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Section 256 of the Income-tax Act, 1961 - Reference to High Court - Question of law - Whether a question of law arose from Tribunal's order holding that it was not open to the Tribunal to decide issue on merits, if not so decided by first appellate authority - Held, yes FACTS The IAC refused to grant registration to the assessee-firm on the ground that there was no genuine firm in existence as some of its partners were only name-lenders. On appeal, the Commissioner (Appeals) held that the partnership in respect of which registration was sought satisfied all the requirements of the Indian Partnership Act, 1932 and that if the IAC had any doubt about the genuineness of some of the partners, he ought to have examined them and there existed no justification for refusing to grant registration in the manner it was done. On second appeal, the Tribunal took the view that it was not open to the Tribunal to decide the issue on merits, if not so decided by the first appellate authority. It further refused to make reference under section 256(1). On an application under section 256(2): HELD A referable question of law did arise from the Tribunal's order. The Tribunal was accordingly directed to draw up a statement of the case and refer the matter for opinion. CASE REFERRED TO Prem Agencies v. CIT [1988] 173 ITR 110/ 36 Taxman 294 (Raj.). JUDGMENT Gulati, J. - This is an application under sub-section (2) of section 256 of the Income-tax Act. 1961 ('the Act'). Four questions have been proposed in the application which are stated to be questions of law in respect of which a mandamus is sought for a direction to the Tribunal to refer the said questions for the opinion of this Court. 2. We have heard the learned counsel for the parties. The dispute arises from the proceedings under section 185(1)(b) of the Act. The IAC by his order dated 12-3-1987, refused to grant registration to the assessee-firm on the ground that there was no genuine firm in existence as some of its partners were only name-lenders. 3. On appeal, the Commissioner (Appeals) did not agree with the IAC. He recorded a finding that the partnership in respect of which registration was sought satisfied all the…

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