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Issues Involved:
1. Validity of the partnership firm due to violation of sub-rule (4) of rule 63 of the Rajasthan Excise Rules, 1956, in light of section 23 of the Indian Contract Act, 1872. 2. Justification of the Income-tax Officer's cancellation of the benefit of continuation of registration under section 186 of the Income-tax Act, 1961, for the assessment year 1967-68. 3. Continuation of registration for the assessment year 1968-69. 4. Validity of the excise license obtained for the financial year 1968-69 and the impact of fraudulent representation. 5. Grant of benefit of registration for the assessment year 1969-70. Detailed Analysis: Issue 1: Validity of the Partnership Firm The Tribunal held that the partnership firm was invalid due to the violation of sub-rule (4) of rule 63 of the Rajasthan Excise Rules, 1956, which prohibits minors from bidding at auctions. The minor partner, Lalu Khan, was represented as a major to obtain the excise contract, constituting fraudulent representation. This fraudulent action rendered the contract void under section 23 of the Indian Contract Act, 1872, which states that any agreement with an unlawful object or consideration is void. The Tribunal concluded that a valid firm had not come into existence under sections 4, 5, and 6 of the Partnership Act, thus invalidating the partnership for the assessment year 1967-68. Issue 2: Cancellation of Continuation of Registration for 1967-68 Following the conclusion that the firm was invalid, the Tribunal justified the Income-tax Officer's action to cancel the benefit of continuation of registration under section 186 of the Income-tax Act, 1961. The Tribunal emphasized that the Income-tax Officer has the authority to cancel registration if the firm is found not to have come into existence in law, as there would be no valid object for registration. Issue 3: Continuation of Registration for 1968-69 For the assessment year 1968-69, the Tribunal maintained the same reasoning as in Issue 1. Since the firm was invalid due to the fraudulent representation and violation of rule 63(4) of the Excise Rules, the benefit of continuation of registration could not be allowed. Issue 4: Validity of the Excise License for 1968-69 The Tribunal found that the excise license for the financial year 1968-69 was obtained through fraudulent representation by the two major partners and the minor partner. Despite the minor attaining majority and a new partnership deed being executed on October 29, 1968, the contract remained void from its inception. The Tribunal reiterated that a contract by a minor is void and cannot become valid even after the minor attains majority. Issue 5: Benefit of Registration for 1969-70 Given the fraudulent nature of the contract and its initial invalidity, the Tribunal held that the benefit of registration could not be granted to the assessee-firm for the assessment year 1969-70. The Tribunal's decision followed logically from the conclusions reached in Issues 1 and 4. Conclusion All five questions referred to the court were answered in the affirmative, in favor of the Department and against the assessee-firm. The Tribunal's findings were upheld, and the parties were left to bear their own costs. A copy of the judgment was directed to be sent to the Tribunal in accordance with section 260 of the Income-tax Act.
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