1971 (12) TMI 11 - HC - Income Tax

Non filing of return for the subsequent year only declaration were filed as per section 184(7) whether registration granted can be continued Held, no

Summary

Issues:
Entitlement to benefits of registration under section 184(7) for the assessment year 1966-67.

Analysis:
The case involved a firm in Bangalore City consisting of four partners engaged in the mill cloth business. The firm had been assessed as a registered firm until the assessment year 1965-66. However, for the assessment year 1966-67, the firm failed to submit the return of income in response to the notice under section 139(2) leading to an assessment being made on a best judgment basis on March 27, 1967.

Despite not filing the return of income for the relevant assessment year, the firm submitted a declaration in Form No. 12 on September 30, 1966, stating no change in the firm's constitution or partners' shares. The Income-tax Officer assessed the firm as unregistered, arguing that the registration ceased to be operative due to the failure to file the return. The Appellate Assistant Commissioner initially directed assessment as a registered firm, but this decision was overturned by the Income-tax Appellate Tribunal based on the clear language of the proviso to section 184(7) of the Income-tax Act, 1961.

The Tribunal's decision was supported by a previous judgment in Madivalappa and Sons v. Commissioner of Income-tax, which held that registration for one year does not extend automatically to subsequent years if the required documents are not furnished. The firm's argument, supported by its counsel, that filing a declaration without a return suffices for registration benefits was deemed untenable by the court. The court highlighted the specific language of the proviso and emphasized the necessity of filing the return of income for the relevant assessment year to maintain registration benefits.

The court concluded that the firm had not met the proviso's requirements, leading to the cessation of the registration's effect for the assessment year 1966-67. Consequently, the court answered the referred question in the negative, favoring the department. The firm was directed to pay the costs of the department, including the advocate's fee.

In summary, the judgment clarified that mere submission of a declaration without filing the return of income does not suffice to maintain the benefits of registration under section 184(7) of the Income-tax Act, 1961. Compliance with all statutory requirements, including filing the return for the relevant assessment year, is crucial for the continuation of registration benefits for a firm.