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1982 Supreme(Pat) 173
PATNA HIGH COURT
S.K.Jha and A.K.Sinha JJ.
Madhur Jalpan
Versus
Commissioner Of Income Tax
Taxation Case No. 105 of 1975 ;
Decided On : DECEMBER 18, 1982
THE RIGHT OF APPEAL UNDER SEC.246(C) OF THE ACT AGAINST THE STATUS TAKEN IN THE ASSESSMENT ORDER WILL INCLUDE THE STATUS TAKEN AS U.R.F. (UNREGISTERED FIRM).
Headnote:
INCOME TAX - APPEAL - STATUS - REGISTERED FIRM OR UNREGISTERED FIRM - WHETHER RIGHT OF APPEAL UNDER SEC.246(C) OF THE ACT INCLUDES THE STATUS TAKEN AS U.R.F. (UNREGISTERED FIRM) - YES - EXPLANATION (2) TO SEC.143 OF THE ACT, INSERTED WITH EFFECT FROM 1ST APRIL, 1971, IS EXHAUSTIVE AND SPECIFICALLY DEALS WITH THE QUESTION OF STATUS OF A FIRM WHICH HAS BEEN LEFT AMBIGUOUS IN SEC.2(31) AND AS LAYING DOWN THAT IN THE CASE OF AN ASSESSEE BEING AGGRIEVED BY THE QUESTION OF ITS STATUS HAVING BEEN DETERMINED, IF THE ASSESSEE WERE A FIRM, THE TERM "STATUS" WOULD ALSO MEAN THE FIRM BEING TREATED EITHER AS A REGISTERED OR AN UNREGISTERED FIRM.
Fact of the Case:
THE ASSESSEE WAS TREATED AS A REGISTERED FIRM UP TO THE ASSESSMENT YEAR 1970-71. FOR THE ASSESSMENT YEAR 1971-72, A DECLARATION IN FORM NO. 12 AS REQUIRED UNDER SECTION 184(7) OF THE ACT WAS SUBMITTED ON JULY 31, 1971, ALONG WITH THE RETURN. THE ITO TOOK THE STATUS OF THE ASSESSEE AS AN UNREGISTERED FIRM SINCE NO APPLICATION FOR EXTENSION OF TIME FOR FILING THE RETURN WAS FILED. THE ASSESSEE PREFERRED AN APPEAL TO THE AAC DISPUTING, AMONGST OTHERS, THE STATUS TAKEN BY THE ASSESSING OFFICER AS AN UNREGISTERED FIRM. THE AAC CONFIRMED THE ASSESSMENT. THE ASSESSEE PREFERRED A FURTHER APPEAL TO THE TRIBUNAL WHICH AGREED WITH THE ORDER OF THE AAC THAT THE STATUS WAS AS GIVEN IN SEC.2(31) OF THE ACT AND THE SAME COULD NOT BE THE SUBJECT-MATTER OF AN APPEAL UNDER SEC.246(C) OF THE ACT AND, THEREFORE, THE APPEAL IN THAT REGARD WAS NOT MAINTAINABLE.
Finding of the Court:
THE TRIBUNAL MISDIRECTED ITSELF ON A PURE QUESTION OF LAW AND HAS NOT TAKEN NOTICE OF EXPLANATION (2) TO SEC.143 OF THE ACT, WHICH CAME INTO EXISTENCE FOR THE FIRST TIME ON THE STATUTE BOOK IN THE YEAR 1971 HAVING BEEN MADE EFFECTIVE FROM THE 1ST OF APRIL, 1971. EXPLANATION (2) TO SEC.143 OF THE ACT READS AS "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 SEC.2, AND WHERE THE ASSESSEE IS A FIRM, ITS CLASSIFICATION AS A REGISTERED FIRM OR AN UNREGISTERED FIRM".
Issues: WHETHER, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE RIGHT OF APPEAL UNDER SEC.246(C) AGAINST THE STATUS TAKEN IN THE ASSESSMENT ORDER WILL INCLUDE THE STATUS TAKEN AS U.R.F. (UNREGISTERED FIRM) ?
