JUDGMENT
R.K. Gulati, J.
1. Although there are two petitioners in the writ petition, in fact the first petitioner, Madan Mohan Paul (hereinafter referred to as “the petitioner”), is the person aggrieved. Messrs. Allied Metal Products
arrayed as the second petitioner, is a partnership concern which came into being as a result of a partnership agreement dated October 1, 1980, in which the first petitioner was admittedly one of the partners along with respondents Nos. 4, 5 and 7 who were the other partners. The firm has its head office at Station Road, Gonda, and the production unit at Kanpur. It is averred that the firm was registered with the Registrar of Firms under the Indian Partnership Act. It was also registered under Section 184/185 of the Income-tax Act, 1961 (for short, “the Act”), and the registration was allowed for the subsequent years also as contemplated under Section 184(7) of the Act. It appears that a fresh deed of partnership dated July 1, 1990 (annexure “4” to the writ petition), was executed. The preamble to that deed, inter alia, recites that the petitioner, Madan Mohan Paul, by his written notice dated May 25, 1990, to the remaining partners expressed his desire to retire from the partnership after the expiry of the notice period of one month as required under Clause 14 of the partnership deed dated October 1, 1980, and on the expiry of the notice period he submitted his retirement consent on June 25, 1990, confirming his retirement with effect from the close of June 30, 1990, and from that date, he actually retired. It is further recited that the remaining partners of the said firm have accepted the retirement of the petitioner with effect from the close of June 30, 1990, and they have reconstituted the firm from July 1, 1990, along with respondent No. 6 who was not a partner in the earlier partnership deed dated October 1, 1980.
2. We may notice that respondent No. 4 is the brother-in-law of the petitioner being married to his sister and respondents Nos. 4, 5 and 6 are brothers. The case of the petitioner is that he continues to be a partner of the firm and the initial deed of partnership dated October 1, 1980, still subsists, inasmuch as the firm, Messrs. Allied Metal Products, under that deed was never dissolved at any point of time. According to the petitioner, respondents Nos. 4, 5 and 7 in collusion with each other stealthily manipulated a fresh partnership deed dated July 1, 1990, excluding him from the partnership and including respondent No. 6 in disregard of the mandatory provisions of the Indian Partnership Act. The reconstituted firm, it is averred, has applied for fresh registration in terms of Sub-section (8) of Section 184 of the Act and the matter is sub judice before the Income-tax Officer, Gonda, the third respondent. The reconstituted firm had also applied and was granted fresh registration on January 25, 1991, by the Registrar of Firms under the Indian Partnership Act. The question whether such registration under the Partnership Act could be granted, is the subject-matter of another Writ Petition No. 21890 of 1993 filed before this court
with which we are not concerned in this case. The petitioner also alleges that he has made certain representations/applications to the Income-tax Officer, Gonda (third respondent), which are pending adjudication and no orders on his representations/applications have so far been passed. Copies of those representations/applications have been filed as annexures “9” to “14” to the writ petition. It is at this stage that the petitioner has approached this court for a writ of mandamus commanding respondents Nos. 1, 2, 3 and 3A not to accept the income-tax returns of the reconstituted firm particularly in respect of the assessment year 1991-92 without affording an opportunity of hearing to the petitioner. It is further prayed that a direction be issued to the aforesaid respondents to decide the representations/applications of the petitioner before deciding the application of respondents Nos. 4 to 7 seeking registration of the firm in question under Section 184/185 of the Income-tax Act and the Rules framed thereunder.
3. We have heard Sri B.B. Paul, learned counsel for the petitioner, Sri S.P. Mehrotra for respondents Nos. 4 to 7, as well as standing counsel for the Income-tax Department. Learned counsel for the petitioner contended that the deed of partnership dated October 1, 1980, still subsists and the registration granted by the Registrar of Firms on the basis of the said partnership deed is also subsisting. He argued that the reconstituted firm or partners named thereunder be refrained from filing any income-tax return in respect of the business carried on by the firm in question and any return if already submitted by them is non est in law which cannot be acted upon and is liable to be rejected. Learned counsel further contended that the application seeking fresh registration by the alleged reconstituted firm under the Act is also not liable to be entertained nor any registration can in law be granted to the firm under Section 185 of the Act in the circumstances of the case. Another argument is that the application for registration filed by the contesting respondents cannot be decided ex parte to the exclusion of the petitioner and, in any case, no decision on such application should be taken until the representations filed by the petitioner are decided by the concerned respondents for which necessary directions may be issued by this court.
