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1979 Supreme(P&H) 90
PUNJAB & HARYANA HIGH COURT
Rajendra Nath Mittal and J.V.Gupta JJ.
Commissioner Of Income-tax
Versus
Mothooram Premchand
Income tax Reference No. 85 of 1974,86 of 1974,88 of 1974,89 of 1974,
Decided On : MAY 22, 1979
An order passed on a declaration under Section 184(7) of the Income-tax Act, 1961, refusing to allow continuation of registration to a firm, is appealable under Section 246(j) of the Act, since it amounts to refusal to grant registration.
Headnote:
INCOME TAX - Registration of firm - Continuation of registration - Appeal against refusal to renew registration - Maintainability - Order passed on declaration under Section 184(7) of the Income-tax Act, 1961, refusing to allow continuation of registration to a firm is appealable under Section 246(j) of the Act, since it amounts to refusal to grant registration.
Fact of the Case:
The assessee-firm filed an application for registration under Section 184(7) of the Income-tax Act, 1961 (hereinafter referred to as "the 1961 Act") for the assessment year 1968-69. The ITO rejected the application on the ground that the registration of the firm had been refused for the assessment year 1967-68. The assessee-firm filed an appeal before the AAC, who dismissed it on the ground that it was not maintainable. The assessee-firm then filed an appeal before the Income-tax Tribunal, which held that an appeal was maintainable before the AAC against the order of the ITO refusing to renew registration under Section 184(7) of the 1961 Act.
Finding of the Court:
The Tribunal was right in holding that an appeal was maintainable before the AAC against the order of the ITO refusing to renew registration under Section 184(7) of the 1961 Act. The order passed on the declaration under Section 184(7) of the 1961 Act, refusing to allow continuation of registration to a firm, is appealable under Section 246(j) of the Act, since it amounts to refusal to grant registration.
Issues: 1. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly directed the Income-tax Officer to take the status of the assessee as registered firm for the assessment year 1968-69? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that an appeal was maintainable before the Appellate Assistant Commissioner against the order of the Income-tax Officer refusing to renew registration under Section 184(7) of the Income-tax Act, 1961?
Ratio Decidendi: The order passed on the declaration under Section 184(7) of the 1961 Act, refusing to allow continuation of registration to a firm, is appealable under Section 246(j) of the Act, since it amounts to refusal to grant registration. The provisions of Section 184(7) have already been reproduced above. According to the said sub-section, the registration shall have effect for a subsequent assessment year if the firm furnishes within a specified period a declaration to the effect that there was no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted.
Final Decision: Question No. 1 is decided in the negative, that is, in favour of the revenue and question No. 2 is decided in the affirmative, that is, in favour of the assessee.
Rajendra Nath Mittal, J.
1. This judgment will decide references Nos. 85, 86, 88 and 89 of 1974, which contain similar questions of law. The facts are being given, in the judgment, from references Nos. 88 and 89 of 1974. The Income-tax Tribunal, Amritsar, referred the following two questions for the opinion of this court, under Section 256(1) of the I.T. Act, 1961 (hereinafter to be referred to as "the 1961 Act "):
(Arising out of ITA No. 751/7.2-73)
"1. Whether, on the facts and in the circumstances of the case, the Tribunal has rightly directed the Income-tax Officer to take the status of the assessee as registered firm for the assessment year 1968-69 ?"
(Arising out of ITA No. 754/72-73)
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that an appeal was maintainable before the Appellate Assistant Commissioner against the order of the Income-tax Officer refusing to renew registration under Section 184(7) of the Income-tax Act, 1961 ?"
2. Briefly, the facts which have given rise to these references are as follows :
The ITO, Jullundur, vide order dated March 4, 1972, refused registration to M/s. Mothooram Premchand, Phagwara (hereinafter to be referred to as the "assessee-firm") for the assessment year 1967-68, On the basis of the order, he rejected the application of the assessce-firm for continuation of registration under Section 184(7) of the Act, for the assessment year 1968-69. He also made an assessment of the firm as an unregistered firm. Two appeals were filed against the orders of the ITO before the AAC. The appeal against the order under Section 184(7) was dismissed by him on the ground that it was not maintainable. He also dismissed the other on the ground that there was no merit in it. The assessee-firm filed two appeals against the orders of the AAC before the Income-tax Tribunal, namely, I.T.A. No. 751/72-73, praying that the authorities below should have taken the status of the assessee-firm as registered firm, and I.T.A. No. 754/72-73 praying that the AAC erred in holding that no appeal was maintainable against an order under Section 184(7) of the Act.
3. In ITA No. 751/72-73, the Tribunal observed that (vide order of even date in ITA No. 753/72-73) it had directed the ITO to grant registration to the assessee-firm for the assessment year 1967-68. Consequently, for similar reasons, it accepted the claim of the assessee-firm and directed the ITO to take the status of the assessee-firm as registered firm for the assessment year 1968-69. The appeal was decided accordingly. In Income-tax Appeal No. 754/72-73 the Tribunal held as follows :
"It has been held by the Delhi High Court in the case of Sant Lot Kashmiri Lal v. CIT [1972] 86 ITR 76 (Delhi) that an order refusing to continue registration under Section 184(7) tantamounts to an order refusing registration under Section 185 and as such an appeal lies to the Appellate Assistant Commissioner against such an order. In the light of this authority, the Appellate Assistant Commissioner was not justified in dismissing the appeal filed by the assessee as incompetent. In this view of the matter, we would have normally remanded the case to the Appellate Assistant Commissioner for deciding the same on merits, but since we have already directed the Income-tax Officer in ITA No. 751/72-73 to take the status of the assessee as registered firm, it is not necessary to refer the case back to the Appellate Assistant Commissioner. We, therefore, accept the claim of the assessee. For statistical purposes, the ITA No. 754/72-73 is allowed."
4. The CIT made an "application to the Income-tax Appellate Tribunal under Section 256(1) of the Act to make a reference of the questions stated above to this court. Consequently, the questions were referred to this court.
5. References Nos. 85 and 86 of 1974 relate to the assessment year 1969-70. In these references similar questions have been framed. The only difference is that in the f
