A declaration filed under Section 184(7) of the Income Tax Act, 1961, claiming continuance of registration for a firm, is of no avail if it is not filed along with the return of income.

JUDGMENT :

G.K. Misra, C.J. - Undisputed facts are that the assessee was granted registration u/s 26A of the Indian Income Tax Act, 1922 (hereinafter to be referred to as "the old Act"), till the assessment year 1961-62. It did not file its returns for the accounting year ending in Diwali on October 19, 1961, u/s 139 (1) or (4) of the Income Tax Act, 1961 (hereinafter to be referred to as "the new Act"). Best judgment assessment was completed u/s 144 of the new Act for the assessment year 1962-63. The status of the assessee was determined as an " unregistered firm ". The assessee filed a declaration u/s 184(7) of the new Act in Form No. 12 on June 28, 1962. The due date for filing of return of income was June 30, 1962. No return was, however, filed. The new Act came into force on April 1, 1962.

2. The assessee's stand was that the firm being registered up to and including the assessment year 1961-62, it was required only to file a declaration in Form No. 12 u/s 184(7) and the assessee having filed such a declaration the Income Tax Officer was not correct in treating the status as an " unregistered firm" by cancelling the registration even though he made the assessment for the assessment year 1962-63 u/s 144 of the new Act for non-filing of the return.

3. The stand taken by the revenue was that the declaration u/s 184(7) is of no avail unless the assessee was first granted registration under the new Act. The assessee not having been registered under the new Act the declaration by itself would not confer the status of a registered firm. Further, the assessee not having filed the return, the declaration is of no avail and the Income Tax Officer was justified in taking the status as an " unregistered firm ".

4. Against the order of the Income Tax Officer completing the assessment u/s 144 the assessee filed an appeal u/s 246(c) of the new Act before the Appellate Assistant Commissioner challenging the status. The appeal was dismissed. The Income Tax Appellate Tribunal in second appeal remanded the case as evidence of filing of declaration u/s 184(7) was produced. The Appellate Assistant Commissioner after remand by his order dated March 31, 1970, allowed the appeal and directed the Income Tax Officer to register the firm.

5. The revenue carried a second appeal and advanced the following contentions :

(i) The appeals against quantum challenging assessment and refusal of the Income Tax Officer to allow registration were two distinct and separate matters. The Appellate Assistant Commissioner exceeded his jurisdiction in dealing with registration while disposing of an appeal filed against quantum.

(ii) There being no application by the assessee for registration no registration could be granted.

(iii) The assessee not having filed return the declaration dated June 28, 1962, cannot be utilised for continuance of registration and the declaration was not valid in law.

6. The Income Tax Appellate Tribunal held that as no registration had been granted u/s 184 of the new Act the question of granting continuance of the registration u/s 184(7) does not arise. The Tribunal did not go into the question as to whether the declaration is valid without it being filed along with the return.

7. At the instance of the assessee the reference has been made u/s 256(1) of the new Act and the following question of law has been referred :

" Whether, in the facts and circumstances of the case, the Tribunal was justified in holding that the declaration filed by the assessee u/s 184(7) of the Income Tax Act, 1961, for the assessment year 1962-63, claiming continuance of registration for that year is of no avail, and as there has been no application for registration in accordance with Section 184 of the Income Tax Act, 1961, claiming registration, the status of the assessee has to be correctly taken as ' unregistered firm ' ? "

8. The question referred is in two parts. The first part is whether the Tribunal was justified in holding that the declaration filed by the assesse