1980 (9) TMI 59 - HC - Income Tax

Summary

Issues:
- Appealability of an order passed by the Income-tax Officer refusing registration
- Interpretation of provisions under the Income Tax Act regarding appeal rights

Analysis:
The High Court of Kerala addressed the issue of appealability of an order passed by the Income-tax Officer refusing registration. The case involved a firm where a change in constitution occurred during the relevant accounting period for the assessment year 1973-74. The Income Tax Officer rejected the application for registration filed by the assessee in Form No. 11A, citing inordinate delay. The assessee appealed before the Appellate Assistant Commissioner (AAC) after the rejection, which was dismissed, leading to a second appeal before the Tribunal. The Tribunal faced a preliminary objection from the department regarding the competency of the second appeal. The Tribunal, following a previous decision, allowed the appeal, stating that the order refusing registration was appealable. The correctness of this view was referred to the High Court.

In a related case, the High Court had previously examined a similar issue where the ITO had declined to condone a delay in filing an application for registration. The High Court established a principle that the right to appeal depends on what the court or Tribunal actually does, not what it should have done. Therefore, if the ITO passes an order under an appealable provision, the right to appeal is maintained. Applying this principle to the present case, the High Court found that the order rejecting the application for registration was passed under s. 185 of the Act, making it appealable under s. 246(j). The Court emphasized that the order was in purport and fact passed under s. 185(1)(b) of the Act, making the appeal before the AAC maintainable in law.

Ultimately, the High Court ruled in favor of the assessee, stating that the appeal filed against the order refusing registration was maintainable. The Court highlighted that the order was passed under the relevant provision of the Act, making it subject to appeal. The judgment favored the assessee, and each party was directed to bear their respective costs. The Court also mandated the forwarding of a copy of the judgment to the Tribunal, as required by law.