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Commissioner of Income-tax Vs. New India Restaurant - Court Judgment

LegalCrystal Citation
Subject;Direct Taxation
CourtGuwahati High Court
Decided On
Case NumberIncome-tax Reference No. 28 of 1975
Judge
ActsIncome Tax Act, 1961 - Sections 184 and 184(7); Income Tax Rules, 1962 - Rule 24
AppellantCommissioner of Income-tax
RespondentNew India Restaurant
Appellant AdvocateG.K. Talukdar and D.K. Talukdar, Advs.
Respondent AdvocateNone
Excerpt:
.....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 ;and (ii) the firm furnishes, before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that whore the income-tax officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made. ' 5. it is found by the tribunal that..........originally or on extension) for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that whore the income-tax officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made. (8) where any such change has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section.'5. it is found by the tribunal that for the previous year as well as for the subsequent years the assessee's status was taken as registered firm......
Judgment:

Pathak, C.J.

1. The following question of law has been referred to the High Court under Section 256(1) of the Income-tax Act, 1961, hereinafter referred to as 'the Act', by the Income-tax Appellate Tribunal, Gauhati Bench, for decision :

'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in directing the Income-tax Officer to grant registration to the assessee, M/s. New India Restaurant, for the assessment year 1970-71, after giving an opportunity to file the declaration in Form No. 12 as required under Section 184(7) of the Income-tax Act, 1961, within one month from the date of the receipt of the order ?'

2. The Income-tax Officer while assessing the assessee for the assessment year 1970-71 found that the assessee had not filed a declaration under Section 184(7) of the Act in Form No. 12 and so for that assessment year the Income-tax Officer took the status of the assessee as unregistered firm. The assessee preferred an appeal against the order under Section 246(c) of the Act to the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner the assessee contended, inter alia, that it was a partnership firm and during the earlier years the registration had been allowed and the status had been taken as registered firm and that the assessee could not file the declaration in Form No. 12 through ignorance and so a fresh opportunity should have been granted to the assessee before completion of the assessment. The Appellate Assistant Commissioner, however, held that as no declaration was filed in the case, the Income-tax Officer's order was justified. The assessee then preferred an appeal from the order of the Appellate Assistant Commissioner before the Income-tax Appellate Tribunal. The Tribunal found that the assessee was assessed as registered firm in the preceding year and also in the subsequent years and that only for the assessment year 1970-71, the assessment had to be completed treating the assessee as unregistered firm since no declaration in Form No. 12 was filed. The Tribunal held that the genuineness of the firm was never in dispute and so the registration had been granted for all the subsequent years and also for the earlier years. The Tribunal, therefore, held that it would be unfair to deny registration to the assessee on the technical ground that Form No. 12 was not filed along with the return of income and that the non-filing of Form No. 12 was an unintentional omission and for this purpose it would be harsh to deny registration to the assessee. Accordingly, the Tribunal directed the Income-tax Officer to grant registration to the assessee-firrn after giving an opportunity to file the declaration as proscribed under the said Act within one month from the date of receipt of the order.

3. The question that arises for consideration is whether the Tribunal could in law allow time beyond the prescribed period to the assessee to file the declaration for continuation of the registration. The relevant provisions of law may, therefore, be noticed.

4. Section 184 of the Act, which deals with application for registration, reads as follows:

'184. (1) An application for registration of a firm for the purposes

of this Act may be made to the Income-tax Officer on behalf of any, firm if--

(i) the partnership is evidenced by an instrument; and (ii) the individual shares of the partners are specified in that instrument.

(2) Such application may, subject to the provisions of this section, be made either during the existence of the firm or after its dissolution,

(3) The application shall be made to the Income-tax Officer having jurisdiction to assess the firm, and shall be signed--

(a) by all the partners (not being minors) personally ; or

(b) in the case of a dissolved firm, by all persons (not being minor's) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased.

Explanation.--In the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf, or, as the case may be by a person entitled under law to represent him.

(4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought:

Provided that the Income-tax Officer may entertain an application made after the end of the previous year, if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year.

