COMMISSIONER OF INCOME TAX Vs. DOON BUILDERS

JUDGEMENT

(1.) AT the instance of the CIT, the Tribunal has referred the following question for the opinion of this Court :

(2.) THE assessee, a partnership firm, filed returns of its income for the asst. yrs. 1958 -59, 1959 -60 and 1960 -61 before April 1, 1962, and was assessed under S. 23(3) of the Indian IT Act, 1922, for those assessments years. It also applied for registration under S. 26A of that Act for the asst. yr. 1958 -59 and registration was granted on December 26, 1958. For the subsequent assessment years the registration was renewed by orders dated September 28, 1959, and June 7, 1960. Thereafter, by a notice dated September 7, 1962, the ITO called upon the assessee to show cause under S. 186(1) of the IT Act, 1961, why the registration granted for 1958 -59 and renewal of registration for the next two years should not be cancelled. The assessee contended, inter alia, that the notice under S. 186 was bad in law. The ITO, however, held that the assessee was not a genuine firm and cancelled the registration granted for the first year and its renewal for the succeeding two years. The assessee appealed to the AAC, and he held that the ITO had acted without jurisdiction in making the impugned orders. The ITO then appealed to the Tribunal, but the Tribunal maintained the orders of the AAC. Two contentions were raised by the ITO before the Tribunal. One was that the ITO did enjoy power under S. 186(1) to cancel the registration and the renewals effected thereafter. Alternatively, it was urged that if it be held that the ITO had no such power, there was power in him to make the impugned orders under r. 6B of the Indian IT Rules, 1922, and the impugned orders should be construed as having been made in the exercise of that power. The Tribunal rejected both the contentions. The CIT applied for a reference to this Court, and the Tribunal has referred the question set out above.

(3.) LEARNED counsel for the CIT refers to S. 297(2)(k) of the Act of 1961, which provides :