1986 (1) TMI 92 - HC - Income Tax

Summary

Issues: Appealability of an order under section 184(7) before the Appellate Assistant Commissioner.

Analysis:
The case involved a partnership firm registered under section 185 of the Income-tax Act, 1961 for the assessment year 1972-73. The Income-tax Officer refused continuation of registration to the firm, treating it as unregistered, leading to an appeal by the assessee before the Appellate Assistant Commissioner. The question referred was whether the appeal was maintainable under section 246(c) of the Act. The Department contended that appeal could only be made under section 246(j) against orders passed under section 185(2), (3), or (5), not under section 184(7). However, a previous decision clarified that section 246(c) allowed appeals when the assessee was aggrieved by an order regarding their assessed status, which included being a registered or unregistered firm.

The term "status" under section 246(c) encompassed various categories mentioned in section 2(31) of the Act, such as individuals, Hindu undivided families, companies, firms, etc. The Explanation to section 143 further defined "status" concerning a firm as its classification as registered or unregistered. The determination of the firm's status significantly impacted the tax liability of the assessee, making them eligible to appeal. The court agreed with the previous decision that the term "status" in section 246(c) included all categories of firms, registered or unregistered, from April 1, 1971. The introduction of Explanation (2) to section 143 eliminated ambiguity and confirmed the appealability of orders under section 184(7) regarding registration continuation.

The argument that section 246(j) would become redundant if appeals were allowed under section 246(c) was dismissed, as both provisions served distinct purposes. The court upheld the previous decision's interpretation that section 246(c) covered all cases of status determination, affirming the Appellate Assistant Commissioner's jurisdiction to entertain the assessee's appeal. Consequently, the reference was answered in favor of the assessee, with no costs imposed, and the order was to be transmitted to the Income-tax Appellate Tribunal as per section 260 of the Income-tax Act.