JUDGMENT
B.P. Jeevan Reddy, J.
1. TWO questions are referred for the opinion of this court under section 256(1) of the Income-tax Act. The questions are :
“1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the firm is not genuine because no consent letters were filed from the guardian of the minors nor was any supplementary deed or codicil filed before the Income-tax Officer ?
2. Whether the Tribunal was justified, on the facts and in the circumstances of the case, in confirming the refusal of registration by the Income-tax Officer relying on the ratio of the decision of the Allahabad High Court in the case of Addl. CIT v. Uttam Kumar Pramod Kumar as ?”
2. The assessment year concerned herein is 1975-76. A partnership deed was executed on July 29, 1974, with effect from May 1, 1974, according to which there were three major partners, viz., R. Gopal, V. Chandrasen Rao and R. Eswaraiah. Two minors, viz., Baby Anita and Master Pawan Kumar, were admitted to the benefits of the partnership. On January 10, 1975, the firm was reconstituted with effect from January 1, 1975. Besides the three major partners aforesaid, one more major partner, viz., Vijayakumar Mehta, was taken in. The two minors earlier admitted continued as such besides them, three more minors, viz., Baby Avani Mehta, Master Apoorva Mehta and Master Sandeep Mehta, were admitted to the benefits of the partnership. The Income-tax Officer, after noticing that the applications filed in Form Nos. 11 and 11A were defective inasmuch as the guardians of the minors admitted to the benefits of the partnership had not given their consent to the partnership deed, called upon the assessee to file the codicil. The assessee, however, contended that the minors were admitted with the knowledge of their guardians and it was not necessary to produce the codicil. But in respect of the two minors, Baby Anita and Master Pawan Kumar, letters of their guardians confirming their consent to their admissions were filed. The income-tax Officer, however, did not consider this letter as adequate and held that in spite of giving an opportunity, the assessee has not filed the codicil and declined to grant registration on the ground that it was not genuine. On appeal, the Appellate Assistant Commissioner was of the opinion that though the Income-tax Officer was not justified in not accepting the letter of the guardian of Baby Anita and master Pawan Kumar, he was of the opinion that not filing the letter of the guardian of the three other minors was sufficient to justify refusal of registration for the period January 1, 1975, onwards. For the same reasons, he was of the opinion that refusal of registration to the previous firm which was in existence before January 1, 1975, was not proper. The assessee as well as the Department both filed appeals against the orders of the Appellate Assistant commissioner before the Income-tax Appellate Tribunal.
3. The contention put forward by the Department was that there was only a change in the constitution under the deed dated January 10, 1975, that it was only a case where a single firm was in existence for the entire period and that, therefore, registration could not have been granted even for the first period, i.e., up to December 31, 1974. The assessee’s contention, however, was that if there was any defect in the partnership deed, the Income-tax Officer should have intimated the same to the assessee within one month of the filing of the application for registration and that, in any event, since there were differences between partners, it has not been possible to produce the consent letter of the guardian. The Appellate Tribunal, however, held, following the decision of the Allahabad High Court in Addl. CIT v. Uttam Kumar Pramod Kumar [FB], that inasmuch as the guardians of the minors have not signed the partnership deed not have they signed the application for registration, registration could not have been granted to the firm. The Tribunal also accepted the contention of the Department that the granting of registration for the period up to December 31, 1974, was equally bad. Accordingly, it dismissed the appeal filed by the assessee and allowed the appeal filed by the Department. Thereupon the assessee applied for and obtained this reference.
4. It has been held by the Calcutta High Court in CIT v. Associate Industrial Distributors , that a deed of partnership need not be signed by the guardians of minors. On an examination of the provisions of the Partnership Act and the Income-tax Act and after referring to the case law on the subject, it disagreed with the view of the Allahabad High Court in Addl. CIT v. Uttam Kumar Pramod Kumar [FB] and held that there is no authority for the proposition that the deed of partnership should necessarily be signed by the guardian of the minor. It also held that the signature of the guardian of the minor is not a necessary requirement for the validity of the partnership. This decision has been followed by a Division Bench of this court in R. C. No. 218 of 1980 disposed of on March 5, 1987 (Srinivasa Stainless Steel and Moulding Works v. CIT [1987] 167 ITR 1). The principle that emerges is that it is not necessary in law that the guardian of the minors admitted to the benefits of the partnership should necessarily sign either the partnership deed or the application for registration. Of course, it is necessary to show that he had consented to the admission of the minors to the benefits of the partnership. This consent can be established either by direct evidence (letter or affidavit of the guardian) or by other evidence, viz., the entries in the account books or such other evidence as may available with the assessee. In this case, the Income-tax Officer insisted upon producing the deed of partnership to show that the guardian has signed. He did not even act upon the letter of the guardian in respect of the two minors, viz., Baby Anita and master Pawan Kumar. So far as the Appellate Assistant Commissioner is concerned, he, however, was prepared to act upon the said letter. The Tribunal took the view, following the decision of the Allahabad High Court, that the guardian should either sign the partnership or the application for registration. Neither the Tribunal nor the other authorities ever called upon the assessee to produce other evidence, if any, in respect of the assessee’s contention that the guardian consented to the admission of the minors. The assessee’s case was that because of differences between the partners, it was not possible to obtain the letter of the guardian. This plea was not rejected by the Tribunal. In such a situation, it was but just and proper that the Tribunal ought to have called upon the assessee to produce other evidence, if any, in his possession to prove that the guardian had in fact consented to the admission of the three minors, Baby Avani Mehta, Master Apoorva Mehta and Master Sandeep Mehta, to the benefits of the partnership. Since such an opportunity has not been given, it has now become necessary to give such an opportunity to the assessee.
5. In these circumstances, we decline to answer the questions referred with an observation that the Tribunal, while passing final orders under section 260 of the Act, shall call upon the assessee to produce evidence, if any, in his possession to show that the guardian of the said three minors had in fact consented to their admission to the benefits of the partnership in January, 1975. We make it clear that the evidence called for need not be by direct evidence of such consent but can be inferred from the conduct or other evidence, if any. The Tribunal shall look into the material, if any, produced in pursuance of such a direction and pass appropriate orders.
6. The reference is answered accordingly.