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TMI Blog1985 (10) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the assessee as an unregistered firm. An appeal was preferred by the assessee before the Appellate Assistant Commissioner of Income-tax, Alwar Range, Alwar. The Appellate Assistant Commissioner of Income-tax condoned the delay and held that there are sufficient grounds for condoning the delay. He further directed the Income-tax Officer to allow continuation of the registration if the same is otherwise in order. An appeal was preferred before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur. Before the Tribunal, the question for consideration was whether the Appellate Assistant Commissioner has jurisdiction to hear the appeal or not ? The Tribunal, vide its order of January 18, 1975, held that no appeal against the order of the Income-tax Officer passed under sub-section (7) of section 184 is provided by the statute. It further held that the Appellate Assistant Commissioner was, therefore, wrong in having assumed jurisdiction where he did not have any. Hence, the order of the Appellate Assistant Commissioner was set aside. A reference application was submitted, under section 256(1) of the Act, before the Tribunal. The Tribunal was of the view that the following questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us the decision of the Allahabad High Court in ITO v. Vinod Krishna Som Prakash [1979] 117 ITR 594, in which their Lordships of the Allahabad High Court, after considering the various provisions of law, held as under (at p. 597): " It is clear that the assessment of a firm as a registered firm or as an unregistered firm is a matter of status, and a dispute that a firm was entitled to be assessed as a registered firm and not as an unregistered one is a dispute relating to the status in which the assessee-firm is liable to be assessed. It is clearly within the ambit of clause (c) of section 246 of the Act. The effect of the Income-tax Officer's order refusing to condone the delay in the filing of the declaration in Form No. 12 is refusal to assess the firm as a registered firm. If the assessee claims that it was not liable to be assessed as an unregistered firm but was entitled to be assessed as a registered firm, the claim relates to the status under which the assessee is assessed within the meaning of clause (c) aforesaid. The assessment order itself could be appealed against on the ground that the assessee was assessed in a wrong status. Since the main reason was the refusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. [1983] 143 ITR 964, in which their Lordships of the Madhya Pradesh High Court, after considering the various provisions of law, held that an application for continuation of registration even if filed beyond time, can be condoned and if the application for condonation of delay is rejected, even then an appeal lies to the Appellate Assistant Commissioner under section 246(j). Mr. Ranka has also cited before us the case of CIT v. Hansa Agencies [1980] 121 ITR 147 (Bom), in which it has been held that a composite appeal was maintainable. On behalf of the Revenue, Mr. Surolia has vehemently opposed the submissions made by learned counsel for the assessee. Mr. Surolia contends that under section 184(7), there is no provision for filing an appeal. An order passed under sub-section (7) of section 184 is revisable and no appeal lies. Mr. Surolia submits that under section 185(2), the Income-tax Officer considers the application for registration and, if he finds that the application is not in order, he is duty bound to intimate the defect to the firm and give it an opportunity to rectify the defect in the application within a period of one month from the date of such intimation; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) of section 184 is concerned. Mr. Surolia submits that a right of appeal is a creation of the Legislature and the Legislature has, in its wisdom, not granted the right of appeal and, as such, any of the provisions of section 246 cannot be made applicable in the instant case. Mr. Surolia also takes the assistance of the provisions of section 251 of the Act, which deal with the power of the assessing authority. An appellate authority in an appeal against an order of assessment may confirm, reduce, enhance or annul the assessment, or may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner (or, as the case may be, the Commissioner (Appeals)). He submits that the power to set aside the assessment and the power to reduce, enhance or confirm the assessment is altogether a different matter and it relates to the question of quantum of assessment. According to Mr. Surolia, the order passed under sub-section (3) of section 184 cannot be set aside, confirmed or varied by the appellate authority as it does not amount to annulling, reducing, confirming or enhan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law to be dealt with under section 185. Mr. Surolia submits that, in the instant case, the application was not filed in time and the delay has not been condoned by the Income-tax Officer. As such, the application cannot be considered on merits and it should be deemed that no application has been filed and the provisions of section 185 of the Act are not applicable. Mr. Surolia has further relied on CIT v. Pohop Singh Rice Mill [1981] 132 ITR 390, in which their Lordships of the Orissa High Court after considering the various provisions of law held that no appeal lies to the Appellate Assistant Commissioner. Shri Ranka appearing on behalf of the assessee submits that all the citations referred by the Revenue are not applicable in the instant case. Mr. Ranka submits that their Lordships have not considered the provisions of clause (c) of sub-section (1) of section 246 and the question of status has not been considered. He submits that the provisions of clause (c) of sub-section (1) of section 246 have not been considered at all. He placed reliance on the word " status " and submitted that the provisions of clause (c) of sub-section (1) of section 246 have been considered. Mr. Sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessment order. We have heard the rival contentions of learned counsel for the parties and have also gone through the law laid down by the various High Courts in various cases. We consider it proper to reproduce the various provisions of law dealing with the matter: " 2(31) 'person' includes (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub-clauses. " " 143, Explanation (2) : 'Status', in relation to an assessee, means the classification of the assessee as an individual, a Hindu undivided family, or any other category of persons referred to in clause (31) of section 2, and where the assessee is a firm, its classification as a registered firm or an unregistered firm." " 184. (3) Explanation : In the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf, or, as the case may be, by person entitled under law to represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Officer in the prescribed manner. (2) Where the Income-tax Officer considers that the application for registration is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the application within period of one month from the date of such intimation; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, reject the application. (3) Where the Income-tax Officer considers that the declaration furnished by a firm in pursuance of sub-section (7) of section 184 is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the declaration within a period of one month from the date of such intimation; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, declare that the registration granted to the firm shall not have effect for the relevant assessment year. (4) Where a firm is registered for any assessment year, the Income-tax Officer shall record a certificate on the instrument of partnership or on the certified copy submitted in lieu of the original instrument, as the case m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered firm or an unregistered firm. Initially, under clause (31) of section 2, there might be an ambiguity whether an unregistered firm is a person or not, as defined in it. But after the statutory amendment in section 143, Explanation (2), referred to above, there remains no ambiguity and even an unregistered firm is having its own status. There is a reasonable classification between a registered firm and an unregistered firm given in the Explanation (2) to section 143 of the Act. In the Explanation to sub-section (5) of section 246, again, the word " status " has been defined. " Status " means the category under which the assessee is assessed as " individual ", " Hindu undivided family " and so on. Mr. Ranka appearing on behalf of the assessee submits that from a perusal of the Explanation to sections 143 and 246, it is clear that the category under which an assessee is assessed is the status for the purposes of assessment. He submits that in the instant case, from a perusal of the order of the Income-tax Officer as well as other authorities, it is clear that the status shown at the time of assessment of the assessee is that of an unregistered firm. He further submits that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons have not been made in clauses (j) and (k) to meet the situation regarding the dispute of registered or unregistered firm. They did not consider it proper to consider that the reference to the status under clause (c) can cover the same field. So far as the case of CIT v. Pushpaka Travels [1985] 152 ITR 717 (Ker) is concerned, the provisions of clause (c) of section 246 have not been considered in detail. Their Lordships were discussing the case of ITO v. Vinod Krishna Som Prakash [1979] 117 ITR 594 (All). Their Lordships after discussing the same observed in Pushpaka Travels' case as under [1985] 152 ITR 717 (at p. 724): "As regards the proposition that the refusal to condone the delay which led to the assessment as an unregistered firm could be questioned in an appeal against the assessment order under clause (c), there can be no dispute. But we do not see how an order refusing to condone the delay falls under that clause. " In the above case, their Lordships have clearly held that as regards the proposition that the refusal to condone the delay which led to the assessment as an unregistered firm could be questioned in appeal against the assessment order under clause (c) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) of section 184. So far as subsection (3) of section 185 is concerned, it relates to the filing of the declaration under sub-section (7) of section 184. If the declaration is filed within the prescribed time and there is a defect and the defect is not removed, then the provisions of sub-section (3) of section 185 come into operation and the order refusing continuation of registration may fall within sub-section (3) of section 185, which is appealable under clause (j) of section 246. Sub-section (7) of section 184 provides that where registration is granted to any assessee firm for one assessment year, it shall have effect for subsequent assessment years. There are only two exceptions to that. One is as provided under clause (i) of sub-section (7) relating to the challenge to the constitution of the firm and the second is that as provided under clause (ii) of sub-section (7) of section 184. Sub-section (7) provides that a declaration to that effect, in the prescribed form, should be filed within the prescribed time and if the declaration is not filed, then the Income-tax Officer can allow filing of the declaration at a subsequent stage if he is satisfied that the assessee firm was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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