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").

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% 22603 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issued notice dated April 14, 1982, to the assessee requiring it to show cause as to why the registration may not be withdrawn on the ground that the newly inducted partners had been wrongly allowed shares in the profits for the whole of the year.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.

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 ground of violation of the conditions of the partnership deed in the matter of allocation of shares among the partners, but ultimately did not cancel the registration and held that the Commissioner of Income Tax could not have directed the Income Tax Officer to change the share allocation among the partners without issuing notice under Section 158 read with Section 67 of the.

10. Shri Rajesh Bindal, learned counsel for the Revenue, fairly stated that the notice issued by the Commissioner of Income Tax was confined to the proposed cancellation of registration on the ground of incorrect allocation of shares among the partners and that no notice was given to the assessee proposing to change the allocation of shares among the partners, but argued that this defect in the procedure adopted by the Commissioner of Income Tax was not sufficient to invalidate the order passed by him. Shri Bindal relied on Section 292B of theand argued that the mere defect in the notice cannot be made a ground for invalidating an action taken by the competent authority which is otherwise in conformity with law.

11. In our opinion, there is no merit in the contention of learned counsel. While examining the legality of a show-cause notice issued by the Commissioner of Income Tax and the order passed by him for reallocation of the shares among the partners, the Tribunal noticed the plea of the Revenue that the defect in the notice was liable to be ignored in view of Section 292B of theand observed as under :

"A cursory look at the show-cause notice issued by the Commissioner and even the order passed by him clearly shows that the Commissioner wanted to cancel the order of registration passed by the Income Tax Officer under Section 185(1)(a). This ultimately he did not do. The share allocation amongst the partners was a ground taken by him for cancellation of registration already granted and not that the order passed by the Income Tax Officer allocating the share income was intended to be modified or cancelled. An assessment order passed by an Assessing Officer is a composite order bringing together the orders passed under various sections. To illustrate, if there is a dispute about the previous year of the assessee, it is to be determined keeping in view the provisions of Section 3 of the Income Tax Act. Again dispute about the status has also to be specifically dealt with. Firm is a status. There may be dispute whether the assessee is a firm or an association of persons or body of individuals. This has to be specifically determined. Not only this, the firm has been given certain concessions in the matter of taxation. For that purpose, it has to get itself registered with the Income Tax Department under Section 185(1)(a) of the Income Tax Act after making an application under Section 184. If the Income Tax Officer finds that the firm was genuine and entitled to registration then he will record a certificate and the registered firm will be entitled to concessional rates of tax. Then follows the quantum of income to be incorporated in the assessment order. In the case of a registered firm, profits of the firm have to be allocated amongst the partners, Then the Income Tax Officer has to pass an order under Section 158 of the Income Tax Act. While passing this order, he has to keep in view the provisions contained in Section 187(1), proviso (i), and Section 67 of the Income Tax Act. It would thus be seen that the various aspects of the assessment order have to be independently determined and then put together in a composite order. One of such issues is the determination of the status of the firm as a registered or unregistered firm. It is determined under section 185. We have pointed out earlier that the order sought to be cancelled or modified by the Commissioner of Income Tax was the one passed by the Income Tax Officer under Section 185(1)(a). Ultimately, he has not cancelled this order. The ground taken was that the share allocation was not correctly made. After taking into consideration the submissions of the assessee, the Commissioner of Income Tax was convinced that the share allocation was correctly made. That is why he did not think it fit to cancel the order passed by the Income Tax Officer under Section 185(1)(a) granting registration to the firm. The Commissioner of Income Tax having accepted the order of the Income Tax Officer passed under Section 185(1)(a) as not erroneous, the cause of action by him came to an end there.

We have already pointed out above that the order under Section 158 is altogether a separate order from the order passed under Section 185(1)(a). The Commissioner of Income Tax did not assume jurisdiction nor did he issue any show-cause notice before modifying the order passed under Section 158 read with Section 187(1), proviso, and Section 67 of the Income Tax Act. He has also not mentioned in his order as to how this order was erroneous inasmuch as it did not affect the tax liability of the firm. We are not inclined to agree with the learned Departmental Representative that Section 292B will cure the situation. Section 292B will be available where an officer has validly acquired jurisdiction. It is not meant to confer jurisdiction when such jurisdiction was not assumed. Undoubtedly, there is mention about wrong allocation of share income amongst the partners but that was in the context of cancelling the order of registration passed by the Income Tax Officer under Section 185(1)(a) and not for the purposes of modifying the order passed by the Income Tax Officer under Section 158 read with Section 187(1), proviso, and Section 67. The Commissioner of Income Tax having not exercised the jurisdiction, his order modifying the order passed by the Income Tax Officer under Section 158 is ab initio void. Since we have held that the order passed by the Commissioner of Income Tax modifying the order passed under Section 158 is without jurisdiction, we do not consider it necessary to go into the contention of Mr. Bali that the same is erroneous read with the assessment orders in the cases of the partners. For the detailed reasons given above, we are unable to sustain the order passed by the Commissioner of Income Tax. It is cancelled."

12. Section 292B of the Act, on which reliance has been placed by learned counsel for the Revenue, reads as under :

"292B. No return of income, assessment, notice, summons of other proceeding furnished or made or issue or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act."

13. A reading of the above reproduced provision makes it clear that a mistake, defect or omission in the return of income, assessment, notice, summons or other proceeding is not sufficient to invalidate an action taken by the competent authority, provided that such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the provisions of the. To put it differently, Section 292B can be relied upon for resisting a challenge to the notice, etc., only if there is a technical defect or omission in it. However, there is nothing in the plain language of that section from which it can be inferred that the same can be relied upon for curing a jurisdictional defect in the assessment notice, summons or other proceeding. In other words, if the notice, summons or other proceeding taken by an authority suffers from an inherent lacuna affecting his/its jurisdiction, the same cannot be cured by having resort to Section 292B.

14. The facts of the case in hand show that the Commissioner of Income Tax had issued notice to the assessee proposing to cancel the registration of firm on the ground of error in the allocation of shares among the partners, but no notice was issued under Section 158 read with Sections 187 and 67 of theproposing to change the share allocation among the partners and the assessee did not get an opportunity to make representation in this regard. Therefore, the Commissioner of Income Tax did not have the jurisdiction to direct modification of the order passed by the Income Tax Officer under Section 158 of theand the order passed by him cannot be sustained by relying on Section 292B of the. As a corollary to this, we hold that the Tribunal did not commit any illegality by setting aside his order.

15. In the result, the question referred by the Tribunal is answered in favour of the assessee and against the Revenue.