JUDGMENT
V.D. Gyani, J.
1. The following question of law has been referred to this court for its opinion :
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that, notwithstanding the minority of the partners during the major part of the accounting year, registration should be granted as on the date of execution of the partnership deed towards the end of the accounting year, when she became major ?”
2. This case relates to the assessment year 1982-83. The respondent-assessee formed a partnership firm as evidenced by a partnership deed dated February 23, 1982, although the partnership was formed by an oral agreement with effect from January 1, 1981, for carrying on the business of manufacturing of veneer, used by the plywood industry. The firm comprised five partners, namely, (1) Sajjan Kr. Bhajanka, (2) Prem Kr. Bhajanka, (3) Nirmal Kr. Bhajanka, (4) Smt. Bimla Devi Chamaria and (5) Smt. Sangita Devi Chamaria. The assessee-firm applied for registration under Form No. 11 on March 24, 1982, before the Income-tax Officer but he refused to entertain the same on the ground that one of the partners, Smt. Sangita Devi Chamaria, was a minor on the date on January 1, 1981, when the partnership was formed by an oral agreement. It further held–“a minor cannot legally enter into an agreement, therefore, the firm could not be said to have been legally constituted with effect from January 1, 1981”. He, therefore, passed an order under Section 185(1)(b) of the Income-tax Act rejecting the claim for registration. The assessee preferred an appeal contending that even if Sangita Devi Chamaria was a minor on January 1, 1981, registration of the firm could not be legally refused as on the date of execution of the partnership deed, i.e., March 22,1982, she had attained majority. The appeal was decided in favour of the assessee and the Income-tax Officer was directed to accord registration to the firm. The Department took up the matter before the Appellate Tribunal and the Tribunal on a consideration of the various submissions made and the facts and findings as available on record following a decision of this court in P.N. Sarmah v. CIT [1980] 125 ITR 553 and two other judgments including that of the Supreme Court in P.D. Sheshan and Co. v. CIT [1954] 26 ITR 27 (sic.) and CIT v. Phair Laboratories [1985] 154 ITR 141 (Ker) [FB], came to the conclusion that Kumari Sangita, though a minor, was admitted to the benefits of the partnership in terms of an oral agreement by the contracting parties who indisputably had the capacity to contract.
3. One significant fact as observed by the Tribunal is that the firm constituted by an oral agreement has not been found to be a bogus firm even by the Income-tax Officer, as can be seen from the order annexure-A. This court, considering the essential requirements of Sections 184 and 185 of the Income-tax Act, held as follows (at page 559 of 125 ITR) :
“The cumulative effect of Sections 184 and 185 of the Act read with the relevant rules is that if the application for registration made by a firm gives the requisite particulars prescribed by Sections 184 and 185 of the Act and the Rules, the Income-tax Officer cannot reject the prayer, if there is a firm in existence ; a firm may be said to be not in existence if it is a bogus or in other words not a genuine one or if, In law, the constitution of the partnership is void. Therefore, the limit of jurisdiction of the income-tax authorities is restricted to finding out two facts : (1) whether the application is in due compliance with the provisions of the Act and the Rules, and (2) whether the firm, represented in the instrument of partnership, is a bogus one or has no legal existence. The discretion conferred on the authorities is a judicial one and ought not to be exercised in a capricious and impetuous way but in a disciplined and responsible manner. When an order refusing registration goes beyond the scope and ambit of the jurisdiction conferred on the authorities this court has jurisdiction to entertain the reference.”
4. As regards the rights of a minor admitted to the partnership under Section 30 of the Indian Partnership Act, 1932, this court held as follows (at page 562) :
“It will be seen that on attaining majority a minor admitted to the benefits of the partnership, has two options open to him : (1) he may elect to become a partner in the firm, or (2) he may repudiate or elect not to become a partner. If he elects to be a partner, he need not do anything nor give any public notice. On the expiry of six months he becomes a partner of the firm. If a minor, on becoming a major and knowing that he had been admitted to the benefits of a partnership keeps silent thereafter and fails to give the requisite public notice his inaction is tantamount to election to become a partner and he becomes liable for all the obligations of the firm ‘from the date of his admission to the benefits of partnership’. It follows, therefore, that he may, either by a consentient act on his part, become a partner or become so by his inaction for six months as allowed. On a perusal of Section 30(5) and (7) it becomes clear that if during the subsistence of the partnership a person who was admitted, at the time when he was a minor, to the benefits of partnership does not elect to become a partner within six months of his attaining majority, would become a partner after the expiry of the said period (six months) and thereafter his rights and liabilities would be the same as those of the other partners as from the date of his admission to the benefits of the partnership.”
5. In the instant case, the finding as recorded by the Appellate Assistant Commissioner and the Tribunal are concurrent. The findings as recorded by the Tribunal on the question of grant of registration, are concurrent, although learned counsel appearing for the Revenue urged that the plausibility of the explanation furnished by the assessee and accepted by the Appellate Assistant Commissioner as well as the Tribunal is far from convincing, we are not impressed by this submission.
6. In view of the foregoing discussion, the question as referred is answered in the affirmative in favour of the assessee, and against the Revenue.