The cancellation of registration under Rule 6B is not subject to scrutiny in the appeal arising out of the assessment under Section 34.

1. These are two references made by the Income-Tax Appellate Tribunal under Section 66(1) of the Income-Tax Act relating to the assessment years 1964-55 and 1955-66. Originally, assessment was completed for those two years under Section 28(8) of the Act after allowing a registration of the assessee as a registered firm under Sec.26A of the Income-Tax Act. In connection with the assessment proceedings for the next three years, the Income-Tax Officer discovered certain discrepancies between the assessees operation through the Banking account and the assessees relationship under the registered Partnership deed and refused therefore the renewal of registration of the assessees firm under Sec.26A. Subsequent to that, an order was passed under Rule 6B cancelling the registration of the firm in respect of assessment years 1954-55 and 1955-56. Thereupon, notice under Sec.34 was issued to the assessee for reopening the assessment for those two years and, after compliance by the assessee, the assessments were made. Against those assessments, the assessee went in appeal to the Appellate Assistant Commissioner and failing there, before the Appellate Tribunal. Before both those authorities, the assessee wanted to challenge the order cancelling registration as passed against him under Rule 6B by the Income Tax Officer and contended that the re-assessment under Sec.34 was invalid because illegal order was passed under Rule 6B. The Appellate Tribunal (as did the Appellate Assistant Commissioner) did not accept the assessees contention and upheld the assessment made under Sec.34 of the Income-Tax Officer. In this back-ground the assessee asked for a reference and obtained the statement of case in which the question for our consideration was framed as follows:-

"Whether in the facts and circumstances of the case and in view of the Tribunals decision for the assessment years in question that the assessees status should be taken to be that of a firm, cancellation of registration under Rule 6B of the Income Tax Rules was legal and justified ?

2. Learned Counsel appearing on both sides agreed that the question requires reframing in view of the facts arising from the Tribunals order Accordingly, the question is framed as follows:-

"Whether in the facts and circumstances of the case, the proceeding under Sec.34 of the Indian Income-Tax Act were validly initiated?"

3. As we have already indicated, the proceedings under Sec.34 were initiated after the order under Rule 6B was passed cancelling the registration of the assessees firm for the years 1954-55 and 1955-56. Whether that order was right or wrong, this is not the proper stage to consider that. The assessee might have gone in appeal against that and agitated that question at different stages as provided under the law. That he did not do. Learned Counsel appearing for him, however, contends that the bona fide impression prevailing with the assessee and his legal advisers was that there was no provision in law for an appeal against an order passed under Rule 6B. On account of some decisions of the Madras High Court, this erroneous impression may have held the ground. Now, that position has been clarified by a decision of the Supreme Court, in which it has been held that that order also can be agitated in appeal as if it were an order passed Under Sec. 6A refusing registration. Be that, as it may, in this proceeding under Sec. 66 of the Act it will not be possible for the assessee to agitate about the propriety of the order passed under Rule 6B cancelling the registration of the firm by the Income Tax Officer. It appears from the order of the Appellate Tribunal that such a stand was taken by the assessee before them, and they defended the cancellation of registration on the ground that the Tribunal itself in regard to the subsequent three years assessment upheld the refusal of registration of the assessees firm on some materials. In our view, the merits of the order passed under Rule 6B were