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TMI Blog2004 (8) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... n Form No. 12 by two out of five partners was treatable as a defect within the meaning of section 185(3) of the Income-tax Act, 1961? 2. If the answer to question No. 1 be in the affirmative, whether the Appellate Tribunal was also justified in taking the view that the said defect could be removed even beyond February 28, 1980, i.e., beyond one month of the service of the notice dated January 25, 1980, pointing out the defect?" Briefly stated, the facts giving rise to the present reference are as follows: The assessee was a registered firm till the assessment year 1978-79 when renewal of registration was granted to it under section 184(7). For the assessment year 1979-80 in question, the assessee filed an application in Form No. 12 on Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t persuasion by their relatives and friends. It was also pointed out that the two partners, namely, Sarvasri Krishna Prakash and Ram Kishore, had retired from the firm with effect from September 21, 1979. The signatures of the partners, Sarvasri Vipin Chandra and Navin Chandra, were stated to have been left out by oversight. It was said that the fresh declaration was delayed because the retiring partners refused to sign the fresh deed. The Appellate Assistant Commissioner accepted the contention raised on behalf of the assessee and allowed the registration. The Revenue being aggrieved preferred an appeal before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal was of the opinion that in view of sub-sections (2) and (3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1980, was not rectified within one month, therefore, the assessing authority had rightly rejected the application for continuation of the registration of the firm and treated it as an unregistered firm. He relied upon a decision of the Madras High Court in the case of Anil Sound Caps v. CIT [1983] 141 ITR 457. Having heard learned counsel for the parties, we find that the respondents had filed the application in Form No. 12 on June 26, 1979, signed by only three out of five partners. On a notice issued on January 25, 1980, to the respondent to show cause as to why the form may not be rejected and its status be taken as that of an unregistered firm, the respondent submitted the reply only on October 3, 1980, and filed revised Form No. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed a fresh declaration in Form No. 12 only on October 3, 1980, and had explained the reasons for filing it so late. The provisions of clause (ii) of the proviso to section 184(7) and section 185(3) of the Act are to be read in a manner so as not to deprive a genuine firm from being entitled for continuation of registration if other conditions are fulfilled. At best, the declaration in Form No. 12 filed on October 3, 1980, should have been treated as a fresh declaration form under sub-section (7) of section 184 of the Act and the Appellate Assistant Commissioner had rightly allowed the continuation of the registration to the firm. In the case of Anil Sound Caps [1983] 141 ITR 457, the Madras High Court has held as follows: "It may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as a fresh declaration and the delay ought to have been condoned which has rightly been done by the Appellate Assistant Commissioner. The Tribunal while dealing with the matter has held as follows: "5. We have considered the rival submissions as also the decisions referred to above. Sub-sections (2) and (3) of section 185 of the Income-tax Act, 1961, regarding grant of registration to a firm show that the registration should not be refused on account of defects in the application for registration which may be cured and that an opportunity should be afforded to the firm to remove the defect, if any. Therefore, the only question to be seen in the present case is whether there was sufficient cause for the assessee to file the revi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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