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Commissioner of Income-tax Vs. Panda and Co. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtOrissa High Court
Decided On
Case NumberSpecial Jurisdiction Case No. 126 of 1975
Judge
Reported in[1979]118ITR915(Orissa)
ActsIncome Tax Act, 1961 - Sections 184(7), 256 and 263; Income Tax Rules, 1962
AppellantCommissioner of Income-tax
RespondentPanda and Co.
Appellant AdvocateStanding Counsel
Respondent AdvocateS.C. Roy, Adv.
Excerpt:
.....delay for the purpose of deposit under first proviso to sub-section (1) of section 173 is necessary. [new india assurance co. ltd. v md. makubur rahman, 1993 (2) glr 430 and new india assurance co. ltd. v smt rita devi, 1997(2) glt 406, approved. new india assurance co. ltd. v birendra mohan de, 1995 (2) gau lt 218 (db) and union of india v smt gita banik, 1996 (2) glt 246, are not good law]. - the income-tax officer clearly erred in mentioning that the old partnership remained in effect for the assessment year under consideration on the basis of the declaration made under section 184(7) as if there was no change in the constitution of the firm. 12- the tribunal was of the opinion that if the order of the ito was bad and the commissioner vacated it, the matter should have gone back to..........section 185(2) read with section 184(6) of the income-tax act, 1961 ?'2. assesses is a partnership firm. the year of assessment is 1968-69, previous year having ended on march 31, 1968. the firm was constituted under an instrument, dated 29th of march, 1967, and had 10 partners. for the assessment year 1967-68 registration had been extended to the firm. on january 23, 1968, one of the partners died and upon his death his widow was admitted as a partner and a fresh partnership deed was made on 30th of march, 1968. for the assessment year 1968-69, the assessee filed a declaration in form no. 12 under section 184(7) of the act which was signed by the nine old partners and the widow. the ito granted renewal of registration while making the assessment. the cit initiated a suo motu revision.....
Judgment:

R.N. Misra, J.

1. Being moved by the revenue, the Income-tax Appellate Tribunal, Cuttack Bench, has stated this case and referred the following question for opinion of the court :

'Whether, on the facts and in the circumstances of the case, the Income-tax Officer should consider that the filing of a declaration in Form No. 12 was an application for registration which was not in order within the meaning of Section 185(2) read with Section 184(6) of the Income-tax Act, 1961 ?'

2. Assesses is a partnership firm. The year of assessment is 1968-69, previous year having ended on March 31, 1968. The firm was constituted under an instrument, dated 29th of March, 1967, and had 10 partners. For the assessment year 1967-68 registration had been extended to the firm. On January 23, 1968, one of the partners died and upon his death his widow was admitted as a partner and a fresh partnership deed was made on 30th of March, 1968. For the assessment year 1968-69, the assessee filed a declaration in Form No. 12 under Section 184(7) of the Act which was signed by the nine old partners and the widow. The ITO granted renewal of registration while making the assessment. The CIT initiated a suo motu revision under Section 263 and holding that the grant of renewal was prejudicial to the interests of the revenue vacated the grant of renewal of registration and directed consequential actions to be taken.

3. Assessee preferred an appeal against the decision of the Commissioner. The Tribunal dealt with the provisions of the Act and observed :

'It follows, therefore, that when the Commissioner of Income-tax restored the matter to the stage of consideration of that application by setting aside the order of the Income-tax Officer, an opportunity to rectify the defect by making a fresh application was due to the assessee and registration should not have been revoked without preserving that right of the assessee to file a fresh application in Form No. 11-A, The order under appeal thus trangresses the principles of natural justice incorporated in Section 185(2) and to that extent it requires to be modified. We, therefore, direct that the order of the Income-tax Officer granting continuation of registration being set aside, the Income-tax Officer shall take up the application for registration and offer an opportunity to the assessee to rectify the defect, namely, the application not being in proper form as provided in Section 185(2) and proceed to dispose of the matter in accordance with law......'

4. The Commissioner of Income-tax had found:

'Under the rules, the assessee has to file an application for registration in Form No. 11-A before the close of the accounting year. This application was not filed. Hence, this was not a case of technical error in respect of which an opportunity should have been given for rectification. The Income-tax Officer clearly erred in mentioning that the old partnership remained in effect for the assessment year under consideration on the basis of the declaration made under Section 184(7) as if there was no change in the constitution of the firm. The order of the Income-tax Officer is, therefore, palpably wrong and prejudicial to the interests of the revenue. In the circumstances, the order passed by the Income-tax Officer which was wrongly labelled as an order under Section 185 of the Act is hereby cancelled......'

5. In the first partnership deed there was no provision for continuance of the firm notwithstanding death or retirement of any of the partners. Under the provisions of the Partnership Act, which in the absence of a contract that the contrary is to apply, the partnership firm automatically stood dissolved when a partner died. The firm had been granted registration in the immediate preceding year and if the death of a partner had not occurred the assessee was entitled to renewal of registration. In the instant case, as would appear from the reasoning which has prevailed with the Tribunal, the difference between the different statutory forms had not been maintained and while the application had to be made in the prescribed Form No. 11-A, the same had been made in Form No. 12- The Tribunal was of the opinion that if the order of the ITO was bad and the Commissioner vacated it, the matter should have gone back to the ITO for examining whether an opportunity should have been extended to the assessee for rectifying the mistakes. Undoubtedly, the application for renewal of registration had been made. It is not known to us whether that application was in time to be treated as an application in Form No. 11-A prescribed under the I.T. Rules. The direction given in the second appeal by the Income-tax Appellate Tribunal appears to us to be wholly in order and appropriate in the interest of justice. The Tribunal has not passed a final order and has required the ITO to examine the application. We do not think any question of law arises out of the appellate order of the Tribunal. Accordingly, we direct the reference made to us to be discharged. We make no order for costs.

Panda, J.

I agree.


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