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TMI Blog1998 (8) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... stered firm, without granting any opportunity to the petitioner, passed the assessment order, assessing the petitioner as an unregistered firm on the ground that the declaration in Form No. 12 was made by the partners of the petitioner-firm on February 20, 1987, before the end of the previous year, i.e., March 31, 1987, and was not valid for renewal of registration. It is further averred that the above decision was arrived at by the concerned officer on the basis of the decision of the Gujarat High court in CIT v. Trinity Traders [1974] 97 ITR 81. It is also stated that the objections have been filed under section 143(2) to the above assessment order made under section 143(1)(a) of the Act. In the objections the petitioner has stated that rejection of Form No. 12 was not valid and no opportunity was granted to the petitioner to cure the defect in the declaration form as provided for under section 185(3) of the Act. It is also contended that according to the above provisions, the second respondent was statutorily bound to grant opportunity to the petitioner where the declaration furnished by the petitioner-firm in pursuance of sub-section (7) of section 184 was not in order. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities in CIT v. Trinity Traders [1974]97 ITR 81 (Guj), is concerned with the facts and law relating to the assessment year 1967-68 which was prior to the amendment of section 185(3). Hence, the authorities were not right in relying upon the said case for deciding the issue on hand. He also contended that whenever there is a defect in the form the assessee could be asked to rectify the same by the authorities by invoking the provisions of sections 184(7), 185(2) and 185(3) of the Income-tax Act, 1961, read with rule 22 of the Income-tax Rules. Sections 184(7), 185(2) and 185(3) read as follows : "184(7). Where registration is granted or is deemed to have been granted to any firm for any assessment year, it shall have effect for every subsequent assessment year Provided that - (i) there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted ; and (ii) the firm furnishes, before the expiry of the time allowed under sub-section (1) of section 139 for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f registration under sub-section (7) is that there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which registration had been granted. Clause (ii) of the proviso, as per which a declaration in the prescribed form and verified in the prescribed manner is to be furnished within the time mentioned therein, prescribes the statutory mode of proof of the requirement of clause (i) of the proviso. Clause (ii) of the proviso excludes every other mode of proof. But the intent and purpose of clause (ii) are only to prove the requirements of clause (i) of the proviso. The earlier requirement of clause (ii) for filing of the declaration together with the return was altered by the Taxation Laws (Amendment) Act, 1970, that came into force on April 1, 1971. The present requirement of the clause is only the furnishing of the declaration in the form and manner prescribed before the expiry of the time allowed under sub-section (1) or (2) or section 139 for furnishing of the return of income for the subsequent assessment year. It is true that as per sub-section (7) of section 184, registration granted to a firm w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for every succeeding year. The facts to be proved are those stated in clause (i) of the proviso and any defect in the declaration is capable of rectification as provided for in sub-section (3) of section 185. An infirmity in the declaration that it does not cover the whole of the accounting period as required by Form No. 12 cannot be held to be fatal to the declaration itself and the infirmity can be treated only as a defect capable of rectification under sub-section (3) of section 185. Counsel relies also on the decision of the Madras High Court in Halima Fancy Stores v. CIT [1976] 104 ITR 190. That decision was also concerned with the requirement of the proviso as it then stood to furnish the declaration along with the return. The Madras High Court at page 194 of the report observed : "The intention of Parliament was to give effect to the registration in the subsequent year also if there was no change in the constitution of the firm or the shares of the partners and, therefore, the factum of change or no change in the constitution of the firm or the shares of the partners is only relevant for the law to operate. The declaration, as such, does not extend the effect of the regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty for rectification of the defect as provided for in sub-section (3) of section 185 of the Act. The Kerala High Court decided question No. 1 in favour of the Revenue and against the assessee and question No. 2 in favour of the assessee and against the Revenue by holding that the declaration filed for continuation of registration in Form No. 12 was only defective as it was filed before the end of the relevant accounting year and the assessee-firm was entitled to an opportunity for rectification of the defect as provided for under subsection (3) of section 185. The Kerala High Court has relied upon the decision of the Patna High Court in CIT v. Sitaram Bhagwandas [1976] 102 ITR 560 and the Allahabad High Court in Nand Singh Taneja and Sons v. CIT [1973] 91 ITR 202 and Addl. CIT v. Murlidhar Mathura Prasad [1979] 118 ITR 392 (All/). The Patna and Allahabad High Courts have taken the view that the requirement of the proviso is not mandatory and a defect in the declaration under clause (i) of the proviso to sub-section (7) will not invalidate the declaration itself. The Allahabad High Court in Addl. CIT v. Murlidhar Mathura Prasad [1979] 118 ITR 392, following its earlier decision in N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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