9911796707
TMI Blog1984 (11) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... April 5, 1971 specifying that the partnership evidenced by the deed dated April 5, 1971, came into existence with effect from April 1, 1971. Narasimha Rao who was previously admitted to the benefits of partnership was a party to this deed of partnership and he was described as major on April 1, 1971. The assessee-firm constituted under the deed dated April 5, 1971, applied for registration under section 184 of the Income-tax Act (hereinafter referred to as "the Act") for the income-tax assessment year 1972-73. While the assessment proceedings for the year 1972-73 were still pending, the Income-tax Officer seems to have passed an order granting registration to this firm for the assessment year 1972-73. During the course of the assessment enquiry, the Income-tax Officer found that Narasimha Rao attained majority only on April 28, 1971, and he was not major either on April 1, 1971, from which date the assessee-firm came into existence or on April 5, 1971, when the partnership deed was executed. The Income-tax Officer, therefore, held the view that the partnership deed executed on April 5, 1971, describing Narasimha Rao as a major partner was ab initio void, inasmuch as Narasimha Rao, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deed of partnership was illegal and the partnership firm was void in law. The limited contention urged by Sri Ch. Srirama Rao, learned counsel for the assessee, is that, notwithstanding the above infirmities, the provisions of section 186 were wrongly invoked to cancel the registration already granted to the assessee-firm. Learned counsel claims that section 186 of the Act can be invoked to cancel registration already granted in only one circumstance and, that is, where the Income-tax Officer is of the opinion that there was no genuine firm in existence as registered during the previous year. It is submitted that the Revenue does not dispute the genuineness of the assessee-firm genuineness speaking from a factual point of view. Learned counsel for the assessee resisted the Revenue's plea that the power to cancel registration already granted under section 186 on the ground of non-genuineness should not be confused with the power to cancel registration on the ground that the partnership firm has no legal existence, because the deed of partnership was ab initio void. According to learned counsel, registration already granted can be cancelled in the former case but not in the latte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alogous to section 186 of the 1961 Act. The Supreme Court made a thorough survey of the provisions contained in the 1922 Act as well as the corresponding rules. The following observations are relevant (at page 208): "A combined effect of section 26A of the Act and the rules made thereunder is that if the application made by a firm gives the necessary particulars prescribed by the rules, the Income-tax Officer cannot reject it, if there is a firm in existence as shown in the instrument of partnership. firm may be said to be not in existence if it is a bogus or not a genuine one, or if in law the constitution of the partnership is void. The jurisdiction of the Income-tax Officer is, therefore, confined to the ascertaining of two facts, namely, (i) whether the application for registration is in conformity with the rules made under the Act, and (ii) whether the firm shown in the document presented for registration is a bogus one or has no legal existence." The above observations were made by the Supreme Court after considering the effect of rule 6B of the Income-tax Rules, 1922, which, as already observed, is analogous to section 186 of the 1961 Act. The above observations would un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identical with the facts in the assessee's case. We may refer to the decision of a Division Bench of this court in CIT v. Sri Ramakrishna Motor Transport [1983] 144 ITR 797. The scope of cancellation of registration under sections 154 and 186 of the Act had come up for consideration in that case. Attention of this court was invited to the earlier decision of this court in CIT v. Balaji Pictures [1983] 144 ITR 807 (AP), to which we have already adverted. The decisions of the Allahabad High Court and the Gauhati High Court above referred to were also noticed by this court. The following observations at page 806 of the report are pertinent: "In the case before us, indeed, the action of the Income-tax Officer will be justified both under section 164(1)(a) as well as under section 186(1). Merely because the Income-tax Officer purported to act under section 154, there is no bar to relate it to the power under section 186(1), if necessary, and to sustain it on that basis. Both procedure-wise and limitation-wise, the action taken can be sustained under section 186(1) as well, if held applicable. Looked at from either angle, we are of the opinion that the Income-tax Officer had power to c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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