath Pyare Lal's case (supra) is also distinguishable. That case is under the Indian Income-tax Act, 1922 whereas the present case is under the Income-tax Act, 1961 where the provisions are different. Further the Supreme Court has reversed the said decision in CIT v. Jagannath Pyarelal [1985] 156 ITR 220. In the case before us the findings of the ITO were that the purported signature of Smt. Arunakumari appearing in the application in form No. 11 dated 24-1-1978 was not put by her and that since the application was not signed by all the partners personally the assessee had not complied with the requirements of Section 184(3). The Allahabad High Court in the case of Brij Rattan Lal Bhoop Kishore v. C1T [1982] 136 ITR 722 held that if an application for registration is not personally signed by one of the partners of the firm, the ITO ought to give an opportunity to the firm to rectify the defect in the application and registration cannot be refused without giving such opportunity. Similarly in the decision of the Calcutta High Court in CIT v. Ghosh & Sons where the receiver of the dissolved firm had signed the application on behalf of the firm for registration, the Court held that it was a defect and that the ITO ought to intimate the defect to the firm and give an opportunity to rectify the mistake within the stipulated period of one month. In the present case the stand of the ITO is that the signature in form No. 11 dated 24-1-1978 was not put by Smt. Arunakumari. So it has to be taken that the purported signature of Arunakumari was non est. and that there was thus a defect in the application. In these circumstances the aforesaid decisions of the Allahabad High Court and the Calcutta High Court are fully applicable. We, therefore, direct the ITO to give necessary opportunity as provided in Section 185(3) to the assessee-firm to rectify the defect and then grant registration to the firm if the defect is rectified within the stipulated period.
7. In the result, the appeal is partly allowed.