This is a writ petition under article 226 of the Constitution.
The prayers contained in this petition are that in the order of the Appellate Assistant Commissioner of Income-tax, dated November 16, 1955, in Appeals Nos. 65/101, 66/103, 69/105 and 60/102, the following words may be deleted 'provided the application for registration is in order'. There is a further prayer that a writ of certiorari may be issued quashing the order dated January 13, 1956, passed by the Income-tax Officer, Azamgarh, and the order dated January 21, 1957, passed in appeals by the Appellate Assistant Commissioner of Income-tax, Varanasi, refusing registration and renewal of registration of the firm of which the petitioner is a partner for the years, 1950-51, 1951-52, 1952-53, 1953-54 and 1955-56.
The facts giving rise to the petition are not in controversy because no counter-affidavit has been filed on behalf of the respondents. The facts are that under an instrument of partnership dated December 19, 1949, the firm came into existence and on October 9, 1953, an application for registration under section 26A for the year 1950-51 was made and applications were also made for renewal of registration for the years, 1951-52, 1952-53 and 1953-54.
On August 19, 1954, the applications were rejected by the Income-tax Officer on the ground that the firm was not genuine. It may only be noted that the applications were duly entertained and the Income-tax Officer made no attempt to go into any other question and disposed of the applications only on the ground whether the firm was genuine or not. The petitioner filed appeals before the Appellate Assistant Commissioner and the appeals were allowed by order dated November 16, 1955. In the appeals it was held by the Appellate Assistant Commissioner that the finding of the Income-tax Officer that the firm was not correct and registration was to be granted to the firm 'provided that the application for registration is in order'. The last portion of the order which has been mentioned by me above within inverted commas has been objected to in this petition on the ground that under section 31(3)(c) the power of the Appellate Assistant Commissioner in appeal against an order under section 26A, where the order was one of the refusal of registration, was confined to 'cancel it and direct the Income-tax Officer to register the firm' and did not extend beyond cancelling the order of rejection and giving a direction to the Income-tax Officer to register the firm, to require him further to examine the applications and so find if they were in order.
Against this order of the Appellate Assistant Commissioner, the Income-tax Officer went up in appeal to the Tribunal but the appeal was dismissed by the Tribunal on December 5, 1956. Meanwhile, the Income-tax Officer rejected the applications under section 26A on January 13, 1956, this time on the ground that the application for 1950-51 which was the application had been made beyond time. The applications for the other years which were applications for renewal of registration were rejected on the ground that, as the registration had been refused for 1950-51, there was nothing of which renewal could be granted in the subsequent years. In paragraph 13 of the petitioners affidavit, it has been stated that the order dated January 13, 1956, was passed by the Income-tax Officer without issuing a notice to the assessee of his intention to refuse registration on the entirely new ground of delay in filing the application or affording the assessee an opportunity of showing cause against such delay. Aggrieved by this order the petitioner filed appeals before the Appellate assistant Commissioner but the appeals were dismissed by that officer on January 21, 1957. Information of the order of the Appellate Assistant Commissioner rejecting the petitioners appeal was received by the petitioner on February 13, 1957. Thereafter, this writ petition was filed for the reliefs which have already been stated in the beginning of this judgment.
Learned counsel for the petitioner has raised the following points before me : first, that the direction contained in the order of the Appellate Assistant Commissioner, dated November 16, 1955, that registration was to be granted if the applications were in order was beyond his powers under section 31(3)(c) of the Income-tax Act.
So far as this point is concerned, it appears to me that quite apart from the merits of the point it is much too late in the day for the petitioner to challenge the order of the Appellate Assistant Commissioner before me in this writ petition. That order was passed as long ago as November 16, 1955. If the petitioner was aggrieved by that order he should have approached this court soon after that order was communicated to him. It was also open to the petitioner to challenge that order in appeal before the Income-tax Appellate Tribunal, but the petitioner did nothing of the kind. Instead, the petitioner acquiesced in that order and appeared before the Income-tax Officer in proceedings for registration and renewal of registration consequent upon the direction of the Appellate Assistant Commissioner.
