1992 (2) TMI 58 - HC - Income Tax

Summary

Issues:
Validity of order for cancellation of registration under section 186(1) in absence of order under section 185(1) or 184(7) of the Income-tax Act, 1961.
Justification of Income-tax Appellate Tribunal's refusal to grant continuation of registration based on genuineness of the firm.

Analysis:
The judgment addresses Income-tax References concerning the cancellation of registration of a partnership firm for various assessment years. The firm had three partners and two minors admitted to its benefits. The Income-tax Officer canceled the registration for the assessment year 1965-66 under section 186(1), citing the firm as not genuine. Registration was also refused for other assessment years, with appellate authorities upholding the refusals under section 186(1).

The main contention was that, despite registration in earlier years, the firm's genuineness was questioned for subsequent years. The court highlighted the independence of sections 184, 185, and 186 of the Income-tax Act, emphasizing that section 186(1) allows cancellation of registration even if registration was granted earlier. The judgment clarified that the firm's genuineness was the crux, and if found not genuine, registration could be refused under section 186(1).

The court emphasized that each assessment year is separate, and the genuineness of the firm must be established for each year independently. The Income-tax Officer's findings, upheld by the Tribunal, concluded that no genuine firm existed for the relevant years. As a result, the court found no illegality in the cancellation of registration under section 186(1) for those years.

In conclusion, the court answered the questions in the affirmative, supporting the Income-tax Appellate Tribunal's decision to refuse continuation of registration based on the firm's genuineness. The judgment highlighted the importance of establishing the firm's genuineness for each assessment year and upheld the legality of canceling registration under section 186(1) when the firm is found not genuine.

The respondents were awarded costs, and the questions were answered in the affirmative, supporting the decisions of the appellate authorities regarding the cancellation of registration based on the firm's genuineness for the relevant assessment years.