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TMI Blog1975 (5) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ct"). Thereafter, the registration was renewed for the year 1955-56, the relevant assessment year. The Income-tax Officer by his order dated 26th March, 1964, cancelled the renewal of registration granted for the assessment year 1955-56 with the prior approval of the Inspecting Assistant Commissioner of Income-tax. The order was passed under section 186(1) of the Income-tax Act, 1961 (hereinafter referred to as "the 1961 Act"). The Income-tax Officer held that the renewal of registration for the assessment year 1955-56 was erroneous as the minor partners were made liable for losses also in the partnership deed on the basis of which registration was granted and which is contrary to the provisions of section 30 of the Indian Partnership Act, 1932. The Income-tax Officer held that since the firm would not be valid there can be no registration of the same under the 1922 Act. Before the Income-tax Officer the assessee raised an objection that the proceedings for cancellation of registration in the instant case could not be taken up under section 186(1) read with section 297(2)(a) of the 1961 Act and clause 2 of the Income-tax (Removal of Difficulties) Order, 1962. The assessee's content ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1955-56 under the 1922 Act and that, although the Income-tax Officer passed the order under section 186(1) of the 1961 Act, it should be deemed as an order under rule 6B of the Indian Income-tax Rules, 1922. Accordingly, the Tribunal set aside the order of the Appellate Assistant Commissioner and restored the order of the Income-tax Officer. The appeal was allowed and the cross-objection was dismissed. On the above facts the above question of law has been referred. Mr. B. P. Saraf, the learned counsel appearing for the assessee, has firstly submitted that the constitution of the firm is legal and even assuming that the firm was not legally constituted, the firm in fact has been existing, and, therefore, it was genuine and the Tribunal was wrong in holding that the Income-tax Officer was justified in cancelling the registration as he found that there was no genuine firm in existence. The second submission of the learned counsel is that the proceedings for cancellation of the registration granted under section 26A of the 1922 Act could not be taken up under section 186(1) of the 1961 Act, and, therefore, the Tribunal was not justified in restoring the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not satisfied the Income-tax Officer shall refuse to renew the registration of the firm. Rule 6B is in the following terms: "6B. In the event of the Income-tax Officer being satisfied that the certificate granted under rule 4, or under rule 6A, has been obtained without there being a genuine firm in existence, he may cancel the certificate so granted." On a consideration of the above provisions of the Act and the rules we find that for the purpose of registration of a firm for the purposes of the Income-tax Act the firm must be constituted under an instrument of partnership. If a certificate of registration has been granted under rule 4, or a certificate granted under rule 4 has been renewed under rule 6A and the Income-tax Officer is subsequently satisfied that the certificate granted under rule 4 or renewed under rule 6A has been obtained without there being a genuine firm in existence, he may cancel the certificate so granted. So the power of cancellation of a certificate granted or renewed has its source in rule 6B of the Rules. In the instant case the certificate of registration was renewed for the year 1955-56. Subsequently, the Income-tax Officer found that there was n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining knowledge that he has been admitted to the benefits of partnership, whichever date is later, such a person may elect to become a partner in the firm after complying with the requirements of sub-section (5). From the agreement of partnership, a copy of which is in the paper book, we find that eight persons have agreed to enter into the partnership and out of these eight persons, three are admittedly minors, on whose behalf their respective fathers have agreed. Clause 6 of the partnership deed provides that each partner shall have equal share in the partnership business and the profit and loss of the partnership shall be divided equally between and borne by the partners. On consideration of the contents of the partnership deed it is quite clear that the minors also had been made partners and their fathers have agreed to form the partnership on behalf of the minors. It is not a case of the partners agreeing to admit some minors to the benefits of the partnership as provided under sub-section (1) of section 30 of the Indian Partnership Act. The partnership in terms has sought to make the minors also full fledged partners and it has been stated that their respective fathers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter referred to as the repealing Act), proceedings relating to registration of a firm or a claim for refund of tax shall be regarded as a part of the proceedings for the assessment of the person concerned for the relevant assessment year." Relying on the above provisions of law, the learned counsel submits that the proceedings relating to registration of the firm for the year 1955-56 shall be regarded as a part of the proceedings for the assessment of the firm for that year and, therefore, the cancellation proceedings should have been taken under the 1922 Act, and the cancellation under section 186(1) of the 1961 Act is without jurisdiction. Under the 1922 Act, the power of cancellation of registration is found in rule 6B of the Indian Income-tax Rules, 1922, framed under section 59 of the Indian Income-tax Act, 1922. The Income-tax Officer in the instant case exercised the power of cancellation and this power is referable to his jurisdiction under rule 6B of the 1922 Rules. In the order of cancellation no doubt it has been mentioned that the order has been passed under section 186(1) of the Income-tax Act, 1961. Under section 297(2)(a) of the 1961 Act, the proceedings for cance ..... 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