The next point raised by the learned counsel is that it was not open to the Income-tax Officer to have refused registration on the ground that the application for the first one of those years had not been made within time and that the applications for subsequent years bound to fail by reason of the failure of the application in respect of the first of those years. The petitioner further argued that, under the proviso to rule 2, it is open to the Income-tax Officer in a suitable case to entertain an application for registration after the expiry of the time limit specified therein. If notice had been given to the petitioner by the Income-tax Officer of his intention to reject the application on the ground of the bar of time he would have shown cause for condonation of delay in making the application. Learned counsel further argued that the Income-tax Officer having entertained the application which was made as long as October 9, 1953, and having disposed of it on the merits, it was open to the Income-tax Officer, after the matter came back to that officer by reason of the order of the Appellate Assistant Commissioner, to reject the application on the ground of the bar of time. I see force in these submissions. Learned counsel has drawn my attention to the language of the proviso in which the words which occur are 'entertain an application'. It is true that there is no specific provision in the rule for the issue of a notice to show cause against the entertainment of a belated application but it appears to me that in the events which had happened, the Income-tax Officer was bound to give notice to the petitioner of this intention to reject the application on the ground of the bar of time. Having entertained the application at a late stage and having dealt with on the merits, the petitioner could have no inkling as to the intention of the Income-tax Officer to reject the application as been barred by limitation. On the other hand, he could entertain not merely a reasonable belief but he would almost be certain that so far as any question of limitation was concerned his application was perfectly within time and if at all it could be rejected in consequence of the direction of the Appellate Assistant Commissioner, it could be rejected only for some other defects as, for example, want of signatures of the other partners or misstatement of any details required to be filled in the form. It has been stated that no counter-affidavit has been filed to dispute the fact that no opportunity was given to the petitioner.
There is the further fact that under the proviso to the rule 2 it is open to an applicant to show cause and if possible to satisfy the Income-tax Officer that there was sufficient cause for the delay, if any, and in case he succeeds in so satisfying that officer the delay is liable to be condoned. If the petitioner is not given an opportunity, no occasion can possibly arise for him to represent before the Income-tax Officer the facts and circumstances which may entitle him to the condonation of delay. Thus right given to a petitioner to satisfy the Income-tax Officer would be taken away from him if an opportunity is not given to him.
Learned for the department has taken his stand upon the point that the rule does not say in so many words that an opportunity shall be given to the petitioner to show cause why the application should be dismissed on the ground of delay. He has also argued that the proviso does not bar the dismissal of an application at the time of its final disposal. The opportunity to show cause of which the proviso speaks is merely for satisfying the Income-tax Officer in regard to the entertainment of the application. I am not satisfied that there is force in any of these submissions. As already stated above, it seems to me that in matter like this it would be contrary to the principles of natural justice if an opportunity is denied to a petitioner. As regards the point that there is no bar to the Income-tax Officer rejecting the application at the stage of hearing and the bar is only regarding the entertainment of the application, it seems to me that the argument really goes against the department. If the opportunity mentioned in the proviso is only with regard to the entertainment of the application, it follows that where an application has already been entertained, there is not subsequently any right left in the Income-tax Officer to reject the application at the stage of hearing. However, it is not necessary for me to decide that point one way or the other finally.
There is further the fact that the petitioner went up in appeal to the Appellate Assistant Commissioner and the petitioners appeal was dismissed by that officer by order dated January 21, 1957.
In the paragraph 3 of his order, the Appellate Assistant Commissioner has stated as follows :
'The Income-tax Officer has refused to renew registration on the ground that the application has been filed very late. No sufficient cause has been shown for the late filling of the application and the rules have not been compiled with. In these circumstances the Income-tax Officer was justified in refusing to register the firm.'
The point which appears to have been missed is that if the petitioner did not get an opportunity to show cause and if the petitioner did nor know that the point of delay was going to be taken against him, how could he be able to show cause, much less any sufficient cause, against the late filing of the application, assuming that the application was filed late. As already stated above, it has not been denied by means of a counter-affidavit that the petitioner was given no opportunity. It follows that the order of the Appellate Assistant Commissioner cannot be allowed to stand.
The order which I propose to make is that the order of the Income-tax Officer dated January 13, 1956, rejecting the applications shall be quashed and the applications shall be deemed to stand restored to the file of the Income-tax Officer. The Income-tax Officer shall be directed to give the petitioner an opportunity to show cause and to put forward the circumstances for the condonation of delay, if any. After such opportunity has been given, the applications shall be dealt with and disposed of according to law and the orders passed by the Appellate Assistant Commissioner in appeals against refusal of registration shall be quashed. I order accordingly. The petitioner shall have his costs of this petition.