Law:

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Section 185 read with section 256 of the Income-tax Act, 1961 - Firm - Position prior to 1-4-1973 - ITO refused continuation of registration of assessee firm on ground that it had not disclosed income from firm 'M' - On appeal, AAC directed continuation of registration as according to him, in a separate case of firm 'M', Tribunal had held that said firm was an independent assessee - Department filed appeal before Tribunal contending that case of firm 'M' was pending before Supreme Court - Tribunal, however, rejected appeal holding that pendency of petition for special leave to appeal did not come in way of rejection of appeal - Whether, on facts, referable question of law did arise from Tribunal's order - Held, yes FACTS The assessee did not disclose the income from the firm 'M' and, therefore, the ITO added the income of that firm to the income of the assessee-firm and, as a consequence thereof, held that the assessee-firm could not be allowed to continue as a registered firm. In appeal, the AAC deleted the addition and directed continuation of registration. According to him, in a separate case of the firm 'M', the Tribunal had held that the said firm was an independent assessee. The Department filed appeal before the Tribunal contending that the case of firm 'M' was pending before the Supreme Court. The Tribunal, however, rejected the appeal holding that the pendency of petition for special leave to appeal did not come in the way of rejection of the appeal. The Tribunal also rejected the reference application filed under section 256(1). On application under section 256(2). HELD A referable question of law did arise from the order of the Tribunal. CASE REFERRED TO CIT v. Mithalal Ashok Kumar [1986] 159 ITR 209 (MP). P.K. Saxena for the Applicant. S.S. Samvatsar for the Respondent. JUDGMENT Faizanuddin, J. -This is an application under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The material facts giving rise to this application, briefly, are as follows: The assessee-respondent did not disclose the income from the firm, M/s. Mithanlal Ashok Kumar, and, therefore, the Income-tax Officer added the income of M/s. Mithanlal…

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