Section 34 - Amendment of section 185 - Taxation Laws (Amendment) Act, 1970

34. Amendment of section 185. In section 185 of the Income-tax Act,- (a) in sub-section (1), the following Explanation shall be inserted at the end, namely:- Explanation. For the purposes of this section and section 186, a firm shall not be regarded as a genuine firm if any partner of the firm was, in relation to the whole or any part of his share in the income or property of the firm, at any time during the previous year, a benamidar of any other partner to whom the first-mentioned partner does not stand in the relationship of a spouse or minor child. ; (b) for sub-sections (2) and (3), the following sub-sections shall be substituted, namely: - (2) Where the Income-tax Officer considers that the application for registration is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the application within a period of one month from the date of such intimation; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, reject the application. (3) Where the Income-tax Officer considers that the declaration furnished by a firm in pursuance of sub-section(7) of section 184 is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the declaration within a period of one month from the date of such intimation; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, declare that the registration granted to the firm shall not have effect for the relevant assessment year. .