1992 (1) TMI 4 - SC - Income Tax

Delay in filing applications for registration under section 184 - ITO refused registration - whether appeal can be fled by assessee against that rejection - Held, yes

Summary

Issues:
1. Maintainability of appeals under section 184(4) and section 184(7) of the Income-tax Act.
2. Interpretation of sections 185(1), (2), and (3) in relation to registration applications.
3. Right of appeal for delayed registration applications.

Analysis:

The Supreme Court addressed the issue of the maintainability of appeals under section 184(4) and section 184(7) of the Income-tax Act. The cases involved assessees who filed applications for registration or declarations for continuance of registration under section 184. The Income-tax Officer completed assessments of the assessees as unregistered firms, as he was not satisfied with the reasons provided for the delay in filing the applications or declarations. The Department contended that appeals were not maintainable under section 246 for orders under section 184(4) or section 184(7.

The Court considered the provisions of sections 185(1), (2), and (3) in relation to registration applications. The original sections outlined the procedure for registration applications, including the requirement for the Income-tax Officer to inquire into the genuineness of the firm. Subsequent amendments introduced stricter timelines for rectifying defects in applications. The Court noted that section 246(j) allowed appeals against orders passed under sub-sections (1), (2), or (3) of section 185.

Two opposing views were presented to the Court. One view argued that delayed applications should not be entertained unless there was a sufficient cause for the delay. The other view contended that delayed applications could be considered defective and rejected under sections 185(2) and (3). The Court agreed with the latter view, emphasizing the need to interpret the right of appeal in a reasonable and liberal manner.

The Court concluded that cases where registration was refused due to delays could be treated as cases where the application was not in order and consequently rejected. The interpretation of sections 185(2) and (3) to include delayed applications for registration allowed assessees a right of appeal. The Court highlighted the importance of considering each case's facts for condonation of delay, leaving it to the appellate authorities to decide on such matters.

In light of the above reasoning, the Court dismissed the appeals, emphasizing the equitable and reasonable interpretation of the provisions. No costs were awarded in the circumstances.