9911796707
TMI Blog1992 (1) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 1981-82. For the earlier years, the firm had obtained registration under the Income-tax Act. For the instant assessment year, Form No. 12 was belatedly filed on August 3, 1981. The assessee had sought extension of time for filing the said form. The assessee had not closed the accounts in time. It did not allocate the share income among the partners as stipulated in the partnership deed. The assessment was completed under section 144 of the Income-tax Act for failure on the part of the assessee to file its return of income. In consequence, the Income-tax Officer declined to grant registration to the firm. In doing so, he invoked section 185(5) of the Act. The order so passed is dated August 16, 1983 (annexure A). The assessee took up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14, 1981), should have considerably affected the smooth running of the firm and should have resulted in various impediments, and the plea of the assessee that the above factors delayed the preparation of accounts and the filing of the returns should be viewed sympathetically and so the circumstances of the case do not justify the cancellation of registration. On this basis, the appeal filed by the assessee was allowed. The cancellation of registration of the firm was annulled. It is thereafter at the instance of the Revenue that the Income-tax Appellate Tribunal has referred the question of law, formulated hereinabove, for the decision of this court. We heard counsel. The main plea raised by counsel for the Revenue, Mr. N. R. K. Nair, was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s section, be made either during the existence of the firm or after its dissolution . . . . (4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought: . . . (7) Where registration is 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 . . . 185. Procedure on receipt of application. - (1) On receipt of an application for the registration of a firm, the Income-tax Officer shall inquire into the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the firm, any such failure in respect of the assessment year as is 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 fourteen days' notice intimating his intention to cancel its registration and after giving it a reasonable opportunity of being heard. " The Appellate Assistant Commissioner held that the delay in filing Form No. 12 deserves to be condoned and this was not questioned before the Appellate Tribunal by the Revenue. On the basis that the assessee-firm had complied with the requirements under section 184(7) of the Act, the registration granted to the firm for the earlier assessment year will be effective for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 185(5) of the Act. We are of the view that the Income-tax Officer has no power to refuse registration to a firm in a case where continuance of registration is granted in exercise of the powers under section 184(7) of the Act. We hold that section 185(5) of the Act applies only at the initial stage of granting or recognising registration. In cases where continuance of registration of the firm is granted, if a best judgment assessment under section 144 of the Act is made or warranted, thereafter, the Income-tax Officer can invoke his powers under section 186(2) of the Act. We are fortified in this view by the Bench decision of the Allahabad High Court in Addl. CIT v. Radha Kishan Banwarilal [1979] 116 ITR 970. Having held that se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Abdul Khader and Co.'s case [1983] 141 ITR 159 (Ker), lays down the correct law. In the light of the principles laid down in the said decision, as the final fact-finding authority, the Appellate Tribunal referred to the peculiar facts that were present in the instant case which disabled the assessee from preparing the accounts and filing the returns in time. It was held that the peculiar facts stated in its order dated October 31, 1984, deserve a sympathetic view and justify the plea that there was sufficient cause for the default. In such circumstances, as the final fact-finding authority, the Appellate Tribunal held that the circumstances disclosed and adverted to by it, in paragraph 10 of the order, did not justify the cancellation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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