1986 (6) TMI 32

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..... nder section 256(1) of the Income-tax Act, 1961. The Tribunal has referred the following question for our opinion : " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in upholding the Appellate Assistant Commissioner's order cancelling the Income-tax Officer's order passed under section 186(1) cancelling the registration granted ? " The assessee .....

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..... by the Income-tax Officer. He held that the Income-tax Officer had no reason to believe that there was no genuine firm in existence during the relevant year and it was a condition precedent to invoke the power to cancel the registration under section 186(1) of the Act. That view has been affirmed by the Appellate Tribunal. The Tribunal, in support of its conclusion, has relied upon two decisions, .....

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..... essly invoking the power under section 186(1). The appeal and further appeal preferred by the parties rested solely on the scope and construction of section 186(1) and not on the source of power located in any other provision. Even the question referred to this court specifically refers to section 186(1) of the Act. It is, therefore, not proper for us to find out whether the order of the Income-ta .....

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..... ture for cancellation of registration. It has been confined to one ground only, that is, the firm that existed during the relevant year was not genuine. Such a power cannot be equated with the power to grant registration. For the purpose of granting registration to a firm under the Act, it is now not in dispute, that there shall be a firm valid in law and also in fact. The concept of the firm bein .....

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..... ision of the Andhra Pradesh High Court in CIT v. Badjanapara Sall Company [1974] Tax LR 19. Since the Income-tax Officer did not form an opinion that there was during the previous year no genuine firm in existence, he ought not to have cancelled the registration under section 186(1). In the result, we answer the question in the affirmative and against the Revenue. In the circumstances of the ca .....

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