B.P.Jeevan Reddy, C.J. - (1.) The Income-tax Appellate Tribunal has referred the following question under Section 256(2) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal's opinion that the Additional Commissioner of Income-tax did not apply his mind before initiating proceedings under Section 263(1) of the Income-tax Act, 1961, and he abdicated his function in favour of the Income-tax Officer is legally correct ?"
(2.) The asessee is a partnership firm. It was constituted under a partnership deed dated March 18, 1963. There were two partners and two minors were admitted to the benefits of partnership. Registration was granted under the Income-tax Act for the assessment year 1964-65. It was being renewed every year. It appears that the two minors attained majority during the financial year ending on March 31, 1964. This fact was, however, not intimated to the authorities. No action was taken to execute a fresh partnership deed including the erstwhile minors or excluding them, as the case may be. When this fact came to the knowledge of the Income-tax Officer, he issued a notice under Section 186 and cancelled the registration for the assesment years 1965-66, 1966-67 and 1967-68. He could not cancel the registration for 1964-65 because it was barred by the limitation prescribed in Section 186. So far as 1968-69 is concerned, the Income-tax Officer approached the Additional Commissioner of Income-tax for cancellation of registration. The order of the Commissioner says, that, when the Income-tax Officer approaching him therefor, he issued a show-cause notice under Section 263. It appears that the assessee did not appear but applied for adjournment. Adjournment was refused on the ground that the reason assigned was not sufficient. The Commissioner proceeded to dispose of the revision on merits. He set aside the order granting registration for the assessment year 1968-69 and sent the matter back to the Income-tax Officer for making fresh assessment according to law.
(3.) The assessee filed an appeal before the Tribunal. The Tribunal found that the Commissioner has initiated the proceedings under Section 263 without applying his mind to the facts of the case and without being satisfied that the facts of the case did warrant the exercise of his power under Section 263. The Tribunal was also of the opinion that the Commissioner has practically abdicated his function to the Income-tax Officer, inasmuch as he acted upon his request and sent the matter back to him. Thereupon, the present reference was obtained.;