Commissioner of Income Tax vs Jain Steel Rolling Mills

Gokal Chand Mital, J.—The Revenue desires this court to issue mandamus for calling for a statement of the case on the following question :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the registration benefits cannot be denied because of lack of signature of the guardian, unless, such guardian refused to verify or sign the documents ?"

The facts of the case are as follows :

Certain minors were admitted to the benefits of the partnership but the partnership deed was not signed by the guardian of the minors. The application for registration of the partnership was rejected on this ground. However, on appeal to the Tribunal, registration was ordered on the reasoning that by CBDT Circular No. 210/13/74/ITA(II) dated 19-3-1976, the Central Board had issued directions that the assessee need not be denied registration for lack of signatures of the guardian unless such guardian refused to verify or sign the document if required to do so. Since opportunity had not been granted to the guardian, order for registration was made.

Before us, an argument has been raised on behalf of the Revenue for issuing mandamus on the basis of a Full Bench decision of the Allahabad High Court in The Addl. Commissioner of Income Tax Vs. Uttam Kumar Pramod Kumar, whereas counsel for the assessee has strongly relied upon the circular, which is binding on the Revenue in view of the Supreme Court decisions in K.P. Varghese Vs. Income Tax Officer, Ernakulam and Another, Ellerman Lines Ltd. Vs. Commissioner of Income Tax, West Bengal, Calcutta, and COMMISSIONER OF AGRICULTURAL Income Tax, KERALA Vs. PERUNAD PLANTATIONS LTD., Navnitlal C. Javeri Vs. K.K. Sen, Appellate Assistant Commissioner of Income Tax, ''D'' Range, Bombay, . in which it has been held that such circulars are binding on the Department. It is also argued that the dictum of the Allahabad High Court in The Addl. Commissioner of Income Tax Vs. Uttam Kumar Pramod Kumar, was dissented from by the Andhra Pradesh and Calcutta High Courts in Srinivasa Stainless Steel and Moulding Works Vs. Commissioner of Income Tax, and Commissioner of Income Tax Vs. Associate Industrial Distributors, .

We have gone through the three Supreme Court decisions referred to above and find that it is clearly laid down that such circulars are binding on the Department and once that is so, the circular noticed above should have been taken notice of and opportunity should have been granted to the guardians to sign the partnership deed on behalf of the minors. Since this procedure was not followed, the Income Tax Officer could not refuse registration.

In the result, we are of the opinion that no question of law arises and the application of the Revenue is dismissed with no order as to costs.