1986 (6) TMI 32

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..... unal has referred the following question for our opinion : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the Appellate Assistant Commissioner's order cancelling the Income-tax Officer's order passed under section 186(1) cancelling the registration granted ? " The assessee-firm had an instrument of partnership dated October 23 .....

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..... Officer had no reason to believe that there was no genuine firm in existence during the relevant year and it was a condition precedent to invoke the power to cancel the registration under section 186(1) of the Act. That view has been affirmed by the Appellate Tribunal. The Tribunal, in support of its conclusion, has relied upon two decisions, one of the Allahabad High Court in Sheonath Prasad M .....

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..... appeal and further appeal preferred by the parties rested solely on the scope and construction of section 186(1) and not on the source of power located in any other provision. Even the question referred to this court specifically refers to section 186(1) of the Act. It is, therefore, not proper for us to find out whether the order of the Income-tax Officer could be sustained under section 154(1) o .....

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..... en confined to one ground only, that is, the firm that existed during the relevant year was not genuine. Such a power cannot be equated with the power to grant registration. For the purpose of granting registration to a firm under the Act, it is now not in dispute, that there shall be a firm valid in law and also in fact. The concept of the firm being valid in law is distinct from its factual genu .....

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..... . Badjanapara Sall Company [1974] Tax LR 19. Since the Income-tax Officer did not form an opinion that there was during the previous year no genuine firm in existence, he ought not to have cancelled the registration under section 186(1). In the result, we answer the question in the affirmative and against the Revenue. In the circumstances of the case, we make no order as to costs. - .....

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