HARI SAHU Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE Tribunal, Cuttack Bench, has drawn up a statement of case and referred the following question of law for the opinion of this Court:

(2.) TO put the matter in more clear terms, the point for consideration in this case is as to whether a mistake committed by the assessee in the books of account in allocating the shares of profit/loss in any particular accounting year can be corrected and reconciled in terms of the partnership agreement before the assessment is made. In order to answer the question, it is necessary to state the relevant facts in brief. The assessee firm, Hari Sahu, was constituted by a partnership deed dt. April 30, 1974, to carry on business w.e.f. April 1, 1974, with the following two partners :

(3.) AN application in Form No. 11 along with the original deed of partner ship was filed on March 31, 1975, for registration of the firm. But the ITO, on noticing from the books of account that the profits were not allocated according to the terms of the partnership deed and that whereas in the deed the share allocation had been made at 40 per cent 25 per cent, 25 per cent and 10 per cent, it was divided at 50 per cent, 20 per cent, 20 per cent and 10 per cent, refused to grant registration for the year in question and the assessment was made taking the status of the firm as an " unregistered firm ".