JUDGMENT
R. S. Syal, (Accountant Member)
1. This appeal by the assessee arises out of the order passed by the Commissioner of Income-tax (Appeals) on December 5, 1996, in relation to the assessment year 1993-94.
2. The only grievance of the assessee relates to the confirmation by the Commissioner of Income-tax (Appeals) of the action of the Assessing Officer in assessing the firm in the status of association of persons rather than the firm as such.
3. Briefly stated the facts are that the assessee filed its return of income accompanied with a copy of the partnership deed certified by the advocate. On being pointed out, the assessee furnished a copy of the partnership deed duly certified by all the partners. The Assessing Officer opined that the firm was liable to be assessed as an association of persons for the reason that the mandatory requirement of submitting a copy of the partnership deed duly certified by all the partners along with the return was not complied with. The action of the Assessing Officer was echoed by the Commissioner of Income-tax (Appeals).
4. Before us, learned counsel for the assessee contended that this was the case of an existing partnership firm which was brought into existence by way of a partnership deed executed on October 25, 1991. It was further explained that a fresh partnership deed was executed on April 1, 1992, only to incorporate the clauses for allowing salary and interest to working partners. As neither any new partner was admitted or old partner retired nor there was any variation in the profit-sharing ratio of partners, learned counsel submitted that there was no change in the constitution of the firm. According to the submissions advanced on behalf of the assessee, it was pleaded that the fresh deed executed on April 1, 1992, was only a supplementary deed and as no change in the constitution of the firm had taken place, there was no requirement at all to file a copy of the deed certified by all the partners. Reliance was also placed on the provisions of Section 184(3) of the Income-tax Act, 1961, for the proposition that in the absence of change in the constitution of the firm, it would be assessed as such in the same manner in which it was being assessed in the earlier year. Our attention was drawn at page 11 of the assessee’s paper book to demonstrate that the registration to the firm was granted in relation to the assessment year 1992-93 by the order of the Assessing Officer dated August 30, 1993. As the registration was allowed by the Assessing Officer for the assessment year 1992-93 and there was no change in the constitution of the firm in the present assessment year, the learned counsel pleaded that the Assessing Officer was not justified in assessing the firm in the status of the association of persons in the present assessment year.
5. In the opposition, the learned departmental representative justified the action of the authorities below while pointing out that there was a clear violation of the provisions of Section 184 inasmuch as a copy of the partnership deed not certified by all the partners was filed along with the return of income and the subsequent action of filing a copy of the partnership deed certified by the parties was of no avail.
6. We have considered the rival submissions in the light of the material placed before us and the statutory provisions relied upon.
7. The admitted facts are that the firm came into existence by a partnership deed executed on October 25, 1991, on the basis of which the registration was granted to the firm for the assessment year 1992-93 by virtue of the order passed by the Assessing Officer under Section 185(1)(a). New provisions in regard to the taxation of the firms were introduced by the Finance Act, 1992, with effect from April 1, 1993, as a result of which the firms were made entitled to claim salary and interest to the working partners and consequently the old provisions dealing with the registration of firm, etc., as contained in Chapter XVI were amended. The amended provisions of Section 184 are relevant for our purpose because the assessment year involved in the present appeal is 1993-94. Section 184(1) stipulated that a firm shall be assessed as a firm for the purposes of this Act if the partnership is evidenced by an instrument and the individual shares of the partners are specified in that instrument. Sub-section (2) of Section 184 further requires that a certified copy of the instrument of partnership shall accompany the return of income of the firm of the previous year relevant to the assessment year commencing on or after April 1, 1993, in respect of which assessment as a firm is first sought. The Explanation to this sub-section provides that the copy of the instrument of partnership shall be certified in writing by all the partners except minors. Sub-section (3) of Section 184 further provides that if a firm is assessed as such for any assessment year, it shall be assessed in the same capacity for every subsequent year unless there is 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 assessment as a firm was first sought. Sub-section (4) further stipulates that if any change takes place in the previous year, a certified copy of the revised instrument of partnership would be required to be furnished along with the return of income for the relevant assessment year. Section 185 provides that where a firm does not comply with the provisions of Section 184, it shall be assessed as an association of persons.
