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Commissioner of Income-tax Vs. Jabalpur Transport Development Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 3 of 1978
Judge
Reported in[1983]143ITR964(MP)
ActsIncome Tax Act, 1961 - Sections , 184(7), 185(3) and 246
AppellantCommissioner of Income-tax
RespondentJabalpur Transport Development Co.
Appellant AdvocateP.S. Khirwadkar, Adv.
Respondent AdvocateH.S. Shrivastava, Adv.
Cases Referred(Ashwani Kumar Maksudan Lal v. Addl.
Excerpt:
- - 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 where 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. moreover, in the matter of construction of an act like the i......non-rectifiable. in case of the former, the ito has to give opportunity to the firm to rectify the defect and continuation of registration can be refused only when the defect is not rectified. but in the case of a non-rectifiable defect, which makes a declaration not in order, the ito cannot ask the firm to rectify the defect and he can straightaway refuse continuation of registration under section 185(3). such a course, though not expressly mentioned in that provision, is implicit, for, otherwise, there is no other provision under which an order refusing continuation of registration can be made for non-rectifiable defects. if a declaration is furnished beyond time and the ito has refused to condone the delay under section 184(7), it would be a case of a declaration which is not in order.....
Judgment:

G.P. Singh, C.J.

1. The question of law referred by the Tribunal in this reference is as follows :

' Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that an order refusing registration/continuation of registration by the Income-tax Officer on the ground of delay of filing of Form No. 12 under Section 184(7) of the Income-tax Act, 1961, is an appealable order and the Appellate Assistant Commissioner is competent to entertain such an appeal under Section 246(j) of the Income-tax Act, 1961 '

2. The assessee was a registered firm. The assessee filed a declaration in Form No. 12 on 1st March, 1974, for continuation of registration for the assessment year 1971-72. Notice under Section 139 was served on the assessee on 16th December, 1972, and according to Section 184(7) the declaration in Form No. 12 should have been filed by 16th January, 1973. The ITO did not condone the delay in filing the declaration and refused continuation of registration for the assessment year 1971-72. The assessee filed an appeal to the AAC, who dismissed the appeal on the ground that it was not maintainable. In further appeal, the Tribunal held in favour of the assessee that the order of the ITO was appealable under Section 246(j) of the Act.

3. The relevant provisions for our purposes are Sections 184(7), 185(3) and 246(j), which read as follows :

' 184. (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 where 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.'

' 185. (3) Where the Income-tax Officer considers that the declaration furnished by a firm in pursuance of Sub-section (7) of Section 184 is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the declaration within a period of one month from the date of such intimation ; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, declare that the registration granted to the firm shall not have effect for the relevant assessment year.'

' 246. Any assessee aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order--...... (j) an order under Clause (b) of Sub-section (1) or under subsection (2) or Sub-section (3) or Sub-section (5) of Section 185. '

4. A reading of the second proviso to Section 184(7) will go to show that a firm has to file a declaration within time for getting the benefit of continuation of registration. If there is delay in filing the declaration within time, the ITO can condone it and allow the firm to furnish the declaration at any time before the assessment is made. The power given to the ITO to permit a firm to furnish a declaration after the expiry of the time, but before assessment, in case sufficient cause is shown, implies that the ITO has power to refuse to condone the delay or to accept the declaration. In case the ITO decides not to condone the delay, he has to declare that the registration granted to the firm shall not have effect for the relevant assessment year but such an order can be passed only under Section 185(3). This provision applies when the declaration furnished by a firm in pursuance of Section 184(7) is not in order. The defects which may make a declaration ' not in order ' may be of two kinds ; rectifiable and non-rectifiable. In case of the former, the ITO has to give opportunity to the firm to rectify the defect and continuation of registration can be refused only when the defect is not rectified. But in the case of a non-rectifiable defect, which makes a declaration not in order, the ITO cannot ask the firm to rectify the defect and he can straightaway refuse continuation of registration under Section 185(3). Such a course, though not expressly mentioned in that provision, is implicit, for, otherwise, there is no other provision under which an order refusing continuation of registration can be made for non-rectifiable defects. If a declaration is furnished beyond time and the ITO has refused to condone the delay under Section 184(7), it would be a case of a declaration which is not in order because of a non-rectifiable defect. Even such a case, in our opinion, falls under Section 185(3) and the ITO would refuse continuation of registration or, in other words, declare under that provision that the registration granted to the firm shall not have effect for the relevant assessment year. It is true as already noticed that Section 185(3) specifically mentions only those cases where the defect is such which can be rectified and where the ITO can give opportunity to the firm to rectify the defect within a particular period. However, reading Section 184(7) and Section 185(3) together, it is implicit that the case of a declaration which is not in order because it is filed beyond time, also comes under Section 185(3). Even in such a case, the order declaring that registration shall not have effect would be an order passed under that provision. Section 246(j) in terms makes an order under Section 185(3) appealable. The order in the instant case passed by the ITO was thus appealable. The view we have taken is supported by a number of cases : [see CIT v. Dineshchandra Industries : [1975]100ITR660(Guj) , Addl. CIT v. Chekka Ayyanna : [1977]106ITR313(AP) , ITO v. Vinod Krishna Som Prakash : [1979]117ITR594(All) , CIT v. Beri Chemical Industries ]. The Allahabad High Court in an earlier case (Ashwani Kumar Maksudan Lal v. Addl. CIT : [1972]83ITR854(All) ), had taken a contrary view, but it has also now adopted the majority view : [see ITO v. Vinod Krishna Som Prakash : [1979]117ITR594(All) ]. In construing a provision granting a right of appeal, the rule of liberal construction is applied. Moreover, in the matter of construction of an Act like the I.T. Act, which is of all-India application, it is necessary that there should be uniformity as far as possible amongst the different High Courts. These considerations also support our view that the order of the ITO was appealable.

5. For the reasons given above, we answer the question in the affirmative, in favour of the assessee and against the Department. There will be no order as to costs of this reference.


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