A corrigendum executed after the close of the previous year cannot have retrospective effect to validate the registration of a partnership firm for a past assessment year.

1. The following question of law has been referred by the Income-tax Appellate Tribunal, Chandigarh Bench, for our opinion:

" Whether, on the facts and in the circumstances of the case, and particularly in view of the fact that the deed of corrigendum had been executed before the Income-tax Officer passed the impugned orders, the assesseee was entitled to registration for the assessment year 1964-65 and continuation thereof for the assessment years 1965-66 and 1966-67 ?"

Messrs. Ram Saran Inder Singh, Khanna, a partnership firm, was registered with the income-tax department up to the assessment year 1963-64. It had the following partners : 1. Shri Ram Saran.

2. Shri Inder Singh.

3. Shri Bali Ram.

4. Shri Behari Lal.

The shares of the partners in profit and loss were equal. During the account year relevant to the assessment year 1964-65, there was a change in the constitution of the firm. Shri Bali Ram retired. His place was taken by Hans Raj, son of Mehnga Ram with effect from 13th September, 1963. A fresh deed of partnership was executed on 18th September, 1963. The shares of the partners in profit and loss were equal. However, in the account books for the period commencing from 13th September, 1963, to 31st March, 1964, the profits were distributed unequally amongst the partners, i.e., Hans Raj, three annas; Inder Singh, four annas ; Ram Saran, four annas and Behari Lal, five annas. The Income-tax Officer granted registration to the reconstituted firm under the deed of partnership dated 18th September, 1963, for the assessment year 1964-65. When later it was discovered that the profits had been shared unequally and not in the ratio indicated in the deed of partnership, the Income-tax Officer proceeded to take action under Section 186(1) of the Income-tax Act, 1961, He, accordingly, issued a notice to show cause on 14th September, 1966, to the partners as to why the registration should not be cancelled. This notice was served on the assessee on 15th September, 1966. On receipt of the notice, the assessee executed a corrigendum dated 7th October, 1966, to the original deed of partnership and modified the profit sharing ratio. In other words, the profit sharing ratio was brought in accord with the actual distribution of profits. The deed of corrigendum was duly filed by the assessee with the Income-tax Officer. The Income-tax Officer, thereafter, cancelled the registration for the assessment year 1964-65 under Section 186(1) of the 1961 Act. He observed that the deed of corrigendum was drawn up on 7th October, 1966, after the close of the previous year in question and thus did not help the assessee. The Income-tax Officer further disallowed the assessees claim for continuation of the registration under Section 184(7) for the two subsequent assessment years 1965-66 and 1966-67.

2. The assessee then preferred an appeal to the Appellate Assistant Commissioner of Income-tax, who held that for the first period, that is, from 1st April, 1963, to 12th September, 1963, the assessee was entitled to registration and that for the period from 13th September, 1963, to 31st March, 1964, the registration had been rightly cancelled. As a consequence, the order of the Income-tax Officer refusing continuation of registration of the firm for the years 1965-66 and 1966-67 was upheld.

3. The assessee then preferred an appeal to the Income-tax Appellate Tribunal. Before the Tribunal it was urged that no doubt the allocation of profits had been done in a ratio other than the ratio specified in the partnership deed, but as the partnership deed had been duly rectified by a deed of corrigendum dated 7th October, 1966, the revenue authorities were not right in ignoring the corrigendum and refusing registration. The Tribunal accepted the assessees contention with the following observations ;

" We find that there is considerable force in the contention of the assessee. Even though the action of the Income-tax Officer in issuing the notice for cance