4. We have considered these submissions carefully. Undisputedly, a firm is an assessee under Section 2(7) of the Act, whether it is registered or not under Section 185 for purposes of this Act. We are not aware of any provision nor was any provision brought to our notice under which a reconstituted firm or its alleged partners could be restrained from filing
a return of income if it volunteers to file the same. On the contrary, the provisions contained in Section 139 of the Act casts a statutory obligation on every person to file his return within a specified period if his total income or the total income of any other person in respect of which he is assessable under the Act during the previous year exceeds the maximum limit which is not chargeable to income tax. Failure to file a return or late filing of a return is visited with penal consequences. The term “person” is defined in Section 2(31) of the Act and it includes a “firm” amongst other entities. The contention that the return filed by the reconstituted firm is non est, in our opinion, is essentially a matter for adjudication by the tax authorities and the petitioner is not entitled to any relief from this court on this score. However, in passing, it may be observed that Section 139 of the Act makes no distinction between a legal and an illegal entity when it requires filing of return by every person whose total income during the previous year exceeds the maximum amount which is not chargeable to tax and likewise the charging section also does not absolve an income from being taxed though tainted with illegality or wrong doing associated with income, profits or gains.
5. Coming to the next submission that the respondents be directed to decide the representations/applications made by the petitioner, this court would be reluctant to issue such a direction unless a clear case is made out for such a relief. Such a direction cannot be issued unless it is demonstrated that the representations/applications are statutorily maintainable and are within the competence of the respondent concerned to decide the same. From a perusal of the various representations filed by the petitioner, it appears that some of the demands made therein are such which are motivated by the consideration to have access to the material or documents to which the petitioner is not otherwise entitled. For instance, in the representation dated October 8, 1993 (annexure “13” to the writ petition), the petitioner has, inter alia, required the third respondent to requisition and impound the account books and relevant records, sales and purchase bills, stock registers and the orders received from the various Government Departments by the reconstituted firm and to make them available to the petitioner for his examination in order to detect discrepancy, etc. Again the contention whether the petitioner continues to be a partner or not, is a matter which perhaps can be adjudicated upon by a competent civil court. Undisputedly, the petitioner has already instituted a civil suit being Suit No. 94 of 1993 in the Court of the Civil Judge, Gonda, seeking dissolution of the firm and for accounting, etc. Likewise, the representations also contain allegations which are more in the nature
of complaints than anything else. They are with respect to evasion of tax by the reconstituted firm and its partners. Learned counsel for the petitioner was unable to refer to us any provision in the Act under which the representations/applications of the nature referred to above were maintainable and for which he could demand a decision as a matter of right, or there was a corresponding duty of the concerned respondents to decide the same. In the name of representations, the petitioner cannot be permitted to require a tax authority or a statutory functionary to decide a non-statutory representation in order to settle some score with the contesting private respondents in respect of any dispute between them. It is settled law that in order that a mandamus may issue to compel the respondents to do something, it must be shown that the statute imposes a legal duty on the concerned authority and the applicant has a legal right under the statute to seek a mandamus to enforce its performance. Non-statutory representation may not necessarily be decided in every case. The question, whether the reconstituted firm is indulging in evasion of tax, etc., is a matter which can certainly be looked into by the tax authorities if the circumstances so demand, for which they are well-equipped. Though it may be true that an Assessing Officer can go into any material collected from any source whatsoever for the purposes of enquiry against an assessee, it would be too far-fetched to hold that the Assessing Officer can be compelled by a third party to take cognizance of his representation and to record a decision thereon by deciding the representation. In this view of the matter, no direction is called for from this court to decide the representations of the petitioner which are motivated by ulterior purposes. Therefore, the second contention also cannot be upheld.
