Rajasthan High Court - Jaipur
Udaipur Soap Factory vs Commissioner Of Income-Tax on 23 October, 1986
Author: J.S. Verma
Bench: J.S. Verma
JUDGMENT 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.
3. 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.
4. 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.
5. The assessee filed an application under Section 256(1) of the Act before the Tribunal making a request that as certain questions of law arose out of the order of the Tribunal, reference may be made to the High Court. The Tribunal allowed the application and referred the above-mentioned five questions for the opinion of this court.
6. The first question relates to the requirement of application for registration in Form No. 11A after the change in the constitution of the firm.
7. It has been strenuously contended by Mr. L.M. Lodha, learned counsel for the assessee, that as there was no fresh partnership, no fresh deed of partnership was required to be executed, that Clause 17 of the partnership deed provided for inducting the heirs of any partner expiring during the existence of the partnership and as such after September 16, 1973, the partnership continued and was entitled to registration on the basis of the application in Form No. 11 filed on July 20, 1973.
8. Mr. B. R. Arora, learned counsel for the Revenue, submitted that admitting new partners into the firm, for whatever reason it might be, and the specification of their shares amounted to constituting a new firm or at least to a change in the constitution of the firm and, therefore, a fresh application for registration was required.
9. Before referring to the principles enunciated in the authorities on the point, it would be profitable to refer to the provisions relating to registration of firms.
10. Section 184 of the Act deals with the application for registration. The firm may make an application if the partnership is evidenced by an instrument and the individual shares of the partners are specified in that instrument. Sub-section (4) of this section requires the application to be made before the end of the previous year for the assessment year in respect of which registration is sought. Sub-section (7) of this section relates to the effect of the registration for every subsequent assessment year in case there is no change in the constitution of the firm. Section 185 of the Act lays down the procedure on receipt of the application under Section 184 of the Act. Section 186 of the Act deals with the cancellation of the registration of the firm in case it is found that no genuine firm as registered was in existence during the previous year. Section 187 of the Act relates to the change in the constitution and provides that the assessment shall be made on the firm as constituted at the time of making the assessment. Section 188 of the Act deals with succession of one firm by another firm.
11. Section 189 of the Act deals with the dissolution of a firm or discontinuance of business.
12. In the instant case, because of the death of Shankerlal, the following points emerge for consideration :
1. Whether the firm was dissolved because of the death of one of the partners and a new partnership deed was required to be executed ;
2. Whether the firm continued because of the provisions of the partnership deed and was entitled to registration on the basis of an application dated September 20, 1973, filed during the lifetime of Shankerlal; and
3. Whether in case the firm is taken to continue, a fresh application for registration was required because of the change in the constitution of the firm and whether the note dated October 27, 1976, could be treated as a fresh application for registration in Form No. 11 A.
13. Shankerlal died on September 16, 1973. To meet such a contingency, Clause 17 of the deed of the partnership contained the following provision :
" Clause 17. That in case of death of any partner, the remaining partners shall not dissolve the firm necessarily, till the end of the accounting year and the legal heirs or executors or representatives of the dying partner may step in his shoes. "
14. The accounting year ended on Diwali, 1973. As there was an option with the legal heirs of the deceased partner to join the partnership and on their agreeing to be inducted as partners, an agreement dated September 20, 1973, was executed and signed by all the partners. This is, therefore, not a case of a dissolution of the partnership. The original partnership deed containing Clause 17 read with the agreement dated September 20, 1973, evidences the instrument of partnership. The Tribunal was, therefore, justified in holding that there was no necessity for a fresh partnership deed. The cancellation of registration was, however, justified because there was no application for registration in Form No. 11A after the change in the constitution of the firm.
15. By the term "constitution of the firm", the identity of the partners and their respective shares are to be understood. The change in the constitution of the firm means the change in the identity of the partners and their shares. A change in the constitution may take place when a partner retires or ceases to be a partner on becoming insolvent or on account of death or a minor partner becomes major. Section 187(2) of the Act relevant for the purpose reads as under:
" 187(2) For the purposes of this section, there is a change in the constitution of the firm-
(a) if one or more of the partners cease to be partners or one or more new partners are admitted, in such circumstances that one or more of the persons who were partners of the firm before the change continue as partner or partners after the change ; or
(b) where all the partners continue with a change in their respective shares or in the shares of some of them, "
16. Death of Shankerlal on September 16, 1973, has brought a change in the constitution of the firm leaving only two surviving partners instead of the original three and the subsequent admission of the legal representatives of Shankerlal and specification of their shares have changed the constitution of the firm.
