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TMI Blog1984 (8) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... October 23, 1967, an application for registration along with a partnership deed. The relevant accounting period of the assessee ended on May 11, 1967. As such the application for registration was submitted beyond the time prescribed under s. 184(4). The assessee was asked by the ITO, " A " Ward, Chittorgarh, who was the assessing authority, to explain the delay. The reason given by the assessee, in his reply for the delay which took place in filing the application for registration, was that one of the partners of the assessee-firm, Shri Roop Narain, was reluctant to sign the partnership deed and as he signed the said deed very late, the delay was caused in filing the application for registration. The ITO, by his order dated December 13, 1971, held that the reason furnished by the assessee for the delay in filing the application for registration was not convincing and as such he refused to condone the said delay. The assessing authority also held that the firm was not genuinely constituted during the accounting period. He, therefore, refused to register the firm and rejected the application for registration and directed that the assessee be assessed to tax in the status of an unreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income-tax authorities on receiving an application for registration are contained in ss. 184 and 185 of the Act, which are as under : "184. (1) An application for registration of a firm for the purposes of this Act may be made to the Income-tax Officer on behalf of any firm, if (i) the partnership is evidenced by an instrument ; and (ii) the individual shares of the partners are specified in that instrument. (2) Such application may, subject to the provisions of this section, be made either during the existence of the firm or after its dissolution. (3) The application shall be made to the Income-tax Officer having jurisdiction to assess the firm, and shall be signed- (a) by all the partners (not being minors) personally; or (b) in the case of a dissolved firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased. 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 a person entitled under law to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the firm and its constitution as specified in the instrument of partnership, and (a) if he is satisfied that there is or was during the previous year in existence a genuine firm with the constitution so specified, he shall pass an order in writing registering the firm for the assessment year; (b) if he is not so satisfied, he shall pass an order in writing refusing to register the firm. Explanation.-For the purposes of this section and section 186, a firm shall not be regarded as a genuine firm if any partner of the firm was, in relation to the whole or any part of his share in the income or property of the firm, at any time during the previous year, a benamidar-- (a) of any other partner to whom the first-mentioned partner does not stand in the relationship of a spouse or minor child, or (b) of any person, not being a partner of the firm, and any of the other partners knew or had reason to believe that the first-mentioned partner was such benamidar and such knowledge or belief had not been communicated by such other partner to the Income-tax Officer in the prescribed manner. " The assessee-firm was to make an application to the ITO concerned for ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application for registration. The ITO is also authorised to refuse to register a firm for the assessment year, if there is any failure on the part of the assessee as specified in s. 184. An appeal was provided in cl. (j) of s. 246 at the relevant time against an order refusing to register a firm passed under clause (b) of sub-s. (1) or sub-s, (5) of s. 185. However, the provisions of clause (j) of s. 246 have since been amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. On account of the aforesaid amendment, the orders passed by the ITO refusing to register a firm under sub-s. (2) or sub-s. (3) of s. 185 have also been made appealable under the said clause (j) of s. 246 along with the orders passed under clause (b) of sub-s. (1) or sub s. (5) of s. 185. Thus, an appeal would be maintainable against an order refusing to register a firm on the ground of delay in filing the application for registration beyond the prescribed time, in case such an order may fall within the four corners of clause (b) of sub-s. (1) of s. 185. The contention which has been advanced on behalf of the Revenue before us is that the only scope of enquiry under s. 185(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t hath resolved and appointed to cure the disease of the common law; (4) the true reason of the remedy. And then the office of all the judges is always to make such construction as shall suppress the mischief and advance the remedy, and to suppress subtle inventions and evasions for the continuance of the mischief and pro privato commodo, and to add force and life to the cure and remedy according to the true intent of the makers of the Act pro bono publico. " Thus, the prior legislation and the judicial intepretation thereof must be taken into consideration while interpreting the provisions of an Act of Parliament. In the Indian I.T. Act, 1922, under s. 30, an appeal was provided against an order refusing to register a firm under s.26A, which provided the procedure for registration of a firm. The application for registration was to be made by the firm at such time and containing such particulars and in such form and verified in such manner as was prescribed and the ITO was required to deal with such an application in such manner as was prescribed. Rule 3 of the Indian I.T. Rules, 1922, prescribed the particulars which were to be furnished in the application for registration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e delay and consequently refusing the registration of a firm fell under the four corners of sub-s. (1)(b) of s. 185 and an appeal in respect of such an order was competent under clause (j) of s. 246. In Mela Ram and Sons v. CIT [1956] 29 ITR 607 (SC), a similar question as has been raised before us, was raised before their Lordships of the Supreme Court and it was argued that under s. 31(3)(a) of the 1922 Act, the AAC was conferred jurisdiction only to pass an order on the merits of the assessment and it was not open to him to entertain any question which did not directly relate to the merits of the case and he could not hear and decide any question of preliminary nature, such as limitation. Their Lordships of the Supreme Court held that such a construction of the provisions of s. 31(3)(a) was too literal and that there was abundant authority for the proposition that a right of appeal should be liberally construed so as to include not only orders passed on a consideration of the merits of the assessment but also orders which dispose of preliminary issues, such as limitation and the like. The question which was raised in Mela Ram's case [1956] 29 ITR 607 (SC) was as to whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers made under IT. 6A and 6B of the 1922 Rules, refusing to renew the registration and also cancelling the certificate so renewed. In Sant Lal Kashmiri Lal v. CIT [1972] 86 ITR 76 (Delhi), the ITO failed to provide an opportunity to the assessee to rectify the defects in the application for registration and the application for registration was rejected. It was held by the Delhi High Court that the order passed by the ITO refusing to register a firm without giving an opportunity to the assessee to rectify the defect would fall under cl. (b) of sub-s. (1) of s. 185 and it is open to appeal under cl. (j) of s. 246. The view which we have taken above was also taken by the Gujarat High Court in CIT v. Dineshchandra Industries [1975] 100 ITR 660 the Andhra Pradesh High Court in Addl. CIT v. Chekka Ayyanna [1977] 106 ITR 313, the Punjab and Haryana High Court in CIT v. Beri Chemical Industries [1980] 121 ITR 87 and the Kerala High Court in CIT v. Tirur Medical Hall [1980] 126 ITR 395 and following the decision of their Lordships of the Supreme Court in Mela Ram's case [1956] 29 ITR 607 and Hukamchand Mannalal's case [1966] 60 ITR 99, it was held that an appeal lay against an order ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application was filed beyond the period of limitation fell under s. 185(1)(b) and appeal lay against such an order. It was also emphasised by their Lordships of the Madhya Pradesh High Court in Durgaprasad Rajaram's case [1982] 134 ITR 601, that in the matter of construction of a statute like the I.T. Act, which is of all India application, it was necessary that there should be uniformity as far as possible amongst the different High Courts. It was also observed that the statutory provision conferring a right of appeal, in case of doubt, should be liberally construed. A discordant note was, however, struck by the Madras High Court in Chandrasekaran and Brothers v. CIT [1974] 96 ITR 711 and the Orissa High Court in New Orissa Traders v. CIT [1977] 107 ITR 553 and a contrary view was taken in those cases. So far as the decision of the Orissa High Court in New Orissa Traders' case is concerned, only the decisions of the Madras High Court in Panna Lal Ramkumar's case [1970] 75 ITR 309 and Chandrasekaran's case [1974] 96 ITR 711, appear to have been brought to the notice of their Lordships of the Orissa High Court and the decisions of the Gujarat, Andhra Pradesh, Punjab and Haryana, Al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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