PATHAK, J. - (1.) AT the instance of the CIT, the Tribunal has referred the following question for the opinion of this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the ITO had no power to cancel the registration and renewal of registration of the assessee under S. 186(1) of the IT Act, 1961, in respect of the asst. yrs. 1958 -59, 1959 -60 and 1960 -61, when the same had been granted with regard to the aforesaid assessment years under the provisions of the Indian IT Act, 1922 ?"
(2.) THE assessee, a partnership firm, filed returns of its income for the asst. yrs. 1958 -59, 1959 -60 and 1960 -61 before April 1, 1962, and was assessed under S. 23(3) of the Indian IT Act, 1922, for those assessments years. It also applied for registration under S. 26A of that Act for the asst. yr. 1958 -59 and registration was granted on December 26, 1958. For the subsequent assessment years the registration was renewed by orders dated September 28, 1959, and June 7, 1960. Thereafter, by a notice dated September 7, 1962, the ITO called upon the assessee to show cause under S. 186(1) of the IT Act, 1961, why the registration granted for 1958 -59 and renewal of registration for the next two years should not be cancelled. The assessee contended, inter alia, that the notice under S. 186 was bad in law. The ITO, however, held that the assessee was not a genuine firm and cancelled the registration granted for the first year and its renewal for the succeeding two years. The assessee appealed to the AAC, and he held that the ITO had acted without jurisdiction in making the impugned orders. The ITO then appealed to the Tribunal, but the Tribunal maintained the orders of the AAC. Two contentions were raised by the ITO before the Tribunal. One was that the ITO did enjoy power under S. 186(1) to cancel the registration and the renewals effected thereafter. Alternatively, it was urged that if it be held that the ITO had no such power, there was power in him to make the impugned orders under r. 6B of the Indian IT Rules, 1922, and the impugned orders should be construed as having been made in the exercise of that power. The Tribunal rejected both the contentions. The CIT applied for a reference to this Court, and the Tribunal has referred the question set out above. It is apparent that the only point for consideration is whether the power under S. 186(1) of the IT Act, 1961, can be employed to cancel the registration or renewal of registration granted under the Indian IT Act, 1922. There is nothing in the language of the question referred to warrant an enquiry as to whether the power exercised by the ITO can be referred to r. 6B of the IT Rules, 1922. Learned counsel for the CIT has vehemently contended that both the contentions advanced by the ITO before the Tribunal form the subject -matter of the question referred to this Court, but we are unable to accept that contention. Turning then to the question before us, it is clear that the return of income for each of the assessment years under consideration was filed by the assessee before April 1, 1962. Under paragraph 2 of the IT (Removal of Difficulties) Order, 1962, proceedings relating to registration of a firm are to be regarded for the purposes of cls. (a) and (b) of sub -s. (2) of S. 297 of the IT Act, 1961, as part of the assessment proceedings for the relevant assessment year. Proceedings relating to registration would include proceedings for cancellation of registration. Consequently, applying S. 297(2)(a) of the Act of 1961, the proceedings for cancellation of registration and of renewal of registration could be taken and continued under the Act of 1922. It is not disputed that if S. 297(2)(a) applied, the proceedings contemplated thereby can be taken only under the Act of 1922. If that is so, no question arises of invoking the provisions of the 1961 Act, including S. 184(7) thereof.
(3.) LEARNED counsel for the CIT refers to S. 297(2)(k) of the Act of 1961, which provides : "Any agreement entered into, appointment made, approval given, recognition granted, direction, instruction, notification, order or rule issued under any provision of the repealed Act shall, so far as it is not inconsistent with the corresponding provision of this Act, be deemed to have been entered into, made, granted, given or issued under the corresponding provision aforesaid and shall continue in force accordingly." ;