17. Sub-section (8) of Section 184 provides as under :
" 184. (8) Where any such change has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section. "
18. Rule 22 of the Income-tax Rules, 1962 (referred to as "the Rules" hereinafter), lays down the procedure for registration of the firm for the purpose of this Act.
19. Sub-rule (2)(ii) of Rule 22 relevant for the present purpose reads as under:
Rule 22(2)(ii):
" and where any change or changes in the constitution of the firm or the shares of the partners have taken place during the previous year before the date of the application-
(a) the application shall be made in Form No. 11A ; and
(b) it shall be accompanied by the original instrument or instruments evidencing the partnership as in existence from time to time during the previous year up to the date of the application together with copies thereof. A certified copy of the instrument or instruments together with a duplicate copy thereof may be attached to the application if, for sufficient reason, the original instrument or instruments cannot be produced. "
20. The change in the constitution of the firm which in the instant case was on account of the death of Shankerlal, the original partner, and his legal representatives being substituted by virtue of Clause 17 of the deed of partnership and the agreement dated September 20, 1973, brings the case within the ambit of Rule 22(2)(ii) and, therefore, an application was required to be made in Form No. 11 A.
21. Mr. Lodha, learned counsel for the assessee, vehemently emphasised that the non-compliance with this Rule will not create any hurdle for registration because the firm continued and an application in Form No. 11 had already been filed during the lifetime of Shankerlal.
22. In this connection, reference has been made to the principles enunciated in the case of Badri Narain Kashi Prasad v. Addl. CIT [1978] 115 ITR 858 (All) [FB], where the court was concerned with the problem of minors and death of a partner. The minor, admitted to the benefits of partnership, became major and as such became responsible for the benefit as well as loss. The question arose as to whether it amounted to a change in the constitution of the firm and whether the firm will be entitled to continuance of registration where the partnership envisaged share of minor in loss on attaining majority. Their Lordships enunciated the principle that it is settled law that on the death of a partner, the constitution of the firm changes. The provision of Section 42(c) of the Partnership Act, 1932, provides that normally a firm dissolves on the death of a partner unless there is a contract to the contrary. In view of the facts and circumstances of the case, their Lordships were of the opinion that there can be no change in the constitution of the firm by the mere fact of a minor, admitted to the benefits of partnership, becoming a major and electing to remain a partner because he was already a partner and continued to be so. It was held that in case the original instrument of partnership envisaged that change, the firm would be entitled to continuance of registration under Section 184(7). Mr. Lodha, taking help from the principle so enunciated, emphasised that in the present case also the instrument of partnership has envisaged the change in the constitution on account of the death of one of the partners and, therefore, the application for registration filed during the lifetime of Shankerlal has been rightly considered by the Income-tax Officer and registration was to continue. It is relevant to note that regarding the question of change in the constitution, their Lordships have observed that it is settled law that on the death of a partner, the constitution of the firm changes. In that case, the minor was already a partner and continued to be so on becoming major. The question was only regarding the continuation of the registration whereas in the instant case the question before the Income-tax Officer was as to whether registration should be granted on an application filed prior to the death of a partner or in case of a change in the constitution, the provisions of Rule 22(2)(ii) would be attracted and application in Form No. 11A was necessary.
23. Mr. Lodha emphatically contended that when there was no dissolution of the firm and the firm continued by virtue of Clause 17 of the partnership deed, it should be taken as such for the purpose of Section 185 of the Act and no fresh application was required.
24. The argument of Mr. Lodha finds a reply in the case of Girdharilal Nannelal v. CIT [1984] 147 ITR 529 (MP) [FB], wherein it was observed that in sections 187, 188 and 189, the Legislature has made special provisions applicable to firms relating to changes in their constitution, succession and dissolution. According to their Lordships, this exercise was unnecessary, if these expressions were to be construed only according to the existing general law and that it cannot be doubted that any matter, for which a specific provision is made in the Income-tax Act, is to be governed by it notwithstanding anything different or contrary contained in the general law relating to that matter. After discussing the provisions of Section 187 and observing that a person may cease to be a partner for any of the special reasons such as death, retirement, etc., and the situation envisaged by Sub-section (2)(a), their Lordships held that resort to the general law and the concept of "dissolution" and "change in the constitution of a firm" according to the general law contained in the Indian Partnership Act is, therefore, not warranted.
