The main legal point established in the judgment is that a jurisdictional defect in the assessment notice cannot be cured by Section 292B of the Income-tax Act.

G.S.Singhvi, J.

1. In compliance with the direction issued by this court I. T. C. No. 60 of 1985, the Income-tax Appellate Tribunal, Chandigarh Bench (for short, the Tribunal), has referred the following question of law for the opinion of this court :

"Whether the Tribunal was right in holding that the Commissioner of Income-tax did not hold jurisdiction to modify the order under Section 158/185(1)(a) ?"

2. The respondent-assessee was constituted as a partnership firm on April 2. 1973. Initially, it comprised the following partners :

(i) Shri Mukat Behari Lal 60 per cent.

(ii) Shri Anil Mittal 40 per cent.

3. On April 1, 1976, Shri Deepak Mittal was taken as a new partner and the ratio of profit sharing was modified as under :

(i) Shri Mukat Behri Lal 1/3

(ii) Shir Anil Mittal 1/3

(iii) Shir Deepak Mittal 1/3

4. The constitution of the firm was again changed through a fresh deed of partnership executed on March 15, 1978, and Shri Rajinder Kumar, trustee of Smt. Nirdosh Mittal Family Trust and Shri Jai Parkash, trustee of Smt. Neeru Mittal Family Trust were taken as partners. The share allocation amongst the partners was decided in the following ratio :

Shri Mukat Behari Lal Karta of HUP 20 per cent. Shri Deepak Mittal 20 per cent. Shri Anil Mittal 20 per cent. Shri Rajinder Kumar, trustee of Shri Nirdosh Mittal Family Trust 20 per cent. Shri Jai Prakash, trustee of Smt. Neeru Mittal Family Trust 20 per cent.

5. By an order dated May 18, 1980, the Income-tax Officer, "A" Ward, Ambala (hereinafter referred to as "the Assessing Authority"), granted registration to the new firm under Section 185(1)(a) of the Income-tax Act, 1961 (for short, "the Act").

6. The assessee filed return for the assessment year 1978-79 declaring an income of Rs. 1,49,574. The distribution of income shown among the partners was as under :

Sl. Name of partner Percentage Business Interest Share of

No. of profit income business

income

(i) Sh. M.B. Lal HUF 20% 22,603 2,766 25,369

(ii) Sh. Deepak Mittal 20% 22,602 2,586 25,185

(iii) Sh. Anil Mittal 20% 22,602 5,904 28,506

(iv) Neeru Mittal Family 20% 22,602 75 22,677

Trust

(v) Nirdosh Mittal Family 20% 22,602 50 22,652

Trust

7 The Assessing Officer determined the income of the assessee at Rs. 1,46,510. After some time, the Commissioner of Income-tax (for short, "the CIT"), issued notice dated April 14, 1982, to the assessee requiring it to show cause as to why the registration may not be withdrawn on the ground that the newly inducted partners had been wrongly allowed shares in the profits for the whole of the year. In the reply filed on behalf of the assessee, it was claimed that the difference in sharing of the profits could not be made a ground for withdrawing the registration. It was also pleaded that the error/mistake in the sharing of profits could, at the best, be taken as a defect which could be remedied by the Income-tax Officer under Section 185(2) of the Act.

8. After hearing the representative of the assessee, the Commissioner of Income-tax held that the distribution of profits for the entire year made by the firm amongst five partners in the ratio of the partnership deed executed on March 15, 1978, is not in accordance with the law. Accordingly, he directed the Income-tax Officer to reallocate the profits among the three partners, namely, Sarvshri Mukat Bihari Lal, Anil Mittal and Deepak Mittal, in equal shares on the basis of partnership deed dated April 1, 1976.

9. The appeal filed by the assessee against the order of the Commissioner of Income-tax was allowed by the Tribunal vide its order dated August 22, 1984. The Tribunal noted that the Commissioner of Income-tax had proposed cancellation of the registration granted to the firm on the