1986 (4) TMI 26 - HC - Income Tax

Issues Involved:

1. Whether an appeal lay to the Appellate Assistant Commissioner against an order under section 184(7) of the Income-tax Act, 1961.
2. Interpretation of clauses (c) and (j) of section 246 of the Income-tax Act, 1961.
3. Applicability of the amended clause (j) of section 246 introduced by the Taxation Laws (Amendment) Act, 1970.

Issue-wise Detailed Analysis:

1. Whether an appeal lay to the Appellate Assistant Commissioner against an order under section 184(7) of the Income-tax Act, 1961:

The primary issue was whether the Tribunal was justified in holding that no appeal lay to the Appellate Assistant Commissioner against the order of the Income-tax Officer refusing to continue the registration of the assessee for the assessment year 1970-71. The court noted that the provision regarding appeals is contained in section 246 of the Act. The assessee's counsel argued that the appeal was maintainable under clauses (c) and (j) of section 246. Clause (j) of section 246, as it stood before the amendment, provided for an appeal against an order refusing to register a firm under section 185(1)(b). The court referred to the Supreme Court decision in Sir Hukumchand & Mannalal Co. v. CIT, which held that the words "refusal to register a firm" include an order refusing to renew the registration of a firm. Based on this interpretation, the court concluded that an order refusing to continue the registration of a firm should be treated as an order refusing to register the firm, making it appealable under section 246(j).

2. Interpretation of clauses (c) and (j) of section 246 of the Income-tax Act, 1961:

Clause (c) of section 246 allows an appeal against an order where the assessee denies his liability to be assessed under the Act or objects to the amount of income assessed, tax determined, or status under which he is assessed. Clause (j) allows an appeal against an order refusing to register a firm under section 185(1)(b). The court observed that the right of appeal should be liberally construed, referring to the Supreme Court decision in Mela Ram & Sons v. CIT. The court also cited various High Court decisions, including the Delhi High Court in Sant Lal Kashmiri Lal v. CIT and the Andhra Pradesh High Court in Addl. CIT v. Chekka Ayyanna, which held that an order refusing to continue the registration of a firm is appealable under section 246(j). The court agreed with these interpretations and concluded that the appeal filed by the assessee was maintainable under clause (j) as it stood before the amendment.

3. Applicability of the amended clause (j) of section 246 introduced by the Taxation Laws (Amendment) Act, 1970:

The amended clause (j) of section 246, effective from April 1, 1971, explicitly included orders under section 185(2), (3), and (5) as appealable. The assessee's counsel argued that the amended clause (j) should apply to the appeal filed against the order passed after April 1, 1971, based on Circular No. 229 issued by the Central Board of Direct Taxes. However, since the court had already concluded that the appeal was maintainable under the unamended clause (j), it did not find it necessary to address this argument. The court focused on the interpretation of the unamended clause (j) and concluded that the appeal was maintainable.

Conclusion:

The court held that the Tribunal was not justified in holding that no appeal lay to the Appellate Assistant Commissioner against the order of the Income-tax Officer refusing to continue the registration of the assessee. The question referred was answered in the negative, in favor of the assessee and against the Revenue.

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