9911796707
TMI Blog1995 (1) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ered under the Partnership Act, filed its return of income for the assessment year 1982-83, on October 6, 1982. In September, 1983, the assessee-firm was directed by the Income-tax Officer to comply with the notices issued under section 143(2) of the Act on various dates, viz., September 3, 1983, October 18, 1983, and January 12, 1984. The assessee sought adjournments on all dates except on October 18, 1983. The Income-tax Officer, thereafter, issued notice under section 142(1). The assessee-firm was further directed on various dates by the Income-tax Officer to comply with the notices issued under sections 143(2) and 142(1) of the Act. The assessee sought adjournments on all the dates except on January 24, 1985. Thereafter, on February 22, 1985, the Income-tax Officer issued a letter to the assessee as regards the consignment received by the assessee-firm from Rangapara Railway Station and ABC Limited, Rangapara, and the assessee was directed to produce books of account in respect of those transactions on February 22, 1985. The Income-tax Officer, on March 1, 1985, intimated the assessee that the assessment was being completed under section 144 of the Act and notice under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under section 144 of the Act. On an application filed by the assessee-firm, the above two questions have been referred to this court for opinion. We have heard Mr. R. Gogoi, learned counsel appearing on behalf of the applicant, and Mr. D. K. Talukdar, learned standing counsel for the Income-tax Department. The contention of Mr. Gogoi was that the order of the Income-tax Officer cancelling the registration was bad in law being based on misappreciation of facts and contrary to law. The assessee-firm was never in default in payment of tax in the year under assessment, inasmuch as adjournments were sought on various valid grounds. The books of account were in the custody of the assessee-firm. The accountant of the assessee-firm lost the books of account on the way back from Tezpur to Rangapara. FIR was lodged before the GRPF, Rangapara. This was informed to the Income-tax Officer. Besides, the accountant also had sworn an affidavit in this connection. Under the said facts and circumstances, adjournments ought to have been given to enable the firm to take steps ; however, the Income-tax Officer passed the best judgment and cancelled the registration under section 186(2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 184 for any assessment year, there is, on the part of the firm, any such failure in respect of the assessment year as mentioned in section 144, the Income-tax Officer may cancel the registration of the firm for the assessment year, after giving the firm not less than 14 days' notice intimating his intention to cancel its registration and after giving a reasonable opportunity of being heard. Sub-section (2) of section 186 of the Act embodies the provisions of the latter part of the main paragraph of sub-section (4) of section 23 of the 1922 Act, and the proviso to that sub-section. The cancellation of registration as per section 186(2) is discretionary. Section 186(2) does not compel the Income-tax Officer to deprive the assessee of the benefit of registration. It would be wrong to assume that the default by the assessee mentioned in section 144 of the Act would lead to two-fold penal consequences : (i) best judgment assessment, and (ii) in the case of a firm, cancellation of existing registration. It is, therefore, incumbent upon the Income-tax Officer to consider the question of registration on the ground that a different conclusion would be illogical or not self-consistent. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings, in the instant case, the authorities were bound to cancel the registration of the assessee-firm for the assessment years in question. The observation of the Tribunal in paragraph 15 of its order gives an inkling that the Tribunal was conscious of the fact that this was an apt case where benefit of registration should be denied and, therefore, to water down its clear finding in paragraph 12, observed that the question of signature and handwriting had to be left out for the purpose of deciding the question of cancellation of registration. With respect, this was a swashbuckling effort. The Tribunal was absolutely unjustified in holding that this was not an apt case for taking action under section 186(2) of the Income-tax Act. " Similarly, in Antiquarts v. CIT [1979] 116 ITR 172, the Kerala High Court also dealt with a similar question. In the said case, in response to a notice issued on June 2, 1969, calling upon the assessee, a registered firm, to file a return within thirty days, the assessee filed an application for extension of time till October 2, 1969. Another application for extension of time till March 31, 1970, was submitted on the ground that one of the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X
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