The correct option is
B Independence Day was celebrated by the residents.
A sentence is in the active voice when the subject performs an action.
A sentence is said to be in the passive voice when the subject receives an action.
The given sentence is in the active voice, as the subject 'The residents' performs an action 'celebrated' against the object 'Independence Day'.
If this sentence is changed to passive voice, then the subject is also changed, in order to retain the meaning of the sentence.
So,
'Subject (The residents) + verb (celebrated) + object (Independence Day)' changes to:
'New subject (Independence Day) + verb (was celebrated) + by + new object (the residents)'
The
passive form of 'celebrated' in the simple past tense is 'was/were
celebrated'.
This can be seen in option B, hence it's the right answer.
Option
A: The sentence is in simple past tense 'celebrated'. While changing the voice of the sentence, the tense does not change. This option, on the other hand, expresses the present tense 'is'.
Option C: Similarly, 'has been' expresses the present perfect tense whereas the event took place in the past.
Option D: The wordings here have been changed and they do not follow the required structure. The verb 'celebrated' has been converted to its noun form, 'celebration', which is not required.
Hence options A, C and D are incorrect.