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TMI Blog1981 (12) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... rm had already been granted registration for the accounting period relevant to the assessment year 1972-73 and continuation of registration for the accounting period relevant to the assessment years 1973-74 and 1974-75. The ITO on application made by the assessee-firm for continuation of registration under section 184(7) for the year under consideration noticed that the said application was in the prescribed form No. 12 requesting for continuation of registration and that application was in order and in time. He, however, disallowed continuation of registration on the ground that in terms of the partnership deed constituting the assessee-firm the profits/losses of the firm to be distributed were the net and not gross amount. According to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then out of it an estimated expenditure of Rs. 2,000 was deducted and the balance so left was to be divided equally between these two partners. According to him, what was being divided by those two partners was the 25 per cent of the gross commission receipts which was certainly not the net profit of the firm. The deduction of Rs. 2,000 was also an estimated expenditure which might or might not have been incurred by the partners. Shri Madhusudan Dayal was not liable for the expenditure of Rs. 2,000, as his share, according to the partnership deed, was the net profit left after deducting all the expenses of the partnership and the shares of the other two partners in the mariner mentioned above. To say in other words, his share which was stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account." 5. Inthe appeal before the Tribunal, the learned counsel for the assessee Mr. Gupta urged that the admission made by the assessee before the AAC that section 186(1) of the Act could be applied to the application made by the assessee under section 184(7), being an admission against law, has to be ignored. There is never an estoppel against law. According to the learned counsel for the assessee, Mr. Gupta, the ITO can take recourse to section 186(1) to cancel the registration of a firm for the year for which it was registered or for which it has granted registration as effective under section 184(7). In this connection, he laid down great emphasis on the words "as registered" in section 186(1). According to Mr. Gupta, section 186( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act are wider than of the Appellate authority under the Code of Civil Procedure and those powers are not restricted to the subject-matter of appeal. He can examine the matter covered by the assessment and correct the assessment order in respect of such matter even to the prejudice of the assessee. His powers are co-extensive to the powers of the ITO under the Act The AAC could, therefore, in the appellate proceedings take recourse to section 186(1), which according to the departmental representative, was rightly invoked by the AAC, more so when there was a concession from the side of the assessee. 7. We have given consideration to the above arguments. There is no estoppel against law. The assessee before us is bound by admission of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) embraces only to those cases where registration is initially granted or extended by virtue of the provisions of section 184(7) is sought to be cancelled. To say in other words, section 186(1) talks of cancellation of registration already granted in the manner indicated herein before and not in a proceeding arising out of the application contemplated by section 184(7). We, therefore, agree with the learned counsel for the assessee, Mr. Gupta, that section 186(1) has no application to the proceeding initiated pursuant to the application contemplated by section 184(7). The concession to that effect made by the assessee before the AAC being contrary to law is not of any avail to the department, since the effect of the order of the AAC restor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at page 1020 by Kanga and Palkhivala in Law and Practice of the Income-tax (7th edn., Vol. 1). That being the position in law, the orders of the tax authorities refusing continuation of registration to the firm on the ground that the profits have not been distributed amongst the partners in accordance with the provisions of the partnership deed or in the manner permissible under the Indian Partnership Act, 1932 cannot be sustained. The order of the AAC could not be sustained in law since the application for continuation of registration was made in time and was in order. The assessee-firm is entitled to the continuation of registration for the year under consideration. 10. Inthe result, the appeal by the assessee is allowed. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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