COMMISSIONER OF INCOME TAX Vs. UNITED BROTHERS

JUDGEMENT

(1.) ON an application by the Revenue, the following question has been referred by the Tribunal to this court under Section 256(1) of the Income-tax Act, 1961, for short "the Act".

(2.) BRIEFLY stated, the facts are as follows : Three persons formed a partnership which was duly registered under Section 184 of the Act. Subsequently, the audit by the Accountant-General objected to the grant of registration on the ground that an artificial juridical person, Ganeshji Maharaj, had been made a partner. Thereupon, the Income-tax Officer with the approval of the Inspecting Assistant Commissioner cancelled the registration. This order was affirmed by the Appellate Assistant Commissioner. However, on appeal by the assessee, the order was set aside by the learned Tribunal. It may be stated that the reference relates to the assessment year 1970-71. Hence, the present reference.

(3.) THE language of this sub-section is clear and unambiguous. Before cancellation of the registration of the firm, the Income-tax Officer has to give reasonable opportunity of being heard to the firm in question. Further, the Income-tax Officer must form the opinion that no genuine firm was in existence as registered and, after forming such an opinion, the Income-tax Officer has to get the previous approval of the Assistant Commissioner before passing the final order of cancellation under the said Section 186 of the Act.