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Issues:
1. Error in passing order under section 263 by the CIT Surat. 2. Validity of the Commissioner's order directing the ITO to assess the appellant firm as unregistered. Analysis: Issue 1: The appeal involved a challenge to the order passed by the CIT Surat under section 263, contending that the order was erroneous and prejudicial to the interest of revenue. The CIT based the decision on the firm's registration status, which had undergone changes due to a missing partner. The firm had initially consisted of two partners, with a subsequent change in the constitution adding a third partner. However, one partner went missing, leading to difficulties in obtaining signatures for registration forms. The CIT held that the continuation of registration was not in accordance with the law, leading to the direction for the firm to be treated as unregistered. The CIT rejected the arguments presented by the assessee, emphasizing strict compliance with registration provisions and the necessity for personal signatures of all partners on registration applications. Issue 2: During the appeal, the counsel for the assessee highlighted a similar case before the Karnataka High Court, arguing that only partners present at the time of signing the declaration should be required to sign, not those entitled to profits in the previous year. The counsel emphasized the inability to rectify the defect due to the missing partner's prolonged absence, amounting to a "civil death." The departmental representative supported the CIT's order, citing relevant legal precedents. The ITAT Ahmedabad, in its analysis, found no error in the ITO's acceptance of the registration form signed by the missing partner's father. Referring to IT Rule 14 and relevant provisions, the ITAT concluded that the ITO's decision was not erroneous, especially considering the partner's untraceable status despite extensive efforts. The ITAT also considered the income assessment aspect related to the missing partner and the requirement for rectifying defects in the registration process. Ultimately, the ITAT canceled the order under section 263 and upheld the ITO's decision, allowing the appeal. In conclusion, the ITAT's detailed analysis of the issues raised in the appeal provided clarity on the registration requirements for partnership firms, the implications of missing partners, and the necessity for compliance with legal provisions. The judgment underscored the importance of procedural adherence and the need to address practical challenges in partnership registrations while upholding the principles of natural justice and legal interpretation.
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