JUDGMENT This is petitioner under article 226 of the Constitution.
The prayer contained in the writ petition is that an order of the Income-tax Officer dated March 14, 1961, under rule 6B of the rules under the Income-tax Act may be quashed.
The material facts are that the petitioner firm was constituted of three partners under an oral agreement on June 7, 1957. The firm commenced business with effect from that date and continued to carry on business. An instrument of partnership was brought into existence on June 23, 1958. The instrument retrospectively governed the terms and conditions of partnership which, as already stated above, started functioning from June 7, 1957. An application for registration of the firm was made in due course for the assessment year 1958-59 and registration under section 26A was granted to the firm by order dated November 29, 1958. Subsequently, on March 16, 1961, registration was renewed for the assessment year 1959-60 and for 1960-61, a day earlier on March 15, 1961. Assessment order in respect of the income of the firm for the said three years were also duly made and the tax demand created under those assessment order was duly paid. It appears, however, that in the meanwhile a notice dated October 13/November 16, 1959, was issued to the petitioner stating that the petitioner firm was not genuinely formed under an instrument of partnership for the assessment year 1958-59 and the petitioner was required to show cause why its registration for that year should not be cancelled under rule 6B. On December 7, 1959, a reply was sent to this notice and Sat Narain, one of the partners of the petitioner firm, also appeared before the Income-tax officer in support of the reply. Some evidence also appears to have been produced before the Income-tax Officer. Despite all this, however, by the impugned order dated March, 14, 1961, the Income-tax officer, Banaras, in the purported exercise of his power under rule 6B cancelled the registration certificate of the firm. The conclusion of the Income-tax officer, on the basis of which registration was cancelled, is contained in the following paragraph of the impugned order :
"It will be clear from the facts narrated that the firm which functioned during the relevant accounting year had not been constituted under an instrument of partnership. As such it was not a genuine firm as envisaged by the Income-tax Rules read with section 26A of the Income-tax Act."
The short argument of the learned counsel for the petitioner is based upon the language of rule 6B of the Rules. That rule is to the following effect :
"6B. In the even of the Income-tax Officer being satisfied that the certificate granted under rule 4, or under rule 6A, has been obtained without there being a genuine firm in existence, he may cancel the certificate so granted."
On the basis of this language learned counsel for the petitioner has urged that the only ground on which a registration certificate once granted can be cancelled is that the registration certificate has been obtained "without there being a genuine firm in existence". Learned counsel goes on to argue that the mere fact that the instrument of partnership may not have existed during the accounting period relevant to the assessment year for which registration is granted is not and cannot be a ground for holding that no genuine firm was in existence. The word "genuine" has to be contradistinguished from the word "bogus" or from the word "unreal". It is to the case of the income-tax department that the petitioner firm did not have the three partners which it is alleged that it had or that it had any other partner or that it was merely a faked-name under which business was being carried on by some other person. If the case of the income-tax department was based on any such fact it might have been possible to hold that the firm was not genuine. The mere fact that the instrument of partnership may not have been in existence during the relevant accounting period could be no ground for holding that the firm was no genuine. It is a different matter that initially a mistake might have been made by the income-tax department for granting registration as no instrument of partnership was in existence during the relevant accounting year but the mistake, if any, could not be corrected by cancellation of the registration under rule 6B for the very simple reason that the only ground upon which registration can be cancelled is the non-existence of a genuine firm. Such was not the case. It follows that the impugned order was wholly without jurisdiction.
The only submission which Sri Gopal Behari, learned counsel for the income-tax department, made was on the lines of the statement contained in paragraph 4 of the counter-affidavit. The material portion of the paragraph is as follows :
"The deponent is advised that the firm has been obtained without there being a genuine firm in existence used in rule 6B also includes those firms which were not constituted under an instrument of partnership during the accounting period in respect of the assessment of which registration was being applied for."
It is not possible to understand this view. As already pointed out it is only where there is no genuine firm in existence that the jurisdiction to order cancellation exists. Merely because the instrument of partnership was not there in the accounting period, when there was no finding that the firm which was in existence was no a genuine firm, could not warrant the passing of an order under rule 6B.
It appears to me that the error into which the Income-tax Officer fell being so plain, the existence of an alternative remedy by a revision to the Commissioner under section 33B(2) cannot be a bar to relief being granted to the petitioner in this writ petition. It may also be stated that the writ asked for is a writ of certiorari. It is well settled in this court that where a writ of certiorari is concerned the existence of an alternative remedy can be no bar. In any case the existence of an alternative remedy is only one of the matters to be taken into consideration by the court in exercising it discretion under article 226. In all the circumstances of the case I am satisfied that the petitioner should be grand relief in the petition.
The writ petition is therefore allowed. A writ of certiorari shall issue quashing the order dated March 14, 1961, cancelling the petitioners registration for the assessment year 1958-59. The petitioner shall be entitled to the costs of this petition.
Order accordingly.