1966 (1) TMI 19 - SC - Income Tax

Whether an order cancelling the certificate of renewal of registration made under section 26A of the Act by an Income-tax Officer is subject to an appeal under section 30(1) to the Appellate Assistant Commissioner? Held that - Under section 23(4) while the Income-tax Officer can make an order refusing to register a firm or may cancel the registration if it is already registered, under section 26A(2) he can only make an order in such manner as may be prescribed. The manner prescribed, as we have already indicated earlier, provides for three different kinds of orders to be made in the same application with the result that an order of refusal to renew a certificate and the order cancelling the certificate renewed are given the same effect, namely, refusal of the application to register. That apart, when section 30 provides for an appeal against the orders under section 23(4) and also against orders under section 26A, it has incorporated the two forms of orders embodied in section 23(4) and used a general word in providing an appeal against an order under section 26A, for the nature of the order is not described but left to be prescribed under the rules. If so, it follows that the words refusal to register a firm in section 30 of the Act are wide enough to take in the orders made under rules 6A and 6B refusing to renew the registration and also cancelling the certificate so renewed. The question propounded for the High Court s decision in the affirmative. The order of the High Court is set aside and the appeal is allowed

Summary

Issues:
Appealability of an order cancelling registration of a firm under section 26A of the Indian Income-tax Act, 1922 to the Appellate Assistant Commissioner.

Analysis:
The case involved an appeal to determine whether an order cancelling the registration of a firm under section 26A of the Indian Income-tax Act, 1922 is subject to appeal under section 30(1) to the Appellate Assistant Commissioner. The appellant's firm had its registration cancelled by the Income-tax Officer on the grounds of not being genuine. The appellant appealed against this cancellation, which was rejected by the Appellate Assistant Commissioner and the Income-tax Appellate Tribunal. The High Court of Madhya Pradesh also ruled against the appellant, stating that no appeal lay under section 30 of the Act against the order of cancellation. The key issue was interpreting the relevant provisions of the Act and Rules to determine the appealability of the cancellation order.

The relevant provisions under consideration were Section 26A, Rule 6, Rule 6A, Rule 6B, and Section 30 of the Act. Section 26A allows for the registration of a firm under prescribed conditions. Rule 6 and Rule 6A deal with the renewal of registration for subsequent years, while Rule 6B empowers the Income-tax Officer to cancel the renewal of registration if the firm is found to be non-genuine. Section 30(1) provides for appeals against certain orders, including cancellation of firm registration. The court analyzed the provisions and concluded that the cancellation order effectively amounted to a refusal to renew the registration certificate, falling within the scope of appeal under section 30(1) to the Appellate Assistant Commissioner.

The court addressed the argument put forth by the Revenue that there was no scope for equitable considerations in income-tax law and that the specific mention of different types of orders in section 30 indicated the legislative intent regarding appealability. However, the court emphasized the distinction in the language used in section 23(4) and section 26A, highlighting that section 30's wording was broad enough to encompass orders under section 26A, including refusals to renew registration and cancellations. The court clarified that its interpretation was based on a fair reading of the relevant provisions and rules, without introducing any equitable considerations.

In conclusion, the court held that the order cancelling the registration of the firm was appealable under section 30(1) to the Appellate Assistant Commissioner. The High Court's decision was set aside, and the appeal was allowed with costs.