25. Mr. Lodha has placed reliance on the principle enunciated in the case of CIT v. Ganesar Industries [1984] 149 ITR 48 (Mad). The facts of the case were similar to the case on hand. One of the clauses in the partnership deed under which the assessee-firm was constituted contained a Clause that on the death of any partner, the share of the deceased partner would be re-allocated among the remaining partners. On the death of a partner on November 19, 1972, the Income-tax Officer granted registration to the firm for the assessment year 1973-74. The Commissioner in suo motu revisional proceedings held that as no fresh partnership deed was executed after the death of the partner, it could not be said that there was an instrument of partnership specifying the individual shares of the partners during the year in question and, consequently, cancelled the registration granted to the firm. The Tribunal, on appeal, held that by virtue of the specific Clause in the partnership deed that the firm would not get dissolved by reason of the death of the partner but his share would stand re-allocated among the surviving partners, the partnership deed should be taken to specify the profit-sharing ratio of each of the remaining partners and, accordingly, the firm was entitled to registration. On a reference, the conclusion of the Tribunal was taken to be correct and the firm was held entitled to registration. The principle enunciated in that case is of no help to the assessee in the present case, The reason is that in the present case the Tribunal in view of Clause 17 of the partnership deed dated November 8, 1972, read with the agreement dated September 20, 1973, has held that for the purpose of Section 184(1), the reconstituted firm was evidenced by an instrument. The grant of registration was, however, considered to be erroneous because of the non-compliance with Rule 22 of the Rules, i.e., the assessee not filing fresh application in Form No. 11A. If the assessee wants any advantage under the Act, strict compliance with the requirements of the Act and the rules framed thereunder is mandatory.
26. In the case of CIT v. Sri Rama Talkies [1973] 87 ITR 615 (AP), in facts similar to the present case, it was held that even when a firm is reconstituted in accordance with the terms of the deed of partnership and a partner is replaced by another without the firm being dissolved, there is a change in the constitution of the firm for the purpose of Section 184(7) of the Act. The registration of the firm was denied on the ground that the application filed was not in proper form, i.e., instead of fresh application for registration, an application for continuation of registration was filed.
27. In the case of K.C. Trunk and Bucket Factory v. CIT [1977] 106 ITR 348 (Gauhati), one of the partners ceased to be so on account of his death. The surviving partners of the firm continued as partners under the terms of the partnership deed. It was taken to be a change in the constitution of the firm within the meaning of Sub-section (2)(a) of Section 187 of the Act. It was, therefore, considered mandatory for the assessee to make an application under Section 184(2) for fresh registration of the firm for the assessment year in question and it not being done, registration was refused.
28. Registration under the Act enables the firm to have the benefit of lower rates of tax than those which would be applicable to the whole income of the firm when charged as a unit of assessment. In order to benefit by registration, the assessee should proceed in strict conformity with the relevant provisions of the Act.
29. The rules framed under the Act have statutory force. As stated earlier, Rule 22 of the rules prescribes the form in which the application should be made. There is specific provision for making application in Form No. 11A after a change in the constitution of the firm. Section 184(8) makes it clear that where any change takes place in the previous year, the firm shall apply for fresh registration for the assessment year concerned, in accordance with the provisions of that section.
30. In view of the conclusion that there was a change in the constitution of the firm on September 16, 1973, on the death of Shanker Lal, we are of the opinion that it was incumbent upon the reconstituted firm to make an application in Form No. 11A. As such, the answer to question No. 1 is in the affirmative.
31. The remaining questions are dependent on the answer to question No. 1 being in the affirmative. Question No. 2 consists of two parts. First is regarding the assessee's note dated October 27, 1976, claimed to be treated as application in Form No. 11A and the second is regarding the applicability of the provisions of Section 185(2).
32. The Income-tax Officer made inquiries regarding the genuineness of the firm while dealing with the application for registration dated September 20, 1973, as to why a fresh deed for registration was not executed. Reply was filed drawing attention to Clause 17 envisaging the contingency of the death of a partner. Mr. Lodha stressed that in case the necessity for application in Form No. 11A is felt, this note should be treated as an application in that form, because it was made after the change in the constitution of the firm. The argument has no force. Section 184(4) providing limitation for filing the application reads as under :
"184. (4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought:
Provided that the Income-tax Officer may entertain an application made after the end of the previous year, if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year."
