An order rejecting a declaration u/s 184(7) of the Income Tax Act, 1961 on the grounds of limitation is not an order u/s 185(3) of the Act and is not appealable.

JUDGMENT :

S.C. Mohapatra, J. - This is a reference u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), at the instance of the assessee.

2. The assessee is a firm. Since the assessment year 1965-66 it was enjoying the benefit of registration granted u/s 185(1)(a) of the Income Tax Act. In respect of the subsequent years, this registration had its effect as the assessee was filing the declaration as provided u/s 184(7) of the Act.

3. In respect of the assessment year 1978-79, the assessee was required to file the declaration before July 31, 1978, the time allowed u/s 139(1) of the Act for furnishing the return of income for the subsequent assessment year. Within that period the assessee did not file the declaration and, after expiry of the time, a declaration was filed u/s 184(7) of the Act on August 28, 1978. Along with such declaration, no explanation for the delay was furnished. Later on, however, an application was filed explaining that the partners of the firm were engaged in arbitration cases and in obtaining loans for the purpose of continuing the business. The Assessing Officer was not satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time allowed.

4. Accordingly, the declaration was not accepted. The operative portion of the order is as follows :

"As the declaration in Form No. 12 has not been filed within the time allowed and the delay has not been satisfactorily explained, renewal of registration is not allowed for this year. Accordingly, the status of the firm is taken as unregistered firm."

5. This order dated March 24, 1979, was described to be one u/s 185(3) of the Act. In view of such description, the assessee preferred an appeal as provided u/s 246(1)(j) of the Act, The Appellate Assistant Commissioner held that the explanation offered indicates that the firm was prevented by sufficient cause from furnishing a declaration within the time so allowed. He directed the Income Tax Officer to allow registration to the firm. Against the appellate order, the Revenue preferred an appeal before the Income Tax Appellate Tribunal, Cuttack Bench, where, amongst other grounds, it was urged that an appeal before the Appellate Assistant Commissioner was not maintainable u/s 246 of the Act since the order passed was not u/s 185(3) of the Act.

6. Relying upon two depisions of this court in New Orissa Traders Vs. Commissioner of Income Tax, and Commissioner of Income Tax Vs. Pohop Singh Rice Mill the Tribunal accepted the contention of the Revenue and it held that an appeal before the Appellate Assistant Commissioner was not main tainable. Accordingly, the appellate order was reversed and the order of the Income Tax Officer was restored, The assessee filed an application u/s 256(1) of the Income Tax Act. On that basis, a statement of case has been made to this court by the Income Tax Appellate Tribunal for decision in accordance with our opinion on the following questions of law :

"(i) Whether the order of the Income Tax Officer, though labelled as an order u/s 185(3), was in fact an order u/s 184(4) ?

(ii) Whether the aforesaid order was an appealable one ?"

7. Mr. R. Sharma, learned counsel for the assessee, submitted that the order passed by the Income Tax Officer was one u/s 185(3) of the Act and, as such, is appealable u/s 246(1)0) of the Act as it stood then. Mr. Sharma further submitted that in case the order of the Income Tax Officer is not appealable, no second appeal would lie to the Income Tax Appellate Tribunal and interference by the Tribunal would be without jurisdiction.

8. Mr. Sharma relied upon the decision of the Supreme Court in Mela Ram and Sons Vs. The Commissioner of Income Tax Punjab and submitted that an order rejecting the declaration u/s 184(7) of the Act on the grounds of limitation is appealable as an order decided on merits. Mr. Sharma submitted that a declaration furnished in pursuance of Section 184(7) being not in order on account o