JUDGMENT R.M. Sahai, J.
1. Aggrieved against order dated 24th September, 1977, of the ITO refusing to renew registration under Section 184 of the I.T, Act for assessment year 1975-76 and the orders dated 4th February, 1978, and 15th September, 1978, passed by the AAC and CIT, the petitioner has approached this court for the quashing of these orders and for direction to opposite parties to grant continuation of registration to the petitioner's firm for the year in dispute.
2. It is not disputed that in the previous years relevant to the assessment year 1973-74 there was change in the constitution of the firm and a fresh deed of partnership was drawn up and the application for fresh registration was granted by the ITO. It was continued in 1974-75. In 1975-76 also, the petitioner filed requisite Form No. 12 seeking continuation of registration under Section 184(7} of the Act on 2nd June, 1975. It is further not disputed that the form was duly signed by all the partners constituting the firm. It was filed in time containing declaration that business was same and there was no change in share. The ITO, however, rejected the application and found Form No. 12 of 1975-76 to be invalid for three reasons. According to him the form was shown to have been dated 31st May, 1975, and it was filed on 2nd June, 1975, when partners of the firm resided at distant places like Bombay, Punjab, Kanpur, Allahabad and Varanasi, etc. From this he inferred that the form could not have been signed between these two days, namely, 31st May and 2nd June. He further drew an inference that the blank form was not signed by the partners prior to 31st May without mentioning the name of the firm, year or date, etc. Second defect noticed by him was that the form on which the petitioner had applied for continuance of registration was printed on 5th November, 1971. Form for earlier year was also printed on the same date. He found that the signature of partners in both the years were in the same sequence and virtually in the same pen and ink. Therefore, according to him, the forms for both the years 1974-75 and 1975-76 were signed by the partners at the same time. Lastly, signatures have been obtained on a blank form with a view to avoid delay in obtaining signatures of partners residing at different and distant places. Declaration made under Section 184(7) signed by partners before the end of the accounting year was not valid. Appeal against this order was not entertained by AAC as the order refusing to grant renewal of registration was an order under Section 185(3) against which separate appeal lay under Section 246(1) of the Act. Against the appellate order and the order refusing to grant registration, the petitioner filed two separate applications under Section 264 of the Act before the Commissioner who also upheld the order of the ITO on merits.
3. None of the reasons mentioned by the, ITO for refusing to continue registration can be sustained. Admittedly, the petitioner followed Asra Sudi Duij as the previous year. For assessment year 1975-76 the previous year commenced from 2nd July, 1973, and closed on 22nd June, 1974. It was explained by the petitioner that the form was got signed by partners for which ample time was available and, therefore, 31st May, 1975, was put on it and it was handed over to the counsel. But as 1st June was Sunday it was filed on 2nd June. There was nothing inherently wrong in this. The inference drawn by the ITO that signatures must have been put on the application between 31st May, 1975, and 2nd June, 1975, was based on no material on record but on assumption for which there was no foundation. The ITO did not consider the explanation, nor did he disbelieve it, but he proceeded to record findings that as the form was dated 31st May, 1975, the signature must have been put on it after that date. Similarly, the inference drawn by the ITO that as forms for both the years 1974-75 and 1975-76 were printed on the same date in 1971, they were invalid, appears to be interesting. How the date of printing of the forms Which were filed in subsequent years could render it invalid is not easy to understand. There is no requirement in the Act or the Rules prohibiting a person from filing an application on a form which was printed prior to the assessment year. Further, no inference could have been drawn against the petitioner from the sequence of signatures, serial number, ink, etc., nor it is clear on what material the ITO was of the opinion that the blank form was signed by the partners and the date, 31st May, 1975, was put on it for the assessment year 1975-76. None of the inferences, therefore, drawn by the ITO were based on evidence. They were conjectural and imaginary in nature.
4. It being admitted that application for registration was filed in time in Form No. 12 declaration, that the partners were the same and there was no change in share, the registration was automatic unless, of course, the ITO found after enquiry that the firm was not genuine. There is no such finding in any order passed by any of the authorities. Under Sub-section (7) of Section 184 if it is provided that where registration is granted to any firm for any assessment year it shall be effective for the subsequent assessment year provided that there was no change in the constitution of the firm or the shares of partners and the application was filed within time. As the application filed by the petitioner complied with the requirement of Sub-section (7), it was incumbent on the ITO to allow registration. Even under Section 185, the only jurisdiction that the ITO had was to get the defect rectified within one month. To reject the application when the petitioner had been granted registration in earlier years and there was no change either in the constitution of the firm or any shares on imaginary grounds without doubting the genuineness of firm, was arbitrary and contrary to law.
5.