9911796707
TMI Blog1971 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted was granted registration for the assessment year 1953-54 and, thereafter, renewal of registration up to and including the assessment year 1961-62. Kashmiri Lal, one of the partners, died on October 21, 1961, within the previous year, relevant to the assessment year 1962-63. On November 31, 1962, a return of income for the firm showing the total income during the previous year ended November 8, 1961, was filed with the Income-tax Officer. It was received by the Income-tax Officer on December 1, 1962. In Part III(b) of the return of income, the names of the partners of the firm were: Saraswati Kumar, Giani Ram, Prahlad Rai, Kashmiri Lal, Kanhiya Lal and Lahori Mal. In column 3 of the Table as prescribed in Part III(b) of the return the extent of share of the various partners were given as follows: 12 1/2 months 15 days Rs. As. Ps. Rs. nP. Saraswati Kumar 0 4 0 0 25 Giani Ram 0 4 0 0 25 Prahlad Rai 0 4 0 0 20 Kashmiri Lal 0 1 6 ------------- Kanhiya Lal 0 1 6 0 15 Lahori Mal 0 1 0 0 15 In Part VII of the return of income also the assessees stated that the profit or loss as per profit and loss account was for the period ending November 8, 1961. Along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kashmiri Lal 19 nP. in the rupee. Kanhiya Lal 28 nP. in the rupee. Prahlad Rai 25 nP. in the rupee." According to paragraph 9 of the instrument of partnership, the first accounts of the partnership business were to close on Diwali day, Samvat year 2015, and thereafter, every year on Diwali Mahurat. The final accounts of the partnership business were to be prepared and the profit or loss of the partnership was to be credited or debited respectively in the accounts of the parties. The previous year for the assessment year thus comprised the period extending from October, 1960, to November 8, 1961. The firm was registered under the Income-tax Act, 1922, for and up to the assessment year 1961-62. Kashmiri Lal, one of the partners, died on October 21, 1961, within the previous year. On November 13, 1962, return of the income of the firm, Sant Lal Kanhiya Lal, showing the total income during the previous year ending on November 8, 1961, was filed with the Income-tax Officer. It was received by the Income-tax Officer on December 1, 1962. As in the case of Sant Lal Kashmiri Lal, the return contained the necessary particulars and in column No. 3 of the Table as prescribed in Par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 962-63. He also noted that since the old partnership had come to an end during the period under consideration itself and the assessee had not claimed registration on the basis of the new partnership the firm could not be granted registration or continuation of registration. This order was made in the case of both the firms. Against the above order of the Income-tax Officer, the assessee went up in appeal before the Appellate Assistant Commissioner. One of the questions that came up before the Appellate Assistant Commissioner was whether the assessee was aggrieved by an order made by the Income-tax Officer and as such whether an appeal lay to the Appellate Assistant Commissioner. It was urged by the assessee that there was no provision under section 184(7) of the Income-tax Act, 1961, which gave authority to the Income-tax Officer to refuse to register the firm and therefore no provision had been made in the Act conferring any right on the assessee to file an appeal with the Appellate Assistant Commissioner against any order under section 184(7) of the Income-tax Act, 1961. It was, however, contended that the contents of the order made by the Income-tax Officer bore resemblance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 184(7) and that the Appellate Assistant Commissioner was clearly wrong in holding that the order was one under section 186(1). The Tribunal also held that the Appellate Assistant Commissioner was in error in holding that it was incumbent on the Income-tax Officer to give the assessee a reasonable opportunity of being heard before he passed his order dated July 19, 1963, and since no appeal lay against an order passed by the Income-tax Officer under section 184(7), the order of the Appellate Assistant Commissioner was set aside and that of the Income-tax Officer restored. On the above facts the Tribunal, at the instance of the assessee, referred the following question of law to this court: " Whether an appeal lay to the Appellate Assistant Commissioner against the order of the Income-tax Officer dated July 19, 1963?" In the Act of 1922 the term "registered firm" was defined in clause (14) of section 2. It meant a firm registered under the provisions of section 26A. The later section provided for procedure in registration of firms and read as follows: " (1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act itself, as has been done in the new Act, the procedure under the Act of 1922 was laid down in the rules made under the said Act. The relevant rules are to be found in rules 2 to 6B of the Income-tax Rules, 1922. Under rule 4(1) if, on receipt of the application referred to in rule 3, the Income-tax Officer is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership and that the application has been properly made, he shall enter in writing at the foot of the instrument or certified copy, as the case may be, a certificate in the following form, namely: "This instrument of partnership/certified copy of an instrument of partnership, has this day been registered with me, the Income-tax Officer for . . . in the State of . . . under section 26A of the Indian Income-tax Act, 1922, and this certificate of registration shall have effect for the assessment for the year ending on the 31st day of March 19........" Sub-rule (2) of rule 4 laid down that if the Income-tax Officer was not so satisfied he shall pass an order in writing refusing to recognise the instrument of partnership or the certified copy thereof and furnish a copy of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 30(1) of the 1922 Act dealt with appeals against assessment under that Act and its relevant portion, so far as it related to the registration of firms, reads as follows : "Any assessee... objecting to the cancellation by an Income-tax Officer of the registration of a firm under sub-section (4) of section 23 or to a refusal to register a firm under sub-section (4) of section 23 or section 26A...may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order." What his Lordship therefore held was that when section 30 provides for an appeal against the orders under section 23(4) and also against order under section 26A, it has incorporated the two forms of orders embodied in section 23(4) and used a general word in providing an appeal against an order under section 26A, for the nature of the order is not described but left to be prescribed under the rules. This reading of the relevant provision was considered by his Lordship as a fair reading of the relevant provisions of the Act and the Rules made thereunder. Sub-section (7) of section 184 of the new Act on which the Income-tax Officer had relied and which the Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which provides that where any such change had taken place in the previous year the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of section 184. As against that the contention urged on behalf of the assessee was that the case came within the purview of section 185(1) which reads as under: " (1) On receipt of an application for the registration of a firm, the Income-tax Officer shall inquire into the genuineness of the firm and its constitution as specified in the instrument of partnership, and- (a) if he is satisfied that there is or was during the previous year in existence a genuine firm with the constitution so specified, he shall pass an order in writing registering the firm for the assessment year; (b) if he is not so satisfied, he shall pass an order in writing refusing to register the firm." The present order, it was claimed, was made under clause (b) of section 185(1) and it was urged that in such circumstances it was incumbent upon the Income-tax Officer to take recourse to sub-sections (2) and (3) of section 185, which read as under: " (2) The Income-tax Officer shall not reject an application for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not claimed registration on the basis of a new partnership the firm cannot be granted registration or continuation of registration." The order of continuation of registration under sub-section (7) of section 184 has not been expressly provided in that sub-section. It has to be gathered by implication for it has been said in the substantive portion of the section that where registration is granted to a firm for any assessment year it shall have effect for every subsequent assessment year. It is however, the procedure that is outlined in section 185 that deals with the registration of the firm and in principle there is no distinction between a fresh registration as well as continuation of registration. In either event, the certificate that the Income-tax Officer has to append to the instrument of partnership or on the certified copy submitted in lieu of the original instrument has to be in the same terms. In that view of the matter, it is the procedure laid down in section 185 that has to be taken into account and since the Income-tax Officer did not give an opportunity to the assessee to rectify the defect, the order was made by him under section 185 of the new Act. Under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
