1976 (1) TMI 48 - AT - Income Tax

Summary

Issues:
1. Assessment of income for the assessment years 1970-71 and 1971-72 by the Income Tax Officer (ITO) without considering the application for registration under s. 185(1) and s. 184(7).
2. Appeal to the Appellate Assistant Commissioner (AAC) challenging the assessment order and seeking recognition as a registered firm.
3. Appeal to the Tribunal contending that the ITO's failure to pass a separate order on registration application should be considered as implied refusal of registration.

Analysis:

1. The Globe Transport Corporation filed returns for the assessment years 1970-71 and 1971-72, declaring income and applying for registration as a firm. However, the ITO assessed the income without addressing the registration application separately, questioning the genuineness of the firm due to various reasons, ultimately assessing the entity as an Association of Persons (AOP).

2. The AAC dismissed the appeals, implying a refusal of registration, based on the ITO's conclusion that the firm was not genuine. The assessee then appealed to the Tribunal, arguing that the failure of the ITO to pass a separate order on registration should be construed as implied refusal, challenging the finding of the ITO and AAC regarding the genuineness of the firm.

3. The Tribunal held that the proper course of action was to set aside the assessment orders and remand the matter to the ITO for proper assessment. Emphasizing the statutory requirement for a separate order on registration application, the Tribunal highlighted that without registration, the firm could not be treated as a registered entity, regardless of its existence, and directed the ITO to first dispose of the registration application before determining the assessee's status.

4. The Tribunal acknowledged the possibility of duplication in the process but emphasized the necessity of following statutory procedures. It allowed the appeals, granting the assessee the opportunity to present arguments on the genuineness of the firm before the ITO objectively, ensuring a fair consideration of the registration application independent of prior conclusions.

In conclusion, the Tribunal's judgment emphasized the importance of a separate order on the registration application for determining the status of the assessee as a registered firm, setting aside the assessment orders and directing the ITO to address the registration application before making any assessment decisions.