33. The case of the assessee does not fall under the proviso. The note dated October 20, 1976, was only an explanation to the query made by the Income-tax Officer and that too after the expiry of the period when application in Form No. 11A was required to be filed. The application in Form No. 11A is required to be accompanied by the documents mentioned in Rule 22(2)(ii)(b) of the Rules. Form No. 11A containing the declaration by the partners of the firm is required to be signed by all the partners. The note dated October 20, 1976, therefore, could not be treated as a fresh application for registration in Form No. 11 A.
34. Section 185(2) of the Act provides that where the Income-tax Officer considers that the application for registration is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect within a period of one month from the date of such intimation and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, reject the application. In order to attract the provision of this sub-section, there should be an application in existence. In the present case, there was no application at all in Form No. 11A and, therefore, the question of the Income-tax Officer scrutinising the application and on finding any defect in it intimating the assessee about it to enable it to rectify the defect does not arise.
35. We have discussed in detail the implications of the assessee not complying with the provisions of the Act and the Rules when filing the application in Form No. 11A and have agreed with the conclusion of the Tribunal that the registration granted to the firm by the Income-tax Officer was erroneous. The Income-tax Officer has wrongly taken the note dated October 27, 1976, as an application for registration in Form No. 11A by the assessee after the change in the constitution of the firm. By the order of the Income-tax Officer dated October 28, 1976, the Revenue was deprived of the right of levying tax on the assessee as a unit. Hence, the order of the Income-tax Officer passed under Section 185(1)(a) was prejudicial to the Revenue.
36. The assessee has challenged the validity of the order of the Commissioner dated October 6, 1978, cancelling the registration of the firm already granted by the Income-tax Officer on the ground that the registration granted to the firm can be cancelled only when the Income-tax Officer is of the opinion that there was during the previous year no genuine firm in existence as registered and that also can be done after giving the assessee a reasonable opportunity of being heard.
37. The order of the Commissioner of Income-tax, Jodhpur, dated October 6, 1978, clearly shows that in view of the objection raised by the audit, he had proceeded under Section 263 of the Act. The Commissioner has power to proceed under that section if he on examining the record finds that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the Revenue.
38. While dealing with the question of correctness of the order passed under Section 185(1)(a) dated October 28, 1976, by the Income-tax Officer, we have concluded that the order was erroneous in so far as it was prejudicial to the interests of the Revenue. That order being so, there was scope for the Commissioner to proceed under Section 263 of the Act. As the order of the Commissioner was passed under that section and not under Section 186(1) of the Act, the question of the order being invalid for not being in accordance with Section 186(1) does not arise.
39. Mr. Lodha emphatically stressed that in case the registration of the firm cannot be allowed after September 16, 1973, because of the failure of the assessee to file the application in Form No. 11A, the registration up to September 16, 1973, at least should have been allowed because for that period there was an application in Form No. 11.
40. The answer to the question relating to such a claim would depend upon the point as to whether piece-meal registration of a firm can be allowed.
41. Mr. Lodha has placed reliance on the principle enunciated in the case of Beni Prasad Sidhgopal v. CIT [1981] 128 ITR 659 (All). In that case, the assessee-firm was granted registration for the assessment year 1956-57. Registration was renewed thereafter up to the year 1959-60. During the accounting year relevant to the assessment year 1960-61, one of the partners died on December 20, 1958, and a minor was admitted orally to the benefits of the partnership. On the question whether the firm was entitled to renewal of registration and, in the alternative, whether it was entitled to registration up to the date of death of the partner, it was held that, as during the accounting year relevant to the assessment year 1960-61, one of the partners had died and a minor had been admitted orally to the benefits of the partnership, but the change in the constitution of the firm was not evidenced by a deed of partnership, the firm was not entitled to renewal of registration for the period after reconstitution. However, since the assessee-firm had been granted renewal of registration year after year and the position had not changed for the assessment year 1960-61 till December 20, 1958, when the firm ceased to exist, the assessee, being an assessable entity liable to be assessed on its income up to the date of reconstitution, was held entitled to renewal of registration up to December 20, 1958. The case relates to the firm ceasing to exist before the end of the accounting year on account of the death of one of the partners and the minor being admitted to the benefits of the partnership and the reconstituted partnership not being evidenced by any instrument of partnership. The matter would, however, be different where the assessee claims continuation of the firm and rightly so as there is only a change in its constitution.
