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Issues:
Whether the Appellate Tribunal was justified in granting registration to an assessee-firm for the assessment year 1972-73 under section 185 of the Income-tax Act, 1961, despite the delay in filing the application for registration not being condoned. Analysis: The case involved a partnership firm seeking registration for the assessment year 1972-73, with the application filed after the statutory deadline. The Income-tax Officer rejected the condonation of the delay in filing the application. However, the Appellate Assistant Commissioner directed the grant of registration based on the Supreme Court's decision in a previous case. The decision was influenced by the completion of assessment for one of the partners, leading to the belief that the firm should not be treated as unregistered. The Tribunal upheld this view, leading to the Department's appeal. The Department argued that without the condonation of the delay, there was no valid application for registration before the Income-tax Officer. They contended that the Income-tax Officer's assessment of a partner should not estop the assessment of the firm as unregistered. The Department also claimed that the Supreme Court's previous decision was not applicable to cases under the Income-tax Act of 1961 due to differences in the relevant sections. The Court, however, did not delve into the Department's arguments. Instead, it referenced a circular issued by the Central Board of Direct Taxes under section 119 of the Act. The circular stated that once the Income-tax Officer assesses a partner's share of income from a firm, the firm cannot be assessed as unregistered. This circular, binding on income-tax authorities, was supported by previous Supreme Court decisions emphasizing the binding nature of such circulars. Therefore, despite the rejection of the condonation application, the Court held that the firm should be treated as registered based on the circular's directions and previous legal precedents. The Court's decision was also supported by a previous judgment of the Bombay High Court. Consequently, the Court answered the reference question in favor of the assessee, with costs imposed on the Department. Judge S. K. Chattopadhyaya concurred with the judgment.
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