1976 (1) TMI 47 - AT - Income Tax

Summary

Issues:
1. Refusal of registration to the assessee firm for the assessment year 1971-72.
2. Compliance with the provisions of section 185(2) of the Income Tax Act regarding rectification of defects in the application for registration.

Detailed Analysis:
1. The appeal was filed by Associated Textile Agencies against the refusal of the Income Tax Officer (ITO) to grant registration to the assessee firm for the assessment year 1971-72. The issue arose due to the filing of two returns by the assessee firm, one for the period ending on 5th March 1970 and the other for the period ending on 29th Oct 1970, claiming a change in the firm's constitution in March 1970. The ITO rejected the registration claim, citing a defect in the application process.

2. The main contention revolved around the compliance with section 185(2) of the Income Tax Act, which requires the ITO to intimate the specific defect in the registration application to the assessee and provide an opportunity to rectify it within a month. The appellant argued that the ITO did not provide a satisfactory intimation as required by the section. The Department, on the other hand, claimed that the provisions of section 185(2) were fulfilled as the defect was communicated to the assessee, who failed to rectify it within the specified time.

3. The Tribunal analyzed the facts and concluded that the statutory requirement under section 185(2) was not fulfilled in this case. Despite discussions between the ITO and the assessee's representative on 3rd Oct 1973, there was confusion regarding the filing of the application and the appropriate form to be used. The Tribunal noted that the ITO did not specifically intimate the defect to the assessee as required by the law, similar to a case considered by the Jabalpur Bench.

4. Consequently, the Tribunal accepted the contention raised by the assessee, setting aside the orders of the ITO and the Appellate Authority. The ITO was directed to provide the assessee with a proper opportunity to rectify the defect in the registration application. The Tribunal highlighted that the assessee had already filed an application in form No. 11-A, leaving it to the ITO to decide whether to accept the existing application or request a fresh one. The Tribunal allowed the appeal, emphasizing the importance of complying with the procedural requirements under the law.

5. Additionally, a request for an additional ground during the hearing was deemed belated and requiring further investigation, leading to its rejection by the Tribunal.