K.S. Paripoornan, C.J. and U.P. Singh, J.
1. At the instance of the Revenue, the Income-tax Appellate Tribunal, Patna Bench, Patna, has referred the following question of law for decision of this court :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing that registration be allowed to continue to the assessee-firm for the assessment year 1975-76 in view of the declaration under Section 184(7) of the Income-tax Act, 1961 ?'
2. We heard counsel for the Revenue and also counsel for the respon-dent-assessee. The entire matter is in a very narrow compass. We are concerned with the assessment year 1975-76. The previous year ended on March 31, 1975. The assessee-respondent-firm was given registration for the assessment year 1974-75. At that time, the firm had 18 partners. By the retirement of five persons, the firm stood dissolved with effect from March 31, 1975. The remaining 13 persons continued the firm from April 1, 1975. The said partners, who continued the firm from April 1, 1975, filed declaration in Form No. 12 on July 28, 1975, for continuation of the registration for the year 1975-76. The list of persons who were partners in the firm from April 1, 1975, was made available to the Income-tax Officer. It was also the admitted case before the Tribunal, that the firm from April 1, 1975, with 13 persons was granted registration for the assessment year 1976-77. The Income-tax Officer did not grant continuation of registration for 1975-76 holding that all the 18 partners, who constituted the firm during the relevant accounting period that ended on March 31, 1975, did not sign the declaration in Form No. 12. In appeal, the Commissioner of Income-tax (Appeals) held that the declaration in Form No. 12 needed to be made only by the partners who constituted the firm on the date of making of such declaration and as on that date 13 persons were partners and continued the firm from April 1, 1975, they had signed the declaration in Form No. 12, and so it should have been accepted and refusal to grant continuation of registration by the Income-tax Officer was held not justified.
3. The Revenue took up the matter in appeal before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal, relying on the decision in Addl. CIT v. S.V. Ramaswamy and Sons : [1977]106ITR154(KAR) , held that the partners of the firm, as constituted at the time of making the declaration, need alone sign Form No. 12 and it is a valid one. It was further held that in the present case the firm was dissolved on March 31, 1975, and Form No. 12 was filed on July 28, 1975, when the firm of 13 partners had come into existence and all of them had signed the declaration in Form No. 12. Holding that, that the view taken by the Commissioner of Income-tax (Appeals) was reasonable, the Appellate Tribunal dismissed the appeal filed by the Revenue. It is thereafter, at the instance of the Revenue, the Income-tax Appellate Tribunal, Patna Bench, Patna, has referred the question of law formulated hereinabove for the decision of this court.
4.
For understanding the scope of the controversy, it is sufficient if we refer to Section 184(7) of the Income-tax Act, read with rules 22(5) and 24 of the Income-tax Rules, 1962, which are as follows :
'Section 184. (7) Where registration is granted or is deemed to have been granted to any firm for any assessment year, it shall have effect for every subsequent assessment year :
Provided that-
(i) there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration, was granted ; and
(ii) the firm furnishes, before the expiry of the time allowed under Sub-section (1) of Section 139 for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that where the Assessing Officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made.'
'Rule 22. (5)--The application shall be signed personally by all the partners (not being minors) in the firm as constituted at the date of the application and, in the case of a dissolved firm, personally by all the persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representatives of any such partner who is deceased, so, however, that in the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf, or, as the case may be, by a person entitled under law to represent him.'
'Rule 24. The declaration to be furnished under Sub-section (7) of Section 184 shall be in Form No. 12 and shall be verified in the manner indicated therein and shall be signed by the persons concerned in accordance with Sub-rule (5) of rule 22.'
5. Under the proviso to Section 184(7) of the Income-tax Act, the firm should, before the specified time, furnish a declaration satisfying Section 184(7), proviso, clause (i), in the prescribed form and verified in the prescribed manner. The prescribed form is rule 24. Under rule 24, the declaration to be furnished under Section 184(7) shall be in Form No. 12.
6. It shall be verified in the manner indicated therein. It shall be signed by the persons concerned in accordance with Sub-rule (5) of rule 22. It is only the persons concerned who should sign Form No. 12 in accordance with or as envisaged by rule 22(5). In other words, the controlling words in rule 24 to the effect that Form No. 12 shall be signed by the persons concerned are crucial. In Addl. CIT v. S.V. Ramaswamy and Sons : [1977]106ITR154(KAR) , Venkatachaliah J. (as he then was), speaking for the Bench, construing those crucial words occurring in rule 24 in the context of rule 22(5) and Form No. 12, stated the law thus :
'. . . . there is support, in the scheme of the 'Act', for the view that it is the partners of the 'firm' as subsisting and as constituted on the date of making of the declaration that are envisaged in the said expression 'persons concerned'. The expression 'persons concerned' are necessarily those whose interests would be adversely affected, if there is a 'non-continuance' of the registration. The expression 'concerned', inter alia, means 'affected' or 'troubled'. The enquiry must necessarily be directed to the ascertainment as to the parties who would be adversely affected if there is a non-continuance of the registration of the firm. . . .'
7. We adopt the above reasoning and observations as our own.
8. It is evident that it is the partners of the firm as subsisting and as constituted on the date of making of the declaration who will come within the expression 'persons concerned' in rule 24. In this case on the date when Form No. 12 declaration was filed on July 28, 1975, the partners of the firm were only 13 in number who had signed the declaration. This fact is not disputed. We are of the view that the Appellate Tribunal was justified in holding that the Commissioner of Income-tax (Appeals) took a reasonable view of the matter and was justified in law in ordering continuance of the registration for the year 1975-76. The order of the Appellate Tribunal does not suffer from any error of law. We, therefore, answer the question referred to this court in the affirmative and in favour of the assessee and against the Revenue. The reference is disposed of as above.
9. A copy of this judgment, duly signed by the Registrar with the seal of this court, shall be forwarded to the Income-tax Appellate Tribunal, Patna Bench, Patna.