K.S. VISWANATHAN, A.M. This is appeal by assessee, firm, against order holding that assessee is not entitled to registration. firm was constituted by instrument dt. 1st April, 1977. There were 5 partners. Two of partners were Apparao and his son Mallikharjuna Rao. Both of them had 15 per cent share in profits of firm. On 12th Dec., 1981, dissolution deed was executed by which these two partners that is Apparao and Mallikharjuna Rao retired from firm. According to this deed, assets and liabilities would be taken over by continuing partners. retiring partners would be given their share of profit for accounting year concerned till date of dissolution by calculating net profit at 1-1/2 per cent of turnover of that period. This is to be paid within 15 days after finalisation of accounts. On 24th Dec., 1981, another partner was inducted. new partnership deed was executed. This partnership deed stated in preamble that Apparao and Mallikharjunarao who are partners had retired from partnership deed with retrospective effect as from 1st April, 1981 and new partner was being taken in. cl. 3 of this deed stated that partnership shall be deemed to have come into operation w.e.f. 1st April, 1981. books of accounts were closed on 31st March, 1982. profits were ascertained and share of profit allocable to retiring partners on basis of turnover for period was credited to their accounts. Thus, Apparao was credited with Rs. 825 and Mallikharjunarao with Rs. 6,177. assessee applied for registration both in Form 11 and Form 11A. ITO was of opinion that assessee is not entitled to registration. ITO pointed out to inconsistency between dates on which two partners had retired; as per dissolution deed dt. 12th Dec., 1981, they were partners till 30th Nov., 1981 and as per new partnership deed, they had retired on 1st April, 1981 itself. Factually, he noticed that all 5 partners had carried on business till 30th Nov., 1981. Therefore, these two partners could not have relinquished their rights in partnership from 1st April, 1981. Therefore, new partnership deed which is deemed to have come into operation from 1st April, 1981 cannot be valid. So, there could not be genuine firm existing by partnership deed dt. 24th Dec., 1981. AAC agreed with ITO. He gave finding that no firm came into existence from 1st April, 1981 as envisaged by partnership deed dt. 24th Dec., 1981. Therefore, registration was, according to him, correctly refused. assessee is on further appeal before us. After having heard parties, we are of opinion that assessee is entitled to registration. Both ITO and AAC have accepted that genuine firm was in existence till 30th Nov., 1981. question is whether new partnership deed has to be accepted as valid partnership deed so that firm is entitled to registration throughout year. In substance, only reason given for treating latter firm as invalid is inconsistency as to date of retirement of two partners. T h e dissolution deed clearly mentions date as 30th Nov., 1981. partnership upto this period is accepted as genuine and valid. Department has not doubted correctness of narration in dissolution deed. Therefore, factually, two partners retired only on 30th Nov., 1981. It is true that partnership deed dt. 24th Dec., 1981 gives date of retirement as 1st April, 1981. assessee's case is that this is erroneous statement. Now, question is whether mention of date in new partnership deed is mistake or not. It is quite possible that it is mistake. At same time, it is quite possible that three continuing partners might have decided to allocate share of profit only among four partners as per change in constitution and to effectuate this, they might have mentioned that partnership is effective from 1st April, 1981. question is whether assuming it is not mistake, partnership is invalid because of this. In order to show that narration in partnership deed dt. 24th Dec., 1981 is mistake, assessee has to show that all surrounding facts and circumstances would only support such inference. We are concerned with original partnership deed of 1977, dissolution deed, new partnership deed dt. 24th Dec., 1981 and books of account. As per dissolution deed, partners have retired on 30th Nov., 1981. This is noted in new partnership deed also. narration which gives rise to controversy in new partnership deed reads as follows: "Whereas aforesaid Illindra Apparao and Illendra Sreenivasa Mallikharjunarao retired from partnership business relinquishing their interest whatsoever in above firm with retrospective effect as and from 1st April, 1981; subject to cl. No. 10 of this Deed." above extract from preamble narrated what had happened earlier. That narration is clearly wrong. It is wrong because dissolution deed does not say that they have relinquished their interest retrospectively from 1st April, 1981. preamble of dissolution deed stated as follows: "Whereas parties on mutual consent have agreed that partnership should be dissolved, partnership w.e.f. 1st Dec., 1981 as per terms and conditions set forth hereunder, it is hereby agreed, laid down, and witnesseth as under: firm of M/s Sri Srinivasa Medical Agencies Ongole stood dissolved w.e.f. 1st Dec., 1981; It has been agreed between partners that all assets and liabilities of firm should be taken over by party of first part with all its furniture, goodwill, if any and existing agencies; party of first part agreed to pay party of second part amount standing to his credit as on 30th Nov., 1981 alongwith 30 per cent of estimated net profit at 1.5 per cent on turnover effected from 1st April, 1981 to 30th Nov., 1981 with 15 days after finalisation of accounts. In case party of second part stands indebited to firm, he should pay same within 15 days of finalisation of accounts." It is quite clear from above that narration in partnership deed is mistake. Having committed mistake in preamble, it is continued subsequently also. That is how cl. 3 of partnership deed stated that new partnership is deemed to have come into effect from 1st April, 1981. It being wrong narration, it cannot invalidate partnership deed which is otherwise valid. I f any authority is required, we may refer to case of CIT vs. K. Venkateshwararao (1982) 134 ITR 328 (AP) wherein Tribunal and High C o u r t had held if there was mistake committed by assessee in distribution of profits and it was honest mistake it cannot effect validity of firm. conduct of assessee is also not inconsistent with theory that it was mistake. assessee firm did not close their books of accounts on 30th Nov., 1981. But, assessee firm had accepted that outgoing partners are entitled to profit upto date of their retirement. Since books were not closed, there must be method acceptable to all partners for ascertaining profit upto 30th Nov., 1981. This method was to estimate net profit on turnover upto 30th Nov., 1981. This has been done. However, Sri Jayakar pointed out that even in allocation made appears to be erroneous. Though, both partners are entitled to equal share or profit, yet one partner was credited with Rs. 820 and other partner Rs. 6,177. This has to be mistake. Again on basis of ratio in Venkateshwararao's case, this is honest mistake and should not stand in way of registration. In view of above, we are of opinion that assessee is entitled to registration. appeal is allowed. *** SRINIVA MEDICAL AGENCIES v. INCOME TAX OFFICER