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TMI Blog1982 (12) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ch a minor is admitted as a full partner, is not valid and cannot be registered under s. 26A of the Indian I.T. Act, 1922. The decisions of the Madras High Court and the other High Courts to the contrary were overruled. Pursuant to this decision, the ITO proposed to cancel the registration granted by him for the assessment years 1958-59 and 1959-60, invoking his power of rectification under s. 154. Meanwhile, the minor, Sri Kameswara Rao, became a major on October 27, 1958, and opted to continue as a partner, as contemplated by s. 30 of the Partnership Act. A rectification deed was executed on October 29, 1958 recording the said fact. Though this fact was brought to the notice of the ITO when he proposed to exercise his power of rectification, the ITO cancelled the registration for the assessment year 1958-59, as also the renewal granted for the assessment year 1959-60. On appeal, however, the AAC took the view that the ITO was not competent to cancel the registration under s. 154 and accordingly set aside his order. The Revenue filed an appeal before the Income-tax Appellate Tribunal contending that, in view of the Supreme Court decision, it must be held that the partnership deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred for our opinion is: " Whether, on the facts and in the circumstances of the case, the cancellation of registration could be made under section 154 of the Income-tax Act, 1961 ? " Sri M. S. Murthy, the learned standing counsel for the Department, assailed the correctness of the interpretation placed by the Tribunal upon the words " any other order " in s. 154. He contended that there is no scope for applying the rule of ejusdem generis to give a restricted meaning to the said words. According to him, the words " any other order " must be given their full effect, and must be held to cover all types of orders. He contended further that the decision of the Supreme Court in CIT v. Dwarkadas Khetan & Co. [1961] 41 ITR 528, which overruled the decision of the Madras High Court, does constitute a valid and sufficient ground for invoking the power of rectification under s. 154. Even with respect to the assessment year 1959-60, learned counsel submitted, the position cannot be different, because no fresh partnership was entered into by the partners after the erstwhile minor, Sri Kameswara Rao, attained majority. According to the learned counsel, the rectification deed executed on Oct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by him under section 250 or section 271 ; (c) the Commissioner may amend any order passed by him in revision under section 263 or section 264. (1A) Where any matter has been considered and decided in any proceeding by way of appeal or revision relating to an order referred to in sub-section (1), the authority passing such order may, notwithstanding anything contained in any law for the time being in force, amend the order under thatsub-section in relation to any matter other than the matter which has been so considered and decided. (2) Subject to the other provisions of this section, the authority concerned (a) may make an amendment under sub-section (1) of its own motion, and (b) shall make such amendment for rectifying any such mistake which has been brought to its notice by the assessee, and where the authority concerned is the Appellate Assistant Commissioner or the Commissioner (Appeals), by the Income-tax Officer also. (3) An amendment, which has the effect of enhancing an assessment or reducing a refund or otherwise increasing the liability of the assessee, shall not be made under this section unless the authority concerned has given notice to the assessee of its intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer is of opinion that there was during the previous year no genuine firm in existence as registered, be may, after giving the firm reasonable opportunity of being heard and with the previous approval of the Inspecting Assistant Commissioner, cancel the registration of the firm for that assessment year : Provided that no such cancellation shall be made after the expiry of eight years from the end of the assessment year in respect of which registration has been granted or has effect. (2) If, where a firm has been registered or its registration has effect under sub-section (7) of section 184 for any assessment year, there is, on the part of the firm, any such failure in respect of the assessment year as is mentioned in section 144, the Income-tax Officer may cancel the registration of the firm for the assessment year, after giving the firm not less than fourteen days' notice intimating his intention to cancel its registration and after giving it a reasonable opportunity of being heard. (3) Where the registration of a firm is cancelled for any assessment year, the Income-tax Officer shall amend the assessments of the firm and its partners for that assessment year on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbiguity. It is not only in the interests of justice but also in the interests of assessee, as well as the Revenue that manifestly erroneous orders are not allowed to stand. We see no reason to cut down the natural and plain meaning of the words, which course may, in some cases, work to the disadvantage of the assessees also. In Lila Vati Bai v. State of Bombay, AIR 1957 SC 521, it was contended that the words or otherwise " in s. 6 of the Bombay Land Requisition Act of 1948 the relevant portion whereof read as follows: " ceases to be in occupation upon termination of his tenancy, eviction, assignment or transfer in any other manner of his interest in the premises or otherwise..."should be read ejusdem generis. This argument was rejected by the Supreme Court in the following words (p. 528) : " The rule of ejusdem generis sought to be pressed in aid of the petitioner can possibly have no-application, The Legislature has been cautious and thorough-going enough to bar all avenues of escape by using the words 'or otherwise'. Those words are not words of limitation but of extension so as to cover all possible ways in which a vacancy may occur.... The Legislature, when it used the words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich benefit continued up to the assessment year 1968-69. The Commissioner cancelled the registration for 1968-69 under s. 263 of the Act. Thereafter, the ITO cancelled the registration for the assessment years 1965-66 to 1967-68, under s.186 on the ground that, though the minors had attained majority on different dates in the previous years ending March 31, 1964, no fresh partnership deed was drawn up thereafter. The Allahabad High Court held that, in the circumstances, it must, be held that a change had taken place in the constitution of the firm necessitating the drawing up of a fresh instrument of partnership and moving an application for grant of a fresh registration and further that, in the circumstances, the cancellation under s. 186 was valid. Similarly, the Gauhati High Court in Mahabir Prasad Kishanlal & Co. v. CIT [1976] 102 ITR 466, held that where a partnership deed sought to make the minors full partners, it is illegal and that the ITO has jurisdiction to cancel the registration of the firm, once granted, under s. 186(1) of the Act. In the case before us, indeed, the action of the ITO will be justified both under s. 154(1)(a) as well as under s. 186(1). Merely becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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