NIRANJANLAL RAMBALLABH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66(1) of the Income -tax Act, by which the following question of law has been referred to this Court : - 'Whether the Commissioner of Income -tax, C.P. and Berar (now Madhya Pradesh and Bhopal) was competent under Section 33B of the Indian Income -tax Act to revise the order made by the Income -tax tax Officer on 22nd July, 1947 ?'

(2.) THE assessee Niranjanlal Rambhallabh claimed registration of their firm for the assessment year 1944 -45 and by the order dated the 22nd July, 1947, the Income -tax Officer granted this application and registered the firm for the assessment year J1944 -45. By the order dated the 19th July, 1949, the Commissioner, in exercise of the powers conferred upon him by Section 33B of the Act, set aside the order on the ground that there was no genuine firm in existence for the relevant assessment year. The Commissioner further observed that 'inasmuch as the assessment case was pending before the Income -tax Officer, having been remanded by the Appellate Assistant Commissioner, it was open to the assessee to press its claim for registration for that year if made and supported by a more convincing and reliable evidence.' The assessees appeal to the Appellate Tribunal to set aside this order was rejected on the 15th April, 1950, and that order has given rise to this reference.

(3.) UNDER the Act assessment is made in the case of registered firms on the share income of the individual partners and not on the income of the firm as such. Section 26A and the rules framed thereunder provide for registration of a firm and the order passed by the Income -tax Officer is appealable under Section 30 at the instance of the assessee and not at the instance of the Commissioner. The registration is operative for that assessment year only. If, however, the bogus nature of the firm comes to light after the firm is registered, the Income -tax Officer has the power under Rule 6B to cancel the certificate of registration. That power was not exercised in the instant case by the Income -tax Officer.