(5) The application shall be accompanied by the original instrument evidencing the partnership, together with a copy thereof :

Provided that if the Income-tax Officer is satisfied that for sufficient reason the original instrument cannot conveniently be produced, he may accept a copy of it certified in writing by all the partners (not being minors), or, where the application is made after the dissolution of the firm, by all the persons referred to in Clause (b) of Sub-section (3), to be a correct copy or a certified copy of the instrument; and in such cases the application shall be accompanied by a duplicate copy of the original instrument.

(6) The application shall be made in the prescribed form and shall contain the prescribed particulars.

(7) Where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year :

Provided that--

(i) there is 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 ; and

(ii) the firm furnishes, before the expiry of the time allowed under Sub-section (1) or Sub-section (2) of Section 139 (whether fixed originally or on extension) for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that whore the Income-tax Officer is satisfied that the firm was prevented by sufficient cause from

furnishing the declaration within the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made.

(8) Where any such change has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section.'

5. It is found by the Tribunal that for the previous year as well as for the subsequent years the assessee's status was taken as registered firm. Sub-section (7) of Section 184 of the Act deals with continuation of registration. Under Sub-section (7) if registration is granted to any firm for any assessment year then it shall have effect for every subsequent assessment year provided two conditions are fulfilled, namely, (i) that there is 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 and (ii) that the firm furnishes along with its return for the assessment year concerned a declaration to that effect in the proscribed form and verified in the prescribed manner.

6. Sub-section (7) of Section 184 of the Act has been amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. So the amendment does not reach the present assessment year, which is 1970-71.

7. In the instant case, Clause (ii) of the proviso to Sub-section (7) of Section 184 has not been complied with. The firm along with its return for the assessment year 1970-71 did not furnish, the declaration as required under Clause (ii) of the proviso to Sub-section (7) of Section 184, which before the amendment was as follows :

'(ii) the firm furnishes, along with its return of income for the assessment year concerned, a declaration to that effect, in the prescribed form and verified in the prescribed manner.'

8. Considering the language of Sub-section (7) of Section 184, we are of the opinion that unless the two conditions laid down by the proviso to this Sub-section are fulfilled, the registration granted to any firm in any assessment year cannot have any effect for the subsequent assessment years.

9. Rule 24 of the Income-tax Rules, 1962, reads as follows :

'24. Declaration for continuation of registration.--The declaration to be furnished under Sub-section (7) of Section 184 shall be in Form No. 12 and shall be verified in the manner indicated therein and shall be signed by the persons concerned in accordance with Sub-rule (5) of Rule 22.'

10. Sub-rule (5) of Rule 22 reads as follows :

'22. (5) The application shall be signed personally by all the partners (not being minors) in the firm as constituted at the date of the application and, in the case of a dissolved firm, personally by all the persons (not being minors) who were partners in the firm immediately

before its dissolution and by the legal representative of any such partner who is deceased so, however, that in the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf, or, as the case may be, by a person entitled under law to represent him.'

11. Reading the provisions of Sub-section (7) of Section 184 of the Act and Rule 24 of the Income-tax Rules, we find that the Income-tax Officer had no jurisdiction to extend the time for filing the declaration if the declaration was not filed within the prescribed time as required under Section 184 of the Act. That being so, the appellate authority, that is, the Tribunal, cannot assume more powers than the Income-tax Officer and give time beyond the prescribed period to file the declaration or direct the Income-tax Officer to give time to the assessee to file the declaration, as has been done by the Tribunal, and to treat the assessee as a registered firm.

12. This interpretation of Sub-section (7) of Section 184 of the Act is strengthened by the subsequent amendment of Sub-section (7) by the Taxation Laws (Amendment) Act, 42 of 1970, which came into force with effect from April 1, 1971.

13. We, therefore, hold that, on the facts and in the circumstances of the case, the Tribunal was not justified in directing the Income-tax Officer to grant registration to the assessee, Messrs. New India Restaurant, for the assessment year 1970-71 after giving an opportunity to file the declaration in Form No. 12 as required under Section 184(7) of the Income-tax. Act, 1961, within one month from the date of receipt of the order.

14. In the result, the question of law referred is answered in the negative and against the assessee.

15. The reference is accordingly disposed of. There will be no order as to costs.

N. Ibotombi Singh, J.

16. I agree.


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