Ratio Decidendi: THE EXPLANATION TO SEC.246 OF THE ACT IS IN NO WAY EXHAUSTIVE BUT MERELY ILLUSTRATIVE, ON THE VERY PLAIN LANGUAGE OF IT, FOR, AFTER SAYING THAT THE STATUS MAY INCLUDE AN ASSESSEE AS AN INDIVIDUAL OR AN HUF AND SO ON, IT CONTEMPLATES THAT THERE MAY BE OTHER CATEGORIES UNDER WHICH THE ASSESSEE IS ASSESSED, WHICH MAY AMOUNT TO A STATUS BESTOWED BY THE ACT UPON SUCH AN ASSESSEE. EXPLANATION (2) TO SEC.143 OF THE ACT IS EXHAUSTIVE AND SPECIFICALLY DEALS WITH THE QUESTION OF STATUS OF A FIRM WHICH HAS BEEN LEFT AMBIGUOUS IN SEC.2(31) AND AS LAYING DOWN THAT IN THE CASE OF AN ASSESSEE BEING AGGRIEVED BY THE QUESTION OF ITS STATUS HAVING BEEN DETERMINED, IF THE ASSESSEE WERE A FIRM, THE TERM "STATUS" WOULD ALSO MEAN THE FIRM BEING TREATED EITHER AS A REGISTERED OR AN UNREGISTERED FIRM.
Final Decision: THE QUESTION REFERRED TO THIS COURT IS ANSWERED IN THE AFFIRMATIVE, IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. THE MATTER SHOULD NOW GO BACK TO THE TRIBUNAL FOR PASSING APPROPRIATE ORDERS FOR DISPOSAL OF THE APPEAL BY THE AAC ON MERITS EVEN WITH REGARD TO THE STATUS OF THE ASSESSEE.
1. Pursuant to a reference under Sec.256(1) of the I.T, Act, 1961 (hereinafter to be referred to as "the Act"), the Income-tax Appellate Tribunal, B Bench, Patna, has referred the following question for the opinion of this court:
"Whether, in the facts and circumstances of the case, the right of appeal under Sec.246(c) against the status taken in the assessment order will include the status taken as U.R.F. (unregistered firm) ?"
2. The facts are not much in dispute. As would appear from the statement of the case, as submitted by the Tribunal, the relevant facts are these. Up to the assessment year 1970-71, the assessee was treated as a registered firm. For the assessment year 1971-72, a declaration in Form No. 12 as required under Section 184(7) of the Act was submitted on July 31, 1971, along with the return. In the course of the assessment proceedings, the ITO observed that the assessee had not filed any application for extension of time for filing the return which was due on 30th June, 1971. Hence, the ITO took the status of the assessee as an unregistered firm. A copy of the order of the ITO has been marked annex. A forming part of the statement of the case.
3. Aggrieved by the assessment order, the assessee preferred an appeal to the AAC disputing, amongst others, the status taken by the assessing officer as an unregistered firm on the ground that the ITO was wrong in observing that no application in Form No. 6 was filed for extension of time though it was filed and Form No. 12 was duly filed within the time prayed for. The AAC by his order dated 3rd October, 1972, confirmed the assessment. With regard to the objection regarding the status taken as an unregistered firm, the first appellate court held that the registration was not a matter of status and, accordingly, he was not competent to hear the appeal on this point and the appeal against the order under Sec.143(3) of the Act was not maintainable against that part of the order treating the assessee as an unregistered firm. A copy of the appellate order of the AAC has been annexed as annex. B to the statement of the case.
4. The petitioner, being aggrieved by the appellate order, preferred a further appeal to the Tribunal which by its order dated 25th April, 1974, accepted the book result of the assessee on merits but, with regard to the status of the assessee as having been taken as an unregistered firm, it agreed with the order of the AAC that the status was as given in Sec.2(31) of the Act and the same could not be the subject-matter of an appeal under Sec.246(c) of the Act and, therefore, the appeal in that regard was not maintainable. A copy of the Tribunals order has been appended as annex. C to the statement of the case.
5. On the above facts, the question of law, as extracted above, has been referred for the opinion of this court. For all practical purposes, therefore, so far as this case is concerned, we have merely to consider the question as to whether an appeal with regard to the status of an assessee either as a registered firm or as an unregistered firm having been found by the assessing officer could be the subject-matter of appeal or not and as to whether, therefore, the appeal was maintainable in that regard.
6. The point is very short and simple. And, for the reasons hereinafter to be recorded, the case has to be decided against the Revenue and in favour of the assessee.
7. It is worthwhile to mention here that Sec.2(31) of the Act defines merely a person as including, (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or 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. It would thus be found that the definition of the term "person" is not exhaustive which is merely inclusive--not all pervasive. In this context, it may also be worthwhile to point out that the very i
