Mulye, J. - (1.)THE following questions of law have been referred to this court for its opinion, by the Income-tax Appellate Tribunal, Indore Bench, Indore, under Section 256(1) of the I.T. Act, 1961, at the instance of the assessee :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal has erred in upholding the action of the ITO under Section 147(a) of the Income-tax Act, 1961 ?

(2) That whether, on the facts and in the circumstances of the case, the Tribunal has erred in not quashing the notice under Section 148 on the ground of limitation ? "

(2.)THE facts of the case as per the statement of the case submitted by the Tribunal may be stated thus : A deed of partnership was executed on June 23, 1961, in the name of M/s. Pagoda Hotel & Restaurant, in which Shri Ramlal Sethi, Vikramjit Sethi, Inderjit Sethi were equal partners with equal shares. THE said partnership was made effective from June 16, 1961. This firm had two activities, of which one was of running hotel and restaurant known as Pagoda Hotel & Restaurant and the second was running of wine shop in the name of "M/s. Sethi Wine Stores", Hamidia Road, Bhopal, dealing in foreign liquor. M/s. Sethi Wine Stores was run as a branch of M/s. Pagoda Hotel & Restaurant. THE return was filed in the name of M/s. Pagoda Hotel & Restaurant showing the income from the hotel business as well as the wine business and the status claimed was that of a registered firm. THE assessing ITO for the assessment years 1962-63 to 1965-66 noted that since the licence for running the wine business was in the name of Ramlal Sethi, no legally constituted firm came into existence because of Rule 6 of the Excise Rules as framed by the M.P. State Government, according to which no transfer or sub-letting of the licence would be permissible without the written permission of the Collector. THE ITO, therefore, rejected the claim for registration by the assessee and assessed the income from both the wine and hotel business in the status of an AOP (Association of persons).
The matter ultimately came up before the Tribunal which by its order dated September 21, 1972, allowed registration in respect of the hotel business by observing as under :

"The activities of conducting wine shop were illegal and income derived from that activity cannot be taken to be an income of the validly constituted firm. It will still remain the income of an AOP consisting of the partners of the firm. In any case, income from the wine shop cannot be clubbed with the income of the registered firm. It is, therefore, necessary to bifurcate this income and to assess them separately, as the status itself is changed."

At the instance of the Commissioner, the Tribunal made a reference to this court under Section 66(1) of the Indian I.T. Act, 1922, which was as under :

"Whether, on the facts and in the circumstances of the case, the assessee-firm was an illegal firm not entitled to registration ?"

(3.)THIS court answered the question as under :
"That the partnership so far as it relates to the wine shop is illegal and cannot be registered, but so far as it relates to the hotel business, it is a valid partnership and is entitled to be registered under the Income-tax Act."

This decision is reported in CIT v. Pagoda Hotel & Restaurant [1974] 93 ITR 271 (MP).