Sudhindra Mohan Guha, J. - (1.) This refernce under Section 256(1) of the I.T. Act, 1961, arises out of an application made by the Commissioner of Income-tax, West Bengal-XII, Calcutta. The assessment relates to the year 1971-72, and.the accounting year ended on 30th June, 1970. The assessee-firm came into existence by a partnership deed dated 20th June, 1954, and at that time it had four limited companies as its partners, viz., (1) Philips Electrical India Ltd. (hereinafter referred to as "Philips", (2) Associated Electrical Industries (India) Ltd. (hereinafter referred to as " AEI"), (3) General Electric Company of India Ltd. (hereinafter referred to as " GEC ") and (4) Siemens Bros. & Co. The firm was registered for and from the assessment year 1955-56. By an agreement dated May 5, 1959, it was decided that the share of M/s. Siemens Bros. & Co. should be transferred to the AEI and the other partners had no objection to such transfer. Therefore, with effect from May 5, 1959, only three partners remained in the firm, viz.. Philips, AEI and GEC. By virtue of an order of the High Court dated August 18, 1969, the AEI merged with the GEC with effect from 20th November, 1969. From the date of the merger only two partners remained, viz., Philips and the GEC, in the firm. There was an exchange of letters in December, 1969, as a result of which the revised profit-sharing proportions between Philips and GEC were clearly spelt out in writing. The firm initially did not file an application for registration before the end of the relevant accounting year. It was later on advised that the merger of the two partners meant, in effect, a change in the constitution of the firm within the meaning of Section 184(8) and that it should file an application in Form No. 11A which it did on 30th March, 1971, along with a letter mentioning that the fresh application for registration had been filed on the advice that there might have been a change in the constitution of the firm under Section 184(8) on the merger of the two partners as stated above.
(2.) The ITO refused registration to the firm,, firstly on the ground that no fresh deed of partnership was executed and there was a multiplicity of documents. Secondly, an application for registration was filed beyond the end of the accounting year and the assessee had no valid explanation to offer for the delay.
(3.) Against the order of refusal, there was an appeal before the AAC. The AAC was of the opinion that the assessee's plea that there was no necessity for executing a fresh deed was sustainable. As regards the delay in filing the application, the AAC was of the view that there was a bona fide belief that no application for registration was initially considered necessary as the assessee was not aware that there was a change in the constitution of the firm within the meaning of Section 184(8). Therefore, he condoned the delay in the application for registration and registered the firm for the assessment year 1971-72.;