1. This is an application filed by the assessee under Section 256(2) of the Income-tax Act, 1961.
2. The facts necessary for the disposal of this application are that the assessee sought registration of the firm for the assessment years 1974-75 and 1975-76 as it is stated that for the year 1976-77, registration was granted but for these two years the Income-tax Officer refused registration and the order was ultimately upheld by the Income-tax Appellate Tribunal. The Tribunal in its order dated February 12, 1981, found certain facts as stated in para. 2 of the order and on the basis of all these facts an inference was drawn that the firm is non-genuine and, therefore, refused registration.
3. Learned counsel for the assessee contended that the registration is sought under Section 184 of the Income-tax Act and the requirements which the authorities are expected to consider are stated in Section 185 of the Act. Reading these two sections, it does not appear that on the facts which have been found by the Tribunal, registration could be refused. It is also contended that on the facts which have been found as stated in the order of the Tribunal, it could not be said that the partnership is non-genuine and the question whether on these findings of fact, registration could be refused in view of Section 185 is a question of law that arises. It was also contended that on these facts whether an inference that the partnership is genuine or non-genuine also is a question of law and it was, therefore, contended that the Tribunal was not right in refusing to make the reference. Learned counsel relied on a decision of this court in Murlidhar Kishangopal v. CIT : 50ITR628(MP) , where practically the same defects as are pointed out by the Tribunal have been held to be not enough for rejection of an application for registration of a firm.
4. Learned counsel for the Revenue, on the other hand, contended that the findings arrived at by the Tribunal are findings of fact and, therefore, the Tribunal was right in maintaining the order passed by the Income-tax Officer.
5. It is apparent that the findings which have been arrived at by the Tribunal are findings of fact but whether on these facts a prayer for registration could be rejected in view of Sections 184 and 185 of the Act as these are the only two sections which deal with registration of firms, it could not be said that this is not a question of law. On these facts whether registration could or could not be refused apparently is a question of law. It is also plain that on the facts found whether an inference that the partnership is non-genuine could or could not be drawn is also a question of law. In viewof those circumstances, therefore, in our opinion, this application deserves to be allowed.
6. The application is allowed. It is directed that the Income-tax Appellate Tribunal shall state the case and refer the following questions to this court for answers :
'(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in maintaining the order refusing registration
(2) Whether, on the facts found by the Tribunal, an inference that the firm is non-genuine could be drawn and registration could be refused in the light of the language of Sections 184 and 185 of the Indian Income-tax Act?
(3) Whether, on the facts and in the circumstances of the case, every assessment year is a separate assessment year and an order under Section 185 is necessary to be passed for each assessment year ?'
7. In the circumstances, the parties are directed to bear their own costs.