Delay in filing a declaration u/s 184(7)(ii) of the Income Tax Act, 1961, cannot be considered a defect within the meaning of Section 185(2) of the Act, and consequently, an order rejecting such a declaration does not amount to an order u/s 185(3) of the Act.

JUDGMENT :

R.N. Misra, J. - The Cuttack Banch of the Income Tax Appellate Tribunal has stated this case at the instance of the revenue and the following question has been referred for opinion of this court :

"Whether, on the facts and in the circumstances of the case, a declaration filed beyond the time prescribed u/s 184(7)(ii) of the Income Tax Act, 1961, could be considered to be not in order within the meaning of Section 185(2) of the Act and, consequently, the order of the Income Tax Officer rejecting such a declaration amounts to an order passed u/s 185(3) of the Act ?"

2. The short facts relevant for the disposal of this reference are these : Assessee is a firm which had been granted registration earlier to the assessment year 1971-72. For the relevant assessment year, i.e., 1971-72, the assessee filed a declaration u/s 184(7) of the Act on October 15, 1971, though under the law the declaration was required to be filed along with a return which became duo on 30th of June, 1971. No extension for the filing of the return having been obtained from the ITO, the declaration was, admittedly, filed beyond time. The delay was not condoned and the ITO refused to continue the registration.

3. An appeal was carried to the AAC, but he refused to entertain the same on the ground that an order u/s 184(7) of the Act was not open to appeal u/s 246 of the Act.

4. On assessee's further appeal to the Tribunal, it was contended that the AAC had overlooked the amendment to Section 246(j) which had specifically provided for an appeal against the order of the ITO u/s 185(3) of the Act. It was further submitted that Section 184 did not provide the procedure for disposing of the various matters for which provision was made therein and Section 185 laid down the procedure. Refusal to allow the benefit of registration virtually came u/s 185(3) of the Act and as Section 246(j) provides an appeal against such an order, the AAC was wrong in refusing to exercise jurisdiction. On behalf of the revenue, it was contended that Section 185(3) applied to a case where the defect was otherwise than pertaining to delay and as such Section 185(3) of the Act had no application.

5. The Tribunal found that there was no provision for rectification relating to the declaration filed u/s 184(7) of the Act prior to the amendment which came into force with effect from April 1, 1971, and the phrase, "not in order" need not be limited to the defects in the application other than being out of time. Accordingly, the Tribunal came to hold that the first appeal lay and after restoring the appeal directed the AAC to dispose of the appeal on merits. The revenue assails the finding of the Tribunal that an appeal lay against the impugned order.

6. There is a Bench decision of this court on the point, being the case of New Orissa Traders Vs. Commissioner of Income Tax. After referring to two Madras decisions in the cases of Pannalal Ramkumar & Co. v. ITO [1970] 75 ITR 300 and A.S.S.S.S. Chandrasekaran and Brothers Vs. The Commissioner of Income Tax, Madras this court stated (p. 555):

"The position, therefore, would be that when an application is rejected as being out of time, the order is one u/s 184(4) and not u/s 185 of the Act. The consequence of this position is that the appeal of the assessee before the Appellate Assistant Commissioner was not maintainable."

7. Learned standing counsel places reliance on this decision and maintains that what was said in regard to a case of first registration coming within the ambit of Section 184(4) of the Act equally applies to an application u/s 184(7) after amendment. He further argues that the Tribunal while disposing of the appeal did not have the advantage of this court's view as by then the judgment had not been reported. It is contended that the Tribunal's decision is contrary to the "court's opinion and, therefore, the reference should be answered in favour of the revenue.

8. Mr. Mohanty for the assessee while not seriously challenging the cor