8. A close reading of these sections brings to light that it is incumbent on the part of assessee to furnish along with its return of income, a copy of the instrument of partnership duly certified by all the partners other than the minors if a firm is sought to be assessed as a “firm” for the first time in the assessment year 1993-94. It implies that in the case of existing firms carrying on business prior to April 1, 1992, the requirement of furnishing a copy of the partnership deed, duly certified by all the partners except minors, along with the return of income for the assessment year 1993-94 is necessary. The earlier registration granted for the assessment year 1992-93 has no relevance for the assessment of the firm as such in relation to the assessment year 1993-94. Once registration is granted and the firm is assessed as such in the assessment year 1993-94 then Section 184(3) comes into picture, according to which the registration granted continues for all the subsequent years unless there is a change in constitution of the firm. If a change in the constitution takes place in the firm, then a certified copy of the revised instrument of partnership is required to be furnished if the firm desires to be assessed as such. In case, the provisions of Section 184 are not complied with, the necessary consequence that follows by virtue of Section 185 is that the firm is assessed in the status of the association of persons.
9. Now the question arises that if a copy of the partnership deed, is enclosed with the return of income which is otherwise complete and is duly signed by all the partners, but the mere fact that the same is not certified by the partners, would render it liable to be assessed as an association of persons ? In this connection, it will be useful to refer to the Explanation to Section 184(2), which reads as under :
“For the purposes of this sub-section, the copy of the instrument of partnership shall be certified in writing by all the partners (not being minors) or, where the return is made after the dissolution of the firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased.”
10. No doubt in this Explanation, the word “shall” has been used to suggest that the copy of the partnership deed attested by all partners except minors is required to be furnished along with the return. We find that the failure to
furnish such a copy of the partnership deed along with the return of income which is otherwise signed by all the partners and complete in all respects but is not certified by them is only a procedural default which can be cured during the course of the assessment proceedings. This is not as big a default as would warrant the cancellation of registration and assessing the firm in the status of association of persons. Hence, if this requirement is originally not fulfilled and later on being pointed out by the Assessing Officer, the assessee makes up this deficiency by submitting a copy of the partnership deed duly certified by all the partners during the course of the assessment proceedings, it is to be considered as compliance with the provisions of Section 184.
11. Reverting to the facts of the case, it is seen that the firm was in existence since October 25, 1991, and in order to be assessed as a firm it was necessary for it to furnish a copy of the partnership deed duly certified by all the partners along with its return of income for the assessment year 1993-94. The firm filed a copy of the partnership deed which was certified by the advocate and not by the partners of the firm, The plea of learned counsel that as it was an existing firm and registration to it was granted in the assessment year 1992-93 and in the absence of change in the constitution, there was no requirement on its part to furnish a revised copy of the partnership deed duly certified by all the partners, is devoid of merits. The reason being that by virtue of Section 184(2) it was obligatory on the part of the assessee to furnish a copy of the partnership deed duly certified by all the partners along with its return of income for the assessment year 1993-94 if it desired to be assessed as a firm.
12. However, on the facts of the present case, it is noted that the copy of the revised partnership deed certified by the advocate was furnished along with the return of income. The lapse on the part of the assessee was that the deed accompanying the return was certified by an advocate instead of by the partners, on the basis of which the Assessing Officer proceeded to assess it in the status of association of persons. On being pointed out, the assessee furnished another copy of the revised partnership deed duly certified by all the partners during the course of the assessment proceeding itself.
13. On the basis of the discussion in the preceding paras, we are of the considered view that the assessee by filing a copy of the partnership deed duly certified by all partners during the course of the assessment proceeding complied with the conditions of Section 184 and is eligible to be assessed as a firm and not as an association of persons. We, therefore, vacate the order of the Commissioner of Income-tax (Appeals) in this regard.
14. In the result, the appeal of the assessee is allowed.