S. C. Agrawal, J. - (1.) These appeals by certificate granted under Section 261 of theIncome-tax Act, 1961 (hereinafter referred to as the Act) are directed against the judgment of the Allahabad High Court dated November 5, 1980 in Income-tax Reference No. 301 of 1977 (reported in 1981 Tax LR 818) relating to the assessment years 1972-73 and 1973-74. In the said Reference Case the following two questions were referred for opinion of the High Court by the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal):
(2.) Question No. 1 was answered by the High Court against the Revenue and in favour of the assessee. In view of the answer given to question No. 1 the High Court did not consider it necessary to answer the second question on ground that it had become academic and the said question was returned unanswered.
(3.) The respondent (hereinafter referred to as the assessee-firm) is a partnership firm which was allowed registration under Section 185 of the Act for the assessment year 1967-68. Thereafter the assessee-firm was continued to be treated as a registered firm right upto the assessment year 1973-74. On a perusal of the assessment records the Commissioner of Income-tax (hereinafter referred to as the Commissioner) found that on November 3, 1966, when the assessee-firm submitted the application for registration for the assessment year 1967-68 in Form 11-A, there was discrepancy regarding shares of different partners as mentioned in the partnership deed and the shares of the partners shown in the application for registration made in Form11-A and that in each of the years relevant to the assessment years 1967-68 to 1973-74 the account books of the assessee-firm showed that the profits in the firm had not been distributed amongst its partners in accordance with the shares mentioned in Form No. 11-a. Being of the view that various orders passed by the Income-tax Officer whereunder the assessee-firm was granted registration for the assessment year 1967-68 and was treated to be continuing as a registered firm for the subsequent years, were erroneous and prejudicial to the interest of the Revenue, the Commissioner issued a show cause notice under Section 263 of the Act requiring the assessee-firm to show cause as to why the registration granted to it under Section 184(7) of the Act in respect of the assessment years 1972-73 and 1973-74 should not be cancelled. In respect of earlier years no action was proposed by the Commissioner for the reason that the action taken by the Income-tax Officer in respect of those years fell beyond the period of limitation of two years laid down in Section 263 of the Act, The assessee-firm appeared before the Commissioner and showed cause and maintained that throughout the profits had been divided amongst the partners in accordance with the shares as shown in the partnership deed and that there was a mistake in Form 11-A filed by the assessee-firm for seeking registration of the firm for the assessment year 1967-68. The Commissioner, however, concluded that the registration for the year 1967-68 as also the renewals in subsequent years were granted on wrong assumption and that treating the firm as continuing to be registered was prejudicial to the interest of the Revenue. The Commissioner, therefore, in exercise of his powers under Section 263 of the Act, cancelled the renewal of registration granted to the assessee-firm for the assessment years 1972-73 and 1973-74 and directed the Income-tax Officer to reframe the assessments for each of the two years in accordance with law. The appeal filed by the assessee-firm against the said order of the Commissioner was allowed by the Tribunal on the view that according to Section 184(7) registration of the firm was to remain effective the years subsequent to the year 1967-68 automatically, provided the conditions laid down in the said Section were fulfilled and that the said Section does not contemplate passing of an order either for renewal or continuance of registration of the firm and there was no order in regard to initial registration continuing to be effective in the subsequent years which could be revised by the Commissioner under Section 263 of the Act, On merits also the Tribunal ruled that profits of the firm in various years had been divided amongst its partners in accordance with the shares mentioned in the partnership deed on the basis of which the firm was granted registration for the assessment year 1967-68 and neither registration of the assessee-firm for that year nor its being continued to be treated as registered for subsequent years could be said to be erroneous merely for the reason that there was discrepancy in the shares of the partners as mentioned in the application made in Form 11-A for registration of the firm for the assessment year 1967-68. The High Court, while answering question No. 1 in favour of the assessee-firm and against the Revenue, has affirmed the view of the Tribunal that in the matter of continuation of the registration for the assessee-firm no order had been passed by the Income-tax Officer which could be the subject-matter of revision under Section 263 of the Act, Hence this appeal.;