1991 (4) TMI 186 - AT - Income Tax

Additional Demand, Application For Registration, Assessed Income, Assessee s Appeal, Assessment Proceedings, Delay In Filing Appeal, Reassessment Proceedings

Issues Involved:
1. Delay in filing the form for registration of the partnership firm.
2. Refusal to condone the delay by the assessing officer.
3. Dismissal of the appeal by the Appellate Assistant Commissioner as not maintainable.
4. Preliminary objection by the Revenue regarding the appeal being time-barred.
5. Merits of the case for condonation of delay.

Detailed Analysis:

1. Delay in Filing the Form for Registration:
The assessee firm, originally established through a deed of partnership on 11-9-1979, underwent several changes in its constitution over the years. For the assessment year 1984-85, the firm filed Form Nos. 11 & 11A along with the deed of partnership on 5-11-1983, resulting in a delay of two months. The delay was attributed to the partnership deed being retained by the bank as a title deed for a term loan, which the assessee claimed to have discovered only after the close of the previous year.

2. Refusal to Condon the Delay by the Assessing Officer:
The assessing officer refused to condone the delay and rejected the registration request under section 184(4) of the Income-tax Act. The assessee's explanation for the delay was not accepted, leading to the refusal of registration for the assessment year 1984-85.

3. Dismissal of the Appeal by the Appellate Assistant Commissioner:
The Appellate Assistant Commissioner dismissed the appeal on the grounds that it was not maintainable under section 246 of the Act. The Commissioner observed that since the assessee's total income was disclosed at nil and accepted by the Income-tax Officer, there was no grievance for the assessee to appeal against the determination of its status as an unregistered firm (URF).

4. Preliminary Objection by the Revenue Regarding the Appeal Being Time-Barred:
The Revenue raised a preliminary objection, arguing that the appeal before the Tribunal was time-barred by more than three years (1079 days). The Revenue contended that there was no satisfactory explanation for such an inordinate delay.

5. Merits of the Case for Condonation of Delay:
The assessee argued that the delay was not deliberate or due to culpable negligence but was caused by the mistaken advice of their earlier counsel. The assessee cited several judicial precedents to support the condonation of delay, emphasizing that the courts should adopt a liberal approach to advance substantial justice. The cases referenced included Concord of India Insurance Co. Ltd. v. Smt. Nirmala Devi, Collector, Land Acquisition v. Mst. Katiji, CIT v. Khemraj Laxmichand, and Manoj Ahuja v. IAC.

Tribunal's Findings:

On Preliminary Objection:
The Tribunal referred to the Supreme Court's decision in Mst. Katiji, which emphasized a pragmatic and liberal approach in condoning delays to serve substantial justice. The Tribunal noted that the expression "sufficient cause" should be interpreted flexibly to enable the courts to apply the law meaningfully. The Tribunal found that the assessee became aggrieved only upon receiving the reassessment order on 24-3-1989, which resulted in a tax demand of Rs. 76,869. The Tribunal held that the delay from 19-2-1986 to 24-3-1989 deserved to be condoned.

On Merits:
The Tribunal did not adjudicate on the merits of the case regarding the two-month delay in filing the application for registration. Instead, it set aside the impugned order and remanded the matter to the Appellate Assistant Commissioner to adjudicate the grounds raised in the appeal. The Commissioner was directed to examine the facts and issues, considering the judicial precedents and discussions on the preliminary objections.

Conclusion:
The appeal was allowed for statistical purposes, and the matter was remanded to the Appellate Assistant Commissioner for a fresh adjudication on the merits of the case, particularly focusing on the condonation of the two-month delay in filing the registration application.

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