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Parwati Traders Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Nagpur
Decided On
Judge
Reported in(1982)1ITD700(Nag.)
AppellantParwati Traders
Respondentincome-tax Officer
Excerpt:
.....firm on the ground that the change in the constitution of the firm occurred during the previous year relevant to the assessment year 1977-78 and as such application for registration in form no. 11a was not applicable to the assessment year in question. in his opinion, the assessee should have filed an application in form no.11. the firm was asked whether it had filed an application in form no.11 for the assessment year 1978-79. as the reply was in the negative, the ito held that the firm was not entitled to registration.2. before the aac the plea was that there was a mistake in the form and the assessee should have been allowed to rectify the same under section 185(2) of the income-tax act, 1961. but the aac held that the ito had given enough opportunity to the assessee to.....
Judgment:
1. This is an appeal by the assessee against the decision of the AAC confirming the order of the ITO treating the assessee as an unregistered firm. The assessee is a firm. Up to 22-4-1976 it consisted of six partners. Partner Smt. Parvatibai Chiranjilal died on 22-4-1976.

A fresh partnership deed was executed. Soon after the firm submitted an application for registration in Form No. 11A along with the partnership deed on 15-3-1978. Form No. 12 was also said to have been submitted on 28-7-1978. The return was filed on 31-7-1978. The ITO treated the firm as an unregistered firm on the ground that the change in the constitution of the firm occurred during the previous year relevant to the assessment year 1977-78 and as such application for registration in Form No. 11A was not applicable to the assessment year in question. In his opinion, the assessee should have filed an application in Form No.11. The firm was asked whether it had filed an application in Form No.11 for the assessment year 1978-79. As the reply was in the negative, the ITO held that the firm was not entitled to registration.

2. Before the AAC the plea was that there was a mistake in the form and the assessee should have been allowed to rectify the same under Section 185(2) of the Income-tax Act, 1961. But the AAC held that the ITO had given enough opportunity to the assessee to rectify the form and since such opportunity was not availed of by the firm, it was not entitled to registration.

3. The learned counsel for the assessee submitted that the ITO never pointed out to the assessee that the form for application for registration should have been in Form No. 11. He merely asked whether an application in Form No. 11 was filed and the assessee stated the facts. It was not pointed out that the assessee had committed a technical error in submitting the application in Form No. 11A for the assessment year 1978-79 and it should have submitted the application in Form No. 11. There was denial of natural justice and the spirit of Section 185(2) had been overlooked. On these grounds, it was urged that the order of the AAC should be set aside.

3.1 The learned departmental representative, on the other hand, argued that the facts narrated in the orders of the ITO and the AAC were very clear. Form Nos. 11 and 11A were meant for different purposes. There cannot be a mistake in filing Form No. 11A in place of Form No. 11. The mistakes that could be rectified are those existing in the particular form which has been filed but the scope for rectification does not extend to substituting one form for another. In other words, if an assessee was obliged to file the application in Form No. 11 and if some mistakes had occurred in that form, those mistakes could be rectified under Section 185(2). But if the assessee files the wrong form, it cannot be permitted to substitute another form by virtue of Section 185(2).

4. After hearing the rival submissions we are inclined to agree with the assessee. This is a case where registration had been granted in the earlier years. It so happened that there was no income for the assessment year 1977-78. [f the assessee had earned some income assessable for the assessment year 1977-78, then its application for registration in Form No. 11A would have had to be considered for that year and perhaps registration granted. Since there was no assessable income for that year and the question of registration had to be taken up for the assessment year 1978-79, the firm filed the application for registration for the year under appeal. In the earlier years the constitution of the firm was different, that is, in the years for which registration had already been granted. It, therefore, thought that the application has to be made in Form No. HA. The relevant rules are as follows : 22. (1) An application for registration of a firm for the purposes of the Act shall be made in accordance with the provisions of Sub-rules (2) to (5).

(2) Where the application is made before the end of the relevant previous year-- (i) and where no change in the constitution of the firm or the shares of the partners has taken place during the previous year before the date of the application- (b) it shall be accompanied by the original instrument evidencing the partnership at the date of the application together with a copy thereof. A certified copy of the instrument together with a duplicate copy thereof may be attached to the application if, for sufficient reasons, the original instrument cannot be produced ; (ii) and where any change or changes in the constitution of the firm or the shares of the partners have taken place during the previous year before the date of the application- (b) it shall be accompanied by the original instrument or instruments, evidencing the partnership as in existence from time to time during the previous year up to the date of the application together with copies thereof. A certified copy of the instrument or instruments together with a duplicate copy thereof may be attached to the application if, for sufficient reasons, the original instrument or instruments cannot be produced.

From these rules it would appear that the application has to be made before the end of the relevant previous year and if any changes have taken place during the previous year before the date of the application, the application has to be in Form No. 11 A. Strictly speaking, the change in the constitution has taken place during the previous year relevant to the assessment year 1977-78. Therefore, the ITO could have asked the assessee to rectify the application in Form No. 11A so that it could be considered for the assessment year 1977-78.

Once the registration is granted for 1977-78, he should have considered the application of the assessee in Form No. 12 for continuation of registration for the assessment year 1978-79. If in his opinion the assessee should have filed an application in Form No. 11, that fact should have been pointed out to the assessee. It is precisely the purpose of Section 185(2) that the assessee should not be penalised for small technical mistakes. We do not agree with the AAC that when the ITO enquired of the assessee whether it has led the application for registration in Form No.11, it could be deemed that he had given sufficient opportunity to the assessee to rectify the form. The opportunity has got to be specific and the assessee has to be told what exactly is the mistake in the form. In our opinion, the mistakes that could be rectified cannot be confined only to the mistakes in the form itself but also to the substitution of the proper form, that is, if an assessee submits an application in Form No. 11 instead of Form 11A that would be a mistake which should be got rectified. The correction is not confined to the entries in the form like mistakes in shares, names, etc. On the whole, we are satisfied that the assessee's prayer for setting aside the order of the AAC is justified. We, accordingly, set aside his order and restore the matter to the ITO who will advise the assessee properly regarding the form in which the application for registration is to be filed and then deal with it according to law.


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