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Issues:
1. Interpretation of provisions under sections 184, 185, and 186 of the Income-tax Act, 1961 regarding registration of a firm. 2. Validity of the Income-tax Officer's refusal to grant registration to a partnership firm for the assessment year 1984-85. 3. Compliance with procedural requirements for continuation of registration under the Act. 4. Comparison of conflicting judgments from different High Courts on the cancellation of registration of a firm. Analysis: The judgment delivered by Justice N. K. Sodhi of the High Court of Punjab and Haryana dealt with the case of a partnership firm, Messrs. K. K. Kakkar and Associates, seeking registration under the Income-tax Act, 1961 for the assessment year 1984-85. The firm, an old and regular assessee, had been granted registration previously and continued to submit the necessary Form No. 12 for subsequent assessment years. However, during the relevant assessment year, the firm failed to comply with notices from the Income-tax Officer, leading to an ex parte assessment under section 144 of the Act. The Income-tax Officer, in this process, refused to grant registration to the firm, citing section 185(5) of the Act. The firm challenged this decision, arguing that the registration should have continued automatically as per section 184(7) of the Act, without the need for a fresh order. The main contention was that the Income-tax Officer should have followed the procedure under section 186 if inclined to cancel the registration. The Court analyzed the relevant provisions of sections 184, 185, and 186 of the Act to determine the firm's entitlement to registration for the assessment year in question. It noted that the firm had been registered previously and had submitted Form No. 12 in time for the relevant year, with no changes in its constitution or partners' shares. The Court emphasized that the Income-tax Officer could not cancel the firm's registration during an assessment under section 144 without following the procedure outlined in section 186(2) of the Act. It clarified that section 185(5) applied to cases where a firm was seeking registration for the first time, not to firms with existing registrations seeking continuation. The judgment also referenced a Division Bench decision of the Allahabad High Court, supporting the automatic continuation of registration for firms like the petitioner. It distinguished a conflicting judgment from the Calcutta High Court, noting the differences in the provisions under the previous Income-tax Act of 1922 and the current Act of 1961. The Court concluded that the Income-tax Officer's refusal to grant registration to the firm for the assessment year 1984-85 was unjustified and ordered the quashing of the Officer's order and the Commissioner's decision. The Court allowed the Income-tax Officer to proceed in accordance with the law, with each party bearing its own costs.
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