KANTA BHATNAGAR, J. - (1.) THE Income -tax Appellate Tribunal, Jaipur Bench, Jaipur, has referred the following five questions for the opinion of this court under Section 256(1) of the Income -tax Act, 1961 (hereinafter to be referred as ' the Act ') : ' 1. Whether, on the facts and in the circumstances of the case, the assessee was required to file a fresh application for registration in Form No. 1IA after the change in the constitution of the firm that took place on September 16, 1973, on the death of a partner, Shri Shankerlal ? 2. If the answer to question No. 1 be in the affirmative : (a) Whether the assessee's note dated October 27, 1976, could be treated as a fresh application for registration in Form No. 11A ; and (b) Whether, on the facts and in the circumstances of this case, the provisions of Section 185(2) were applicable in the present case ? 3. Whether the Income -tax Officer's order dated October 28, 1976, passed under Section 185(1)(a) was erroneous and also prejudicial to the Revenue ? 4. Whether, in view of Section 186(1) of the Income -tax Act, 1961, the Commissioner's order dated October 5, 1976, cancelling the registration of the firm already granted by the Income -tax Officer was valid in law ? and 5. Whether registration could be allowed to the assessee -firm at least for the period up to September 16, 1973, for which period all the formalities for grant of registration had been complied with ? '
(2.) THE facts of the case giving rise to this reference are as under : On November 8, 1972, three persons, viz., Shankerlal, Ashok Kumar and Jagdish Prasad, entered into a partnership business and executed the partnership deed. The business was in the name and style of M/s. Udaipur Soap Factory, Udaipur. On July 20, 1973, an application in Form No. 11 along with the aforesaid partnership deed was filed for the registration of the firm. On September 16, 1973, partner Shankerlal died. In pursuance of the provision of Clause 17 of the partnership deed dated November 8, 1972, the firm continued and the deceased Shankerlal's heirs, Smt. Gangaben and Shri Ashok Kumar, were admitted as partners in his place. On September 20, 1973, an agreement to that effect was drawn on a stamp -paper of the value of Rs. 5 and the shares of the partners so substituted were specified. The Income -tax Officer (for short 'the ITO') asked the assessee -firm to explain as to why a fresh partnership deed had not been executed at the time of admitting the two new partners into the assessee -firm. The assessee, vide note dated October 27, 1976, filed a reply drawing his attention to Clause 17 of the original partnership deed and also stated that on September 20, 1973, an agreement had been drawn up on stamp -paper and new partners were admitted into the partnership in place of the deceased partner from September 16, 1973, up to Diwali, 1973. The Income -tax Officer took the firm to be genuine and granted registration to the assessee firm under Section 185(1)(a) of the Act by an order dated October 28, 1976. The registration was to remain effective for the assessment year 1974 -75. There was an audit objection with regard to the grant of registration to the assessee -firm for the assessment year 1974 -75. The Commissioner, therefore, after making necessary inquiry into the matter, held that the agreement dated September 20, 1973, did not reconstitute the firm. It was also held that the application in Form No. 11 filed on July 20, 1973, had become infructuous and in the absence of a fresh deed of partnership and the application for registration in Form No. 11A, the order granting registration to the assessee by the Income -tax Officer was erroneous inasmuch as it was prejudicial to the interests of the Revenue.
(3.) THE assessee felt aggrieved by the order of the Commissioner and preferred an appeal before the Income -tax Appellate Tribunal, Jaipur Bench, Jaipur (for short 'the Tribunal'). The Tribunal was of the opinion that the agreement dated September 20, 1973, read with the original partnership deed evidenced a reconstituted firm not only with regard to the composition but also with regard to the shares of profits of the partners and as such for the purpose of Section 184(1) of the Act, the reconstituted firm was evidenced by an instrument. The Tribunal, therefore, disagreed with the findings of the Commissioner on this point. However, the Tribunal upheld the conclusion drawn by the Commissioner regarding the order of the Income -tax Officer being erroneous and prejudicial to the interests of the Revenue for the reason that the application filed on July 20, 1973, had become infructuous and purposeless after the change in the constitution of the firm and the application in Form No. 11A had not been filed as required by law. The argument regarding the prayer for granting registration up to September 16, 1973, the date of death of a partner, Shankerlal, also did not find favour with the Tribunal on the ground that it is not permissible to break the period of accounting and allow piece -meal registration. The appeal of the assessee was dismissed.;