6. Before proceeding further, it may be noticed that a firm under the Act is a unit of assessment and the income of the firm is computed in its hands as that of an entity irrespective of whether the firm is registered or unregistered. At this stage, it would be useful to notice certain provisions and the schemes provided therein pertaining to the assessment and registration of firms, as they stood at the relevant time. The principal sections dealing with assessment of registered and unregistered firms are Sections 182 and 183, respectively. Part “B” of Chapter XVI of the Act which contains Sections 184 to 186 speaks of registration of a firm. Section 184 provides for making an application for registration. Section 185 deals with the procedure after receipt of the application for registration and Section 186 provides for contingencies and circumstances in which the registration of the firm can be cancelled. When a firm is registered, the income-tax payable by it is determined and the share of each partner in
the income of the firm is included in his total income and assessed accordingly along with other income, if any. In the case of an unregistered firm, the firm itself is assessed to tax unless it is covered by Section 185(b) of the Act. The procedure for computation of total income of a firm is common, whether it is registered or unregistered. A firm can trade without being registered under the Act. The importance of registration of a partnership firm under the Act lies in the fact that after registration the firm becomes liable to assessment to income-tax at lower rates than what otherwise would be in the case of an unregistered firm. The right of registration to a firm is given by the Act in order to enable it to get the benefit of lower rates of tax than those which would be applicable to the whole income of the firm charged as unit of assessment. In N.T. Patel and Co. v. CIT [1961] 42 ITR 224 (SC), the Supreme Court observed that the reason impelling a firm to secure registration is that if registration is granted, the firm can pay the concessional rate of tax. The right to obtain registration is a statutory right which can be availed of when the requirements under the statute are fully complied with. Section 185(1) of the Act lays down that on receipt of an application for registration, the Assessing Officer shall enquire into “the genuineness of firm” and “its constitution as specified in the instrument of partnership”, and if the Assessing Officer is satisfied that there is or there was during the previous year a genuine firm in existence with the constitution so specified in the instrument, he should pass an order in writing granting registration and if he is not so satisfied, he should pass an order refusing to register the firm. Thus, the Assessing Officer is required to inquire into and decide the genuineness as well as the legality of the firm. Though the power to grant registration lies with the Assessing Officer, its exercise is not discretionary in the sense that where the essential requirements prescribed under the Act and the Rules framed thereunder are satisfied, the assessing authority has no option but to grant it as of right. This takes care of the submission of the petitioner that the application for registration could not in law be entertained. For the discussion made, the third submission of the petitioner is rejected.
7. The last contention of the petitioner that the firm constituted by respondents Nos. 4 to 7 under the deed of partnership dated July 1, 1990, is not genuine and on the petitioner’s own showing, the matter is yet to be decided by the Income-tax Officer, namely, the third respondent. As the matter is sub judice, we would not like to make any comment on the merits of this contention, for any observation made by this court is likely to affect the decision in one way or the other. We may, however, observe that in making an inquiry into the genuineness of the firm, the third
respondent is expected to take into consideration all those materials which are legally permissible and germane to the enquiry contemplated under Section 185 of the Act. From the representation of the petitioner dated September 6, 1993 (annexure-12 to the writ petition), it appears that the petitioner had approached the third respondent and he was informed by the third respondent that the assessment proceedings for the assessment year 1991-92 and the matter of registration had not yet been taken up and the petitioner would be informed of the proceedings as and when they would be taken up for consideration. If that be so, this itself meets the complaint of the petitioner when he asserts that he is entitled to have his say in the matter. In these circumstances, for the present, it is unnecessary to pursue the discussion further. Suffice it to say that the matter is in the discretion of the Assessing Officer which must be exercised on judicial considerations bearing in mind that it will facilitate the enquiry under Section 185 in order to reach the necessary satisfaction whether the firm is entitled to registration or not.
8. For the reasons stated above, the petitioner is not entitled to any relief in respect of the last contention as well.
9. Before parting with the case, in all fairness, we may mention the argument advanced by learned counsel who appeared for respondents Nos. 4 to 7. We were invited to the provisions of Section 185(6) which refers to deemed “registration” to a firm in certain circumstances, envisaged under that Sub-section. The said provisions contemplate that notwithstanding anything contained in Sub-sections (1) to (4) where a firm has made an application for registration in relation to an assessment year and has furnished the return for that assessment year, such firm shall be deemed to have been registered under this section on the expiry of the period for serving notice as specified in the proviso to Sub-section (2) of Section 143 in respect of such return. There is a proviso attached to that section but it is not necessary to refer to it. The non obstante clause with which this Sub-section opens “notwithstanding anything” carves out an exception and directs deemed registration in the circumstances mentioned therein. If the reconstituted firm has been given the benefit of deemed registration as contemplated in the above provision, then anything said or observed in this order shall not be construed as a direction to respondent No. 3 to institute an enquiry contemplated under Section 185 of the Act.
10. With the above observations, the writ petition is rejected in limine.
11. After the order was dictated, learned counsel for the petitioner made an oral request for grant of certificate for leave to appeal to the Supreme
Court. We refuse to grant the certificate prayed for as, in our opinion, the case does not involve any substantial question of law of general importance to be decided by the Supreme Court. The prayer for grant of certificate is, accordingly, rejected.