An ITO's order refusing to condone the delay in filing a declaration in Form-12 under Section 184 (7) of the Income Tax Act, 1961, is appealable under section 246(j) of the Act, as it is passed under section 185(3) of the Act and not under section 185(1)(b).

1. Whether I.T.O™s order refusing to condone delay in filing declaration in Form-12 under Section 184 (7) of the Income Tax is appealable under section 246. This is the all-important question posed for our opinion by the Appellate Tribunal. To answer this, it has to be seen whether the crucial order has been passed under Section 184 (7) or under Section 185 (1) (b) or under Section 185 (3). No appeal will lie in the former case as any order passed under section 184 (7) is not appealable under section 246 but it would certainly lie if it is concluded that the order falls under section 185.

2. We are conscious that we are not traversing any virgin field most of the High Courts, barring our court, have already pronounced on the point in issue and held in favour of maintainability of the appeal. All the same it becomes necessary to deal with the matter and answer the reference, though for different reasons, but in a repeat exercise.

3. The facts leading to the controversy are that in respect of assessment year 1974-75 respondent (assessee) field declaration for continuation of registration, beyond the prescribed time. He submitted it on 6.1.1975 when he should have done it by 30th June, 1974. The ITO refused to condone the delay and vide order dated Jan. 8, 1976 treated the assessee as un registered firm. The assessee went in appeal to the AAC and challenged before him only one part of the order i.e. refusal of condonation of delay. The appeal was allowed and ITO directed to condone the delay and grant registration of the firm. The Respondent felt aggrieved and took the appeal to the Tribunal taking the plea that the ITO™s order passed under section 184 (7) was not appealable before the AAC. The Tribunal relying upon 106 ITR 313 rejected the contention holding that as the order refusing condonation of delay amounted to refusal to continue registration, it was thus appealable under section 185(1) (b). The Revenue felt dis-satisfied and sought reference under section 256(1) to this court. Consequently, the tribunal has drawn up a statement of the case and referred the following question for our opinion.

"Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the Income Tax Officer™s order refusing to condone the delay in filing the declaration in the Form: 12 is an order passed under section 185(1) (b) of the Act, 1961 and is appealable under section 246(j) of the Act, 1961?

4. Mr. Thakur LC for Revenue, urged before us that I.T.O™s order should be held to have been passed under proviso 2 to Section 184(7) which empowered him to condone (he delay or lo refuse it in a case where the declaration is filed beyond the prescribed time. Since the ITO had exercised his discretion against the assessee in the present case, his order should be construed to be one passed under aforesaid proviso and as section 246 provided on appeal against such order, it was obviously not appealable. According to him, it would consequently neither fall under section 185 (i) (b) nor under section 185 (3). On analysing the two provisions, he contended that the former dealt with the application seeking registration of the firm for the first time and the letter envisaged rectification of defects in declaration under Form: 12 other than the one related to period of limitation. He submitted that the bar of limitation could not be termed a defect capable of rectification by the assessee and, as such, section 185 (3) had no application in the case.

5. Mr. Gupta, representing the assessee, on the contrary argued that niceties of interpretation of the provisions apart, the net effect of ITO™s order amounted to refusal or registration to the assessee and increase in his tax liability. That being so, the order fell under Section 185 (I) (b) and was appealable. He invited our attention to the relevant order which concludes thus :

I treat the assessee as unregistered firm."

6. It is in this scenario that examination