Law:

Section:

Section 185 of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1993 - Assessment year 1969-70 - Assessee firm by mistake gave wrong date of execution of deed of partnership - Said deed was executed during accounting year and application for registration along with said deed was filed within time prescribed by law - Firm was also assessed as a genuine firm - However, ITO refused registration on account of giving wrong date of execution of partnership deed - Whether since firm was genuine and application for registration along with said deed was filed before end of accounting year, assessee was to be granted registration - Held, yes FACTS The assessee-firm claimed that the partnership was constituted on 1-1-1968, on which date a draft of the partnership deed was drawn up on a plain paper. Later on when the necessary stamp paper was purchased on 19-1-1968, the same draft was typed thereon and through inadvertence under a bona fide belief the partners signed the deed under the same date as was typed out in the draft because they had formed the partnership on 1-1-1968 itself. When this mistake was detected a fresh deed was drawn up on the 24-1-1968, on new stamp papers purchased on 23-1-1968. For the assessment year 1969-70, an application for registration under section 185 was filed before the ITO admittedly on the close of the corresponding accounting year. The ITO held that since the accounting year of the assessee ended on 20-10-1968, the application was within the time prescribed by the Act and the Rules. He, however, held that though the stamp paper was purchased on 19-1-1968, it was purported to have been executed on 1-1-1968, which was quite impossible and since the registration under the Act was a special privilege which was granted to an assessee, the assessee was not entitled to such privilege on account of the wrong date of execution given in the deed which went to show that the assessee had wanted to play fraud with the department. Commissioner rejected assessee's revision petition under section 264. On writ, when it was observed that since the assessee had not exhausted the internal remedy by way of appeal and further second appeal, the…

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