JUDGMENT R.A. Sharma, J.
1. At the instance of the Department, the Income-tax Appellate Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the Income-tax Act, 1961, for the opinion of this court:
"Whether, on the facts and in the circumstances of the case, the Tribunal is justified in holding that there was no mistake apparent from the record and that, as such, action under Section 154 was not justified ?"
2. The assessee-firm, for the assessment years 1966-67 and 1967-68, was assessed in the status of a registered firm. The Income-tax Officer subsequently, in exercise of his powers under Section 186(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act), cancelled the registration of the assessee-firm, vide order dated March 24, 1975, on the ground that the assessee-firm consisted of more than 20 persons which is prohibited by Section 11(2) of the Companies Act, 1956, and was, as such, illegal and is not liable to be registered. It was further held that the assessee-firm is to be assessed in the status of an unregistered firm. However, the Income-tax Officer, later on purporting to act under Section 154 of the Act, modified the aforesaid order by holding that as no valid firm existed under the law, the assessee is to be assessed in the status of an association of persons and not as an unregistered firm. The assessee filed appeals against the aforesaid orders before the Appellate Assistant Commissioner who allowed the appeals on the ground that under Section 154, only apparent mistakes can be corrected and the Income-tax Officer has no jurisdiction to review his order. The Department's appeals against the first appellate orders have been dismissed by the Income-tax Appellate Tribunal. The Tribunal has, however, at the instance of the Department, referred the aforesaid question of law to this court for its opinion.
3. The basis of the whole controversy are the orders dated March 24, 1975, passed by the Income-tax Officer, cancelling the registration of the assessee-firm. These orders have been set aside by the Income-tax Appellate Tribunal in Appeals Nos. 742 and 743 of 1981 filed by the assessee. However, at the instance of the Revenue, the Appellate Tribunal referred the following two questions under Section 256(1) of the Act to this court for opinion :
"(I) Whether on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in taking the view that the assessee-firm (consisting of 17 adult partners and four minors admitted to the benefits of partnership) was not illegal in terms of Section 11 of the Companies Act ?
(II) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the assessee-firm was entitled to registration under the Income-tax Act, 1961 ?"
4. We have answered these questions in Income-tax Reference No. 78 of 1983 (CIT v. Bhawani Prasad Girdhari Lal and Co. [1990] 186 ITR 518 (All)) in the affirmative, in favour of the assessee.
5. In view of our decision in Income-tax Reference No. 78 of 1983 (CIT v. Bhawani Prasad Girdhari Lal and Co. [1990] 186 ITR 518 (All)), the controversy involved in this reference hardly survives. But, as the Tribunal has considered the case on merits, we intend dealing with the question on merits also. Under Section 154 of the Act, only mistakes apparent from the record can be rectified. This section does not give power to the Income-tax Officer to change his opinion and review his order. It was not a case of a mistake being apparent from the record and, as such, the Income-tax Officer was not justified in making the rectification in exercise of his powers under Section 154 of the Act. In our opinion, the Tribunal was fully justified in dismissing the appeals of the Department against the order of the Appellate Assistant Commissioner.
6. Our answer to the question is in the affirmative and in favour of the assessee.