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1971 Supreme(Del) 346
High Court Of Delhi
SANT LAL KASHMIRI LAL,DELHI - Appellant
Versus
COMMISSIONER OF INCOME-TAX, DELHI - Respondent
I.T.R. 130 of 1968
Decided On : 12/15/1971
A.P.AGGARWAL, ARUN SHARMA, R.L.AGARWAL, RANDHIR CHAWLA, V.Kumar
An appeal lies to the Appellate Assistant Commissioner against an order of the Income-tax Officer refusing to register a firm under Section 185(1)(b) of the Income-tax Act, 1961.
Headnote:
INCOME TAX - Registration of firm - Cancellation of registration - Appeal against order of Income-tax Officer - Whether an appeal lay to the Appellate Assistant Commissioner against the order of the Income-tax Officer dated 19-7-1963.
Fact of the Case:
Two firms, Sant Lal Kashmiri Lal and Sant Lal Kanhiya Lal, were registered under the Income-tax Act, 1922. Kashmiri Lal, one of the partners, died on 21-10-1961. Fresh instruments of partnership were drawn up on 23-10-1961, and the firms were re-constituted. The Income-tax Officer passed an order on 19-7-1963, refusing to register the firms for the assessment year 1962-63, on the ground that there was no genuine firm in existence during the previous year. The assessees appealed to the Appellate Assistant Commissioner, who held that the order was one under Section 186(1) of the Income-tax Act, 1961, and that no appeal lay against it. The Tribunal upheld the order of the Appellate Assistant Commissioner.
Finding of the Court:
The Tribunal erred in holding that the order of the Income-tax Officer was one under Section 186(1) of the Income-tax Act, 1961. The order was in fact made under Section 185(1)(b) of the Act, and an appeal lay to the Appellate Assistant Commissioner under Section 246(j) of the Act.
Issues: Whether an appeal lay to the Appellate Assistant Commissioner against the order of the Income-tax Officer dated 19-7-1963.
Ratio Decidendi: The Income-tax Officer's order was made under Section 185(1)(b) of the Income-tax Act, 1961, which provides for an appeal to the Appellate Assistant Commissioner under Section 246(j) of the Act. The Tribunal erred in holding that the order was made under Section 186(1) of the Act, which does not provide for an appeal.
Final Decision: The question is decided in favour of the assessee, but in the circumstances there will be no order as to costs.
( 1 ) THIS judgment will dispose of two references viz. I. T. R. No. 13 of 1968 and I. T. R. No. 21 of 1968 The assessee in either reference is a partnership frm. In Income-tax Reference No. l3 of 1968, the assessee is a firm named Sant Lal Kashmiri Lal which was constituted under an instrument of partnership dated 20th December 1952 with the following partners and their respective spares :- Kaslimiri Lal. . . . .- /1/6 pies lahori Mal. . . . . .-/1. 00 anna kanhiya Lal. . . . . .-/1/6 pies prahlad Rai. . . . . .-/4. 00 annas saraswati Kumar. . . . . .-/4. 00 annas gyani Ram. . . . . .-/4. 00 annas. The firm as constituted was granted registration for the assessment year 1953-54 and thereafter renewal of registration upto and including the assessement year 1961-62. Kashmiri Lal one of the partners, died on 21-10-1961 within the previous year, relevant to the assessment year 1962-63. On 30-11-1962 a return of income for the firm showing the total income during the previous year ended on 8-11-1961, was filed with the,lncome-tax Officer. It was received by the Income-tax Officer or 1-12-1962.
( 2 ) IN Part lll (b) of the return of the income the names of the partners of the firm were:-Saraswati Kumar, Giani Ram, Prahlad Rai, Kashmir! Lal, Kanhiya Lal and Lahori Mal. in column 3 of the table as prescribed in Part lll (b) of the return the extent of share of the various partners were given as follows:- 12. 5 months 15 days saraswali Kumar -/4. 00 25 np. Giani Ram -/4. 00 25 np. Prahlad Rai -/4. 00 20 np. Kashmiri Lal -/1/6 kanhiya Lal -1/6 15 np. Lahori Mal -/1. 00 15 np. In part VII of the return of income also the assessees stated that the profit or loss as per profit and loss account was for the period ending 8-11-1961. Along with the return the assessee filed a declaration in Form 12 dated 16-11-1962. The note below the declaration indicated that the words "or to the date (. . . . . . . . . . . . 19 ) of dissolution of the firm" were applicable only if the firm had been dissolved before the date of this declaration. The date as required in this form of declaration was not filled in. The declaration was signed by the remaining five partners i. e. Saraswati Kumar, Giani Ram, Prahalad Rai, Kanhiya Lal and Lahori Mal. Consequent upon the death of Kashmiri Lal on 21-10-1961 a fresh instrument of partnership was drawn on 23-10-1961, parties to which were Lahori Mal, Kanhiya Lal Prahled Rai, Saraswati Kumar, and Giani Ram. The pre-amble to this deed recited that consequent upon the death of Kashmiri Lal on 21-10-1961 the firm was dissolved and the aforesaid partners had agreed to carry on and conduct business in partnership. Para 6 of the instrument of partnership lays down that the firm shall take over and continue the old business of Sant Lal Kashmiri Lal and shall record its transactions in the books of the old firm which for the sake of convenience, had been taken over as such. It was also agreed that the accounts of the Business shall be closed as hitherto done on Diwali, For the accounts closed on Diwali Samvat 2018 corresponding to 8-11-1961, the net profit was to be ascertained and the proportionate profit calcutated on time basis upto the date of death of Kashmiri Lal i. e. 21-10-1961 was to be credited and adjusted in the respective partners accounts of the old firm in accordance with their profit sharing ratio.
( 3 ) IN Income-tax Reference No. 21 of 1968 the name of the firm was Sant Lal Kanhiya Lal which was constituted under an instrument of partnership dated 23. 10. 1957. Thepre-ambleto instrument of partnership stated that Lahori Mal, Kashmiri Lal and Kanhiya Lal had been carrying on the business of grain merchants and commission agents under the name and style of Sant Lal Kanhiya Lal under an instrument of partnership dated 15-12-1945 and they had expressed their desire to take Prahlad Rai as a partner in the said running business and Prahlad Rai had agreed to be partner under the terms and
