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TMI Blog1985 (9) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, for the assessment years 1962-63, 1964-65 and 1966-67 ? (ii) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order of the Appellate Assistant Commissioner for the assessment year 1964-65 in upholding the cancellation of registration under section 186(1) on a ground different from that taken by the Income-tax Officer in his order? " There is yet another question referred to us at the instance of the Commissioner of Income-tax. This question relates to the assessment year 1961-62 and reads as follows: " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in upholding the order of the Appellate Assistant Commissioner cancelling the order of the Income-tax Officer refusing registration to the assessee-firm for the assessment year 1961-62 within the meaning of section 186(1) of the Income-tax Act, 1961 ? " The assessee was a firm. It consisted of three partners, Sardar Gian Singh Purewal, Sardar Ravinder Singh Purewal and Sardar Jugtar Singh Purewal. The agreement of partnership came into being on March 3,1958. For the assessment year 1958-59, the firm applied and was granted r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner allowing the appeal in respect of the assessment year 1961-62 filed an appeal before the Tribunal. The assessee, in turn, filed separate appeals against the orders of the Appellate Assistant Commissioner. The Tribunal affirmed the order of the Appellate Assistant Commissioner in regard to all the four cases. The assessee and the Revenue being aggrieved by the respective orders of the Tribunal against them moved under section 256 of the Act and the Tribunal has referred the four cases to us for our opinion. The points advanced before us must be divided into four categories. The point advanced in respect of the assessment year 1961-62 is, in my opinion, by itself, different from the points advanced for the assessment years 1962-63, 1964-65 and 1966-67. They must, therefore, be discussed separately. We shall now consider the weight of the submission urged in Taxation Cases Nos. 137 to 139 of 1976. The submission urged on behalf of the assessee in these three references is that the Appellate Assistant Commissioner having not accepted the grounds given by the Income-tax Officer for cancelling the registration had no jurisdiction to uphold the order on different ground a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh and Sardar Ravinder Singh were available in India or were contributing their labour and exertion to the partnership firm. He, however, came to the same conclusion as the Income-tax Officer that there was no valid partnership in existence and registration could not have been allowed, but on an entirely different ground. The Appellate Assistant Commissioner examined Sardar Gian Singh Purewal and recorded his evidence on oath. The evidence shows that Ravinder Singh was not a major on the date of execution of the deed. He, therefore, rejected the appeal but on a ground different from that of the Income-tax Officer. The assessee contested the conclusion of the Appellate Assistant Commissioner in regard to the finding for the year 1964-65. It was not contended that Sardar Ravinder Singh was not a minor at the time of execution of the deed of partnership but it was contended that the Appellate Assistant Commissioner could not arrive at a conclusion on a ground different from that given by the Income-tax Officer. The same ground has been urged before us. Having considered the submissions urged on behalf of the assessee, we are of the view that the submissions lack substance and mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in support of his submission placed reliance upon the case of CIT v. Amritlal Bhogilal Company [1958] 34 ITR 130 (SC) and CIT v. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC). None of those two cases have any relevance to the question falling for consideration before us. In the case of Amritlal Bhogilal Co. [1958] 34 ITR 130 (SC), the facts were that the Income-tax Officer made an estimate about the profits of the assessee under the proviso to section 13 and computed the total income of the assessee, who had applied for and obtained renewal of registration of the firm. Against the order of assessment, the assessee preferred an appeal to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner reduced the estimated profit. The assessee's appeal for another year was pending before the Appellate Assistant Commissioner. Meanwhile it had come to the notice of the Commissioner that the assessee-firm, which had been granted renewal of registration by the Income-tax Officer, was not a firm which could be registered under the Act as one of the partners of the firm was a minor. The Commissioner then took action under section 33B(1) of the Act and issued notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. (1958] 34 ITR 130 (SC) has no relevance to the question before us. In the instant case, the question of registration had fallen for consideration before the Appellate Assistant Commissioner in an appeal under section 246 of the Act. In the case of Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC), the Supreme Court held that in an appeal filed by the assessee, the Appellate Assistant Commissioner has no power to find a new source of income not mentioned in the return and not considered by the Income-tax Officer and assess it under his powers granted under section 31. The situation thus in that case also was entirely different. In the instant case, the question is whether there was a valid partnership. The circumstances for cancelling the registration taken into account by the Revenue were two. First was that Sardar Ravinder Singh was minor on the date the agreement was executed. The second was that Sardar Jugtar Singh and Sardar Ravinder Singh were not contributing their labour to the firm. The Appellate Assistant Commissioner found wrongly that the Income-tax Officer had not recorded any finding about the sons of Sardar Gian Singh contributing their labour. He, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellate Assistant Commissioner and the Tribunal erred in law in setting aside the order of the Income-tax Officer on the ground that no notice had been issued to the assessee in respect of the assessment year 1961-62 to show cause why the registration for that year be not cancelled. The submission has substance and should be accepted as we shall indicate hereinafter. A chronology of events will bring out clearly that the assessee had reasonable opportunity of showing cause against cancellation of registration for the year 1961-62. The firm had been granted registration since the assessment year 1958-59. The registration was being continued year after year. In the course of assessment for the year 1964-65, the Incometax Officer came by some materials which showed that there was no legal partnership. He, therefore, issued a notice to the assessee to show cause why the registration be not cancelled. There can be no running away from the fact that the notice was issued in the course of assessment for the year 1964-65 (A. Y.). The notice did not refer to any particular year but was in general terms. The notice was as follows; " GOVERNMENT OF INDIA Office of the Income-tax Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid order, the Appellate Assistant Commissioner examined Sardar Gian Singh Purewal on oath. From the statement of Gian Singh himself, it came out that Ravinder Singh was a minor on May 31, 1958. I have stated earlier that the Appellate Assistant Commissioner committed an error of record in observing that the Income-tax Officer had not given any finding in regard to Ravinder Singh and Jugtar Singh not being available to contribute their labour and enterprise. Be that as it may, the Appellate Assistant Commissioner upheld the order of cancellation of the registration though on ground different from that of the Income-tax Officer, namely, that Sardar Ravinder Singh, son of Sardar Gian Singh, was not a major on the date of execution of the deed. The order of the Appellate Assistant Commissioner was passed on February 20, 1971. The finding that Sardar Ravinder Singh was a minor was recorded on February 20, 1971, and that was upheld by the Appellate Tribunal as well. The question of cancellation of registration for the year 1961-62 was taken up for consideration after the Appellate Assistant Commissioner had passed an order on February 20, 1971, while passing the order for 1964-65 (as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld have taken a different view of the matter, but since the requirement of law is only to afford reasonable opportunity of being heard, that opportunity can be given even across the table when the assessee is before the Income-tax Officer when the latter is hearing matter. Rules of natural justice are not hide bound. They have a salutary purpose and must be complied with, but they cannot be raised to the status of slogans or a jargon. In the instant case, the assessee knew full well that he was called upon to sustain the registration on two counts. The two counts were common for all the three years in question. Further, the Income-tax Officer has mentioned in his order for the year 1961-62 (assessment year) as follows: " A show-cause notice was issued to the assessee requesting him to explain why registration should not be cancelled. In his reply dated October 20, 1969, the assessee admitted that Sardar Ravinder Singh was residing in the U.S.A. and was not in a position to contribute his labour (See annexure " X "). We are, therefore, fully satisfied that the assessee had reasonable opportunity of being heard and that the provisions of section 186(1) of the Act in that regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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