1993 (2) TMI 80 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 184(7) of the Income-tax Act, 1961 regarding continuation of registration for a partnership firm.
2. Compliance with the requirement of furnishing a declaration in Form No. 12 along with the return of income.
3. Authority of the Income-tax Officer to allow filing of the declaration beyond the specified time.
4. Impact of amendments to section 184(7) on the timeline for filing the declaration.

Analysis:
The High Court of BOMBAY addressed a reference under section 256(1) of the Income-tax Act, 1961 regarding the entitlement of a partnership firm to continuation of registration despite non-compliance with the requirement of proviso (ii) of section 184(7). The case involved the filing of a declaration in Form No. 12 along with the return of income for the assessment year. The Income-tax Officer initially refused continuation of registration due to the absence of the declaration. However, the Appellate Assistant Commissioner ruled in favor of the assessee, emphasizing the importance of verifying facts before disbelieving explanations.

The Tribunal upheld the decision of the Appellate Assistant Commissioner, leading to an appeal by the Revenue. The core issue revolved around the timeline for filing the declaration as per the amended provisions of section 184(7). The Court highlighted the changes brought by the amendment, allowing the Income-tax Officer to accept the declaration before the assessment is made if sufficient cause for delay is established. The Court referred to circulars issued by the Central Board of Direct Taxes, emphasizing a liberal approach in condoning delays in filing declarations.

The Court analyzed the mandatory nature of filing the declaration in the prescribed form and its verification to ensure stability in the firm's constitution. It clarified that while the declaration is mandatory, the timeline for filing it is not as rigid, especially considering the power granted to the Income-tax Officer to accept delayed declarations. The Court affirmed the Tribunal's decision, stating that the Income-tax Officer had the authority to accept the declaration filed beyond the specified time, as in this case. Ultimately, the Court ruled in favor of the assessee, highlighting the importance of considering the facts and circumstances of each case in determining the continuation of registration for a partnership firm.