9911796707
TMI Blog1986 (3) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the accounting year ending on March 31, 1974, and was granted registration for the assessment year 1974-75, the first year of assessment of the firm. The assessee, on January 21, 1975, filed a declaration in Form No. 12 praying for the continuation of registration for the assessment year 1975-76. The declaration was defective in that it was filed before the closing of the relevant accounting year ending on March 31, 1975. The Income-tax Officer rejected the declaration as invalid and declined to grant continuation of registration to the firm. In appeal at the instance of the assessee, the Appellate Assistant Commissioner found that there was no change in the constitution of the firm during the relevant accounting period and in the view that he took that it was not proper to decline the continuance of registration on a purely technical ground that the declaration had been filed a few days prior to the ending of the accounting year, directed the Income-tax Officer to make a fresh assessment treating the assessee as a registered firm. In appeal, at the instance of the Revenue, the Tribunal, following the decision of the Gujarat High Court in CIT v. Trinity Traders [1974] 97 ITR 81 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-sections (1) or (2) of section 139 for furnishing of the return of income for the subsequent assessment year. Counsel for the Revenue points out rule 22 of Part V of the Income-tax Rules, 1962, as per which the declaration under clause (ii) of the proviso to sub-section (7) of section 184 of the Act is to be furnished in Form No. 12. The form requires an affirmation that " there has been no change in the constitution of the firm or the shares of the partners since the last day of the previous year relevant to the assessment year ...... .. Counsel strongly urges that there is a clear purpose in the requirement of the affirmation as stated above in the form prescribed under the rule for the information required is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such intimation. If the defect is not rectified within the said period, the Income-tax Officer is required by order in writing to declare that the registration granted to the firm shall not have effect for the relevant assessment year. The assessee-firm is thus entitled to an opportunity for rectification of defects, if any, in the declaration furnished by him and it is only on his failure to rectify the defect that the registration can be declared as not effective for the year of assessment. The declaration furnished in the present case is defective as it does not relate to the whole of the accounting period and the assessee is entitled to an opportunity under sub-section (3) of section 185 for rectification of the defect. Counsel for the Revenue relies on the decision of the Gujarat High Court in CIT v. Trinity Traders [1974] 97 ITR 81, in support of the proposition that the declaration if not in strict compliance with the requirements of sub-section (7) is no declaration at all and the Income-tax Officer is entitled to proceed on the basis that the firm is not registered for the relevant accounting period. The decision of the Gujarat High Court relates to the interpretatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quent assessment year provided there is no change in the constitution of the firm or the shares of the partners. The declaration under clause (ii) of the proviso is the statutory mode of proof of these requirements for the registration to have effect 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 subsection (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 fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Karnataka High Court. The Patna and the 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. Considering the requirement of the proviso as it stood prior to its amendment, the Patna High Court in the decision in CIT v. Sitaram Bhagwandas [1976] 102 ITR 560, observed at p. 564: " If we look to the spirit and substance of the legislative provision in question, it is clear to me that the term 'along with its return of income' is merely directory and not mandatory. The law must be so construed as to not make it in any way illogical or ridiculous. The spirit of the legislative change was that if the Income-tax Officer while dealing with the assessment of a firm had before him the return filed by the firm and declaration in due form at the time when he was applying his mind to the return, that is, during assessment proceedings, the assessee was entitled to automatic renewal provided for in section 184(7). The Income-tax Officer at the time of assessment, if the assessee wants to avail of the benefit of section 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
