1972 (2) TMI 16 - HC - Income Tax

Whether Tribunal was right in law in holding that the Income-tax Officer had no power to cancel the registration and renewal of registration of the assessee under section 186(1) of the Income-tax Act, 1961, in respect of the AY 1958-59, 1959-60 and 1960-61, when the same had been granted with regard to the aforesaid assessment years under the provisions of the Indian Income-tax Act, 1922 - hold that the Income-tax Officer had no power under section 186(1) of the Income-tax Act, 1961, to cancel the registration for the assessment year 1958-59 and the renewal of registration for the assessment years 1959-60 and 1960-61 granted under the provisions of the Indian Income-tax Act, 1922 - question is answered in the affirmative

Summary

Issues:
1. Interpretation of the power of the Income-tax Officer to cancel registration and renewal of registration under section 186(1) of the Income-tax Act, 1961, in relation to assessment years 1958-59, 1959-60, and 1960-61.

Analysis:
The judgment delivered by the High Court of ALLAHABAD pertains to a case where the Income-tax Appellate Tribunal referred a question to the court regarding the power of the Income-tax Officer to cancel registration and renewal of registration of an assessee partnership firm under section 186(1) of the Income-tax Act, 1961. The firm had filed returns for the assessment years 1958-59, 1959-60, and 1960-61 before April 1, 1962, and had obtained registration under section 26A of the Indian Income-tax Act, 1922, for the year 1958-59, with subsequent renewals. The Income-tax Officer issued a notice under section 186(1) of the 1961 Act to cancel the registration and renewals, alleging the firm was not genuine. The Appellate Assistant Commissioner and the Tribunal held that the Income-tax Officer lacked jurisdiction to cancel the registration. The Income-tax Officer contended that the power existed under section 186(1) or alternatively under rule 6B of the 1922 Rules. However, both contentions were rejected by the Tribunal.

The court focused on whether the power under section 186(1) of the 1961 Act could be used to cancel registrations granted under the 1922 Act. It was argued that proceedings for cancellation of registration could be continued under the 1922 Act as per section 297(2)(a) of the 1961 Act, which deems such proceedings as part of assessment proceedings under the 1961 Act. The court highlighted that if section 297(2)(a) applied, the proceedings could only be conducted under the 1922 Act, excluding the application of the 1961 Act provisions.

The court also examined section 297(2)(k) of the 1961 Act, which deems actions under the repealed Act to continue under the corresponding provisions of the 1961 Act if not inconsistent. The argument was made that registration should be considered as "recognition" under this provision. However, the court found that section 297(2)(k) could not override section 297(2)(a) and that the case fell within the scope of the latter provision, thus disallowing the Income-tax Officer's power to cancel the registrations granted under the 1922 Act.

In conclusion, the court held that the Income-tax Officer lacked the authority under section 186(1) of the 1961 Act to cancel the registrations for the relevant assessment years granted under the 1922 Act. The question referred was answered in the affirmative, and the assessee was awarded costs.