42. In the case of CIT v. Kejriwal Traders [1969] 71 ITR 463 (Cal) even in a case where on the specific and express terms and clauses in the deed, there was a dissolution of the firm both in fact and in law, it was observed by their Lordships that it is not permissible to break the periods of accounting and to allow piecemeal registration of the instrument of partnership under Section 26A of the Indian Income-tax Act, 1922.
43. In the case of CIT v. Sri Rama Talkies [1973] 87 ITR 615 (AP), the facts were somewhat similar to those of the case on hand. In a partnership deed dated April 1, 1953, it was provided that in the event of the death of any partner, the partnership was not to dissolve and it was to continue with an heir of the deceased partner taking his place. One of the partners died on October 15, 1963, and for the assessment year 1964-65, the corresponding accounting year of which was October 9, 1962, to November 11, 1963, the assessee-firm applied for continuation of registration under Section 184(7) in Form No. 12. The Income-tax Officer refused registration on the ground that the application was not in proper form and that a fresh application for registration should have been filed instead of an application for continuation of registration. The order was confirmed by the Appellate Assistant Commissioner. On further appeal, the Appellate Tribunal directed the Income-tax Officer to grant continuation of registration up to October 15, 1563, holding that the Act did not prohibit the grant of registration for part of the previous year. On a reference made at the instance of the Revenue, it was held as under (headnote):
"Where a firm ceased to exist or is succeeded by a different firm during the course of the previous year, it may be permissible to grant registration for the assessment year in relation to that part of the previous year during which it existed. But, where the assessee claims to be the same firm throughout the previous year and submits a single return as if there was only one assessee during the whole of the previous year, the registration can be granted only in relation to the whole of the previous year and not for a part of the previous year."
44. In the case of K. C. Trunk and Bucket Factory v. CIT [1977] 106 ITR 348 (Gauhati), the point for determination was as to whether registration should have been allowed for the period up to the death of one of the partners. It was observed that Section 4 of the Act, which is the charging section, provides for charging income "for any assessment year" and that, Section 184(4) shows that registration is to be sought in respect of an assessment year and not part of a year. According to their Lordships, Sub-section (7) of Section 184 also shows that where registration is granted to any firm for any assessment year, it shall have effect for every subsequent year. That sub-section does not provide that the registration granted to a firm for any assessment year shall have effect for any part of a year. Referring to the provision of declaration of the firm, it was observed that it also shows that the declaration is to be made for continuation of registration for an assessment year. According to their Lordships, separate assessments for parts of a year are not permissible except as provided in Section 188 incase of succession of one firm by another, in accordance with the provisions of Section 170, if the case is not one covered by Section 187. That case was covered by Section 187 of the Act. It was held that the registration granted to a firm for any assessment year cannot have effect for a part of the subsequent year within the meaning of Section 184(7).
45. The case of the assessee is that the firm was not dissolved and the assessee continued to be the same. It is not a case of succession of one firm by another so as to entitle each one of them to separate registration in the same year. It is a case of change in the constitution of the firm covered by Section 187 of the Act. The period of the accounting year, therefore, cannot be broken and piecemeal registration cannot be allowed. The Tribunal was, therefore, right in its conclusion.
46. In view of the above discussion, the questions referred to us for opinion are answered as under :
Question No. 1 is answered in the affirmative, i.e., in favour of the Department and against the assessee and it is held that in the circumstances of the case, the assessee was required to file a fresh application for registration in Form No. 11A after the change in the constitution of the firm that took place on September 16, 1973, on the death of partner, Shanker Lal.
47. Question No. 2(a) is answered in the negative, i.e., in favour of the Department and against the assessee. The assessee's note dated October 27, 1976, could not be treated as a fresh application for registration in Form No. 11 A.
48. Question No. 2(b) is answered in the negative, i.e., in favour of the Department and against the assessee. In the circumstances of this case, the provisions of Section 185(2) were not applicable.
49. Question No. 3 is answered in the affirmative, i.e., in favour of the Department and against the assessee. The Income-tax Officer's order dated October 28, 1976, passed under Section 185(1)(a) was erroneous and prejudicial to the Revenue.
50. Question No. 4 is answered in favour of the Department and against the assessee in the way that the Commissioner's order dated October 5, 1978, was valid as it was passed under Section 263 of the Act and not under Section 186(1) of the Act.
51. Question No. 5 is answered in the negative, i.e., in favour of the Department and against the assessee. The registration could not be allowed to the assessee-firm even for the period up to September 16, 1973, despite all the formalities for grant of registration having been complied with.
52. In the circumstances of the case, we make no order for costs.