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TMI Blog1974 (9) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... its total income on 30th June, 1964, along with a declaration in Form No. 12 for renewal of the registration under section 184(7). It appears that the assessee further filed an application for registration in Form No. 11 on July 7, 1968, along with a copy of the partnership deed. The Income-tax Officer concerned considered only the application made in Form No. 11 which was filed for purposes of obtaining registration. Since the original partnership deed was not annexed with the said form, the Income-tax Officer called upon the assessee to show cause why registration should not be refused. On behalf of the assessee, it was contended before the Income-tax Officer that the assessee had filed registration application in time through its income-tax practitioner to whom the work was entrusted ; but as the assessee was not aware of the technicalities since the partners had migrated to India from Aden, the assessee had made an application for obtaining the registration in Form No. 11. The Income-tax Officer, however, in the absence of any evidence, refused to condone delay in filing the application and treated the firm as unregistered firm. The assessee, therefore, carried the matter in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Circular bearing No. 3-P (XXV-22) of 1964, dated the 29th July, 1964, by the Central Board of Direct Taxes, New Delhi, on which the Tribunal relied for purposes of its finding that the Income-tax Officer did not give an opportunity to the assessee concerned for purposes of making a proper application according to the departmental practice indicated in the aforesaid circular was also not justified, inasmuch as the circular applied only to those cases where application for registration by a firm for any assessment year was pending and a declaration for continuation of such registration under section 184(7) of the Income-tax Act, 1961, was sought for. Since it is an admitted position here that there was no registration application made on behalf of the assessee-firm in the previous assessment years, there was no question of application of the circular in question. The only question to which we have, therefore, to address ourselves is, whether an appeal is competent against the order of the Income-tax Officer refusing to condone delay under section 184(4) ? The provisions as to the registration of a firm and the procedure to be adopted by the taxing authorities on the applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edure, which the Income-tax Officer has to follow on receipt of the application, is prescribed in section 185. On receipt of an application, the Income-tax Officer has to inquire about the two facts, namely, (1) genuineness of the firm, and (2) its constitution, as may be specified in the instrument. If on such inquiry he is satisfied that there is or was during the previous year in existence a genuine firm with the constitution so specified, he will grant registration ; if he is not satisfied, he will pass an order refusing to grant registration. By sub-section (2) of section 185, it has been made obligatory on the Income-tax Officer that he would not reject an application for registration merely on the ground that such application is not in order, but he is required to indicate the defect to the assessee and give an opportunity to rectify such defect. In spite of this opportunity, if the assessee does not rectify the defect, the Income-tax Officer may reject the application for registration. If the Income-tax Officer grants registration, he is required to record a certificate on the instrument of partnership or on the certified copy submitted in lieu of the original instrument, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or registration was made by the tax consultant in the preceding assessment years on behalf of the assessee-firm. Clearly, therefore, the Tribunal was not justified for purposes of finding out what is the departmental practice in this connection to rely on the aforesaid circular. None-the-less the question remains, whether an appeal against the order refusing to condone delay is competent or not. In this connection, we have to read the provisions contained in section 185(1)(a) and (b) which prescribe the procedure to be followed by the Income-tax Officer on receipt of an application for registration. The Income-tax Officer has to scrutinise the application for purposes of satisfying himself as to the fact of genuineness of the firm and its constitution. He may satisfy himself by considering the original instrument and the application filed for registration containing the prescribed particulars. The result of his inquiry may be that he may be satisfied about the genuineness of the firm and its constitution, or he may not be satisfied about these two points. If he is satisfied, he grants the registration. If he is not satisfied that there is or was during the previous year in existenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time being in force relating to income-tax or super-tax. Under sub-section (2) of section 26A of the 1922 Act, such application was to be made by such person or persons and at such time or times and containing such particulars and in such form and verified in such manner as may be prescribed, and was to be dealt with by the Income-tax Officer in such manner as prescribed. Rule 3 of the Indian Income-tax Rules, 1922, prescribed the particulars which were to be furnished in the application for registration and the time within which such application was to be made. A proviso similar to the one contained in section 184(4) is also to be found in rule 2 of the Indian Income-tax Rules, 1922, where the Income-tax Officer was empowered to entertain an application made after expiry of time limits specified in the rule if he was satisfied that the firm was prevented by sufficient cause from making the application within the specified time. Rule 4 of the said rules prescribed the procedure which the Income-tax Officer had to follow on receipt of such an application. If the Income-tax Officer was satisfied that there was a firm in existence constituted as shown in the instrument of partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides for effectiveness of the registration granted to any firm for any assessment year for every subsequent year on the satisfaction of the conditions mentioned in the proviso to the said sub-section (7). The registration granted in any assessment year is effective for that assessment year only and it would have been so but for the provision contained in sub-section (7) of section 184. In order that a registration once granted to the firm may continue to be effective for the subsequent year, a provision is made in sub-section (7) where for effective continuance of the registration two conditions have been prescribed as to absence of change in the constitution of the firm or shares of the partners and a declaration to that effect accompanying the return. The order granting a declaration that registration continues to be effective is not the same as an order refusing registration. The decision of the Allahabad High Court, therefore, in our opinion, cannot be of much assistance to the cause of the revenue before us in this reference. Our attention has been drawn by the learned advocate, Mr. K. C. Patel, who assisted us on behalf of the assessee who was unrepresented, that the amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (j) has, however, been amended with effect from April 1, 1971, to make it clear that in cases (1) and (2) above, there is a right of appeal. In other cases also, a liberal construction of section 185(1)(b) should be taken and the view preferred that there is a right of appeal also in such cases ........ " It, therefore, appears clear to us that there were no justifying reasons for Parliament to depart materially from the scheme which was available under the Act of 1922 and when some doubts have been raised as to whether appeals are competent against orders under section 184(7) or section 185(2) or (3), Parliament has by clarificatory legislation made those orders appealable. In that view of the matter, therefore, on the plain reading of section 185(1)(b), we are of the opinion that the Tribunal was right in holding that appeal against the order refusing to condone delay under section 184(4) and consequently refusing registration was competent. The result, therefore, is that for the reasons stated in this judgment, the first question is answered in the negative and against the revenue. As to the second question referred to us, Mr. Kaji was right when he contended that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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