1987 (6) TMI 103 - AT - Income Tax

Summary

Issues:
Cancellation of registration of a firm for failure to file a return of income.

Analysis:
The appeal was filed by the assessee challenging the cancellation of registration to their firm due to failure to file a return of income. The assessee argued that the requirement for registration under sec. 184(7) did not necessitate the filing of a return of income. The issue revolved around whether registration of a partnership firm could be upheld or refused despite not filing a return of income. The assessee contended that the amendment to sec. 184(7) allowed for filing form no. 12 separately from the return of income, thus registration could be granted without filing a return.

The amendment to sec. 184(7) allowed for filing form no. 12 separately from the return of income, as per the assessee's argument. However, the Circular No. 56 clarified that the intention was to avoid hardship in filing the declaration along with the return of income. The Tribunal noted that the legislative intent was not to entertain form no. 12 without the filing of a return of income by the firm. The Tribunal highlighted the provisions of secs. 182, 183, 184(7), and 186(2) to analyze the issue comprehensively.

The legislative framework differentiated between registered and unregistered firms concerning income tax treatment. Registration conferred a privilege of lower tax rates, not a vested right. The Tribunal emphasized that registration was a benefit subject to full compliance with statutory requirements. The right to registration was not absolute but contingent on fulfilling statutory obligations. The Tribunal underscored that the grant of registration was a privilege for lower tax rates and not a guaranteed entitlement.

Sec. 186(2) empowered the Income Tax Officer to cancel the registration of a firm for non-filing of a return, in line with sec. 184(7). The cancellation of registration was upheld as lawful and consistent with the provisions of the Act. The Tribunal affirmed the decision of the Appellate Authority Commissioner (AAC) in upholding the cancellation of registration. The Tribunal opined that the appeal lacked merit as the cancellation did not impact the firm's tax liability due to the absence of an assessment.

In conclusion, the Tribunal dismissed the appeal, stating that the cancellation of registration was justified under the law. The Tribunal highlighted that the appeal lacked merit as the cancellation did not affect the firm's tax liability. The decision was based on the legislative framework, statutory provisions, and the privilege of registration subject to compliance with statutory requirements.