1984 (5) TMI 14

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....s been referred to us for the assessment year 1970-71 : "Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in reversing the order of the Appellate Assistant Commissioner and in directing the Income-tax Officer to treat the firm as a registered firm for the assessment year 1970-71 ? " The firm in question had four partners and an application for regi....

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....ner, Rameshwar Parshad, under s. 131 of the I.T. Act, 1961, and a reference was also made to s. 185(3) which gives power to reject or accept the application for registration of the firm. In the result, the Tribunal held that when the authorities were satisfied with the genuineness of the firm, the question of refusing registration to the firm did not arise. We have been taken through the provis....

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....lication for registration was first signed by two partners and later by a third partner but not by the fourth partner. So, the application remained a defective and invalid application, not in accordance with law. Under s. 185 of the Act, the ITO has power to require a defect to be removed before rejecting the same and if it is not removed, to reject the application. There has been some change i....

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.... is: " the Income-tax Officer may reject the application ", which also means the ITO may accept the application. This is a complete misreading of the section. The power is to reject the application. It has to be exercised in a quasi-judicial manner. However, in no case can the ITO accept the application when it is not in accordance with law. To hold otherwise would mean that s. 184(3) and other pr....