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Bishambar Dayal Sriniwas Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Income-tax Reference Application No. 38 of 1976
Judge
Reported in(1986)55CTR(Raj)164; [1986]162ITR5(Raj); 1986(2)WLN209
ActsIncome Tax Act, 1961 - Sections 184(7) and 246
AppellantBishambar Dayal Sriniwas
RespondentCommissioner of Income-tax
Appellant Advocate N.M. Ranka and; J.K. Ranka, Advs.
Respondent Advocate R.N. Surolia, Adv.
Excerpt:
income tax act, 1961 - sections 246 & 184(7)--appeal--maintainability of--ito rejecting assessee's application for condonation of delay in filing application for registration of firm--held, appeal lies before appellate assistant commissioner under section 246(c).;reference answered in favour of assessee - - it is clearly within the ambit of clause (c) of section 246 of the act. since the main reason was the refusal to condone the delay which led to the assessment as an unregistered firm, the same could be questioned in an appeal under clause (c). the order refusing to condone the delay was hence appealable to the appellate assistant commissioner under clause (c) as well. their lordships further held that where a composite order is passed, both rejecting the status of the assessee as.....mehta, j. 1. this reference arises on the request of the assessee.2. the assessee-applicant is a firm. it carries on business. for the year 1970-71, it was granted registration under the income-tax act, 1961 (hereinafter referred to as 'the act'). it filed its declaration for continuation of registration in terms of sub-section (1) of section 184 of the act in respect of the assessment year 1971-72 on october 8, 1971. the assessee filed an application for condonation of delay to the income-tax officer. it was submitted by the assessee that the delay was caused due to the wrong impression about the interpretation of the amended section 184(7) of the act. it was further submitted that it was a case of a genuine firm of more than 10 years' standing and a slight delay of seven days should be.....
Judgment:

Mehta, J.

1. This reference arises on the request of the assessee.

2. The assessee-applicant is a firm. It carries on business. For the year 1970-71, it was granted registration under the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). It filed its declaration for continuation of registration in terms of Sub-section (1) of Section 184 of the Act in respect of the assessment year 1971-72 on October 8, 1971. The assessee filed an application for condonation of delay to the Income-tax Officer. It was submitted by the assessee that the delay was caused due to the wrong impression about the interpretation of the amended Section 184(7) of the Act. It was further submitted that it was a case of a genuine firm of more than 10 years' standing and a slight delay of seven days should be condoned. The Income-tax Officer rejected the prayer of the assessee and declined to condone the delay and assessed the assessee as an unregistered firm. An appeal was preferred by the assessee before the Appellate Assistant Commissioner of Income-tax, Alwar Range, Alwar. The Appellate Assistant Commissioner of Income-tax condoned the delay and held that there are sufficient grounds for condoning the delay. He further directed the Income-tax Officer to allow continuation of the registration if the same is otherwise in order.

3. An appeal was preferred before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur. Before the Tribunal, the question for consideration was whether the Appellate Assistant Commissioner has jurisdiction to hear the appeal or not? The Tribunal, vide its order of January 18, 1975, held that no appeal against the order of the Income-tax Officer passed under Sub-section (7) of Section 184 is provided by the statute. It further held that the Appellate Assistant Commissioner was, therefore, wrong in having assumed jurisdiction where he did not have any. Hence, the order of the Appellate Assistant Commissioner was set aside.

4. A reference application was submitted, under Section 256(1) of the Act, before the Tribunal. The Tribunal was of the view that the following question of law arose out of the order of the Tribunal and referred the same for opinion:

'Whether, on the facts and in the circumstances of the case and on a true interpretation of Sections 246 and 184(7) of the Income-tax Act, 1961, an appeal against the order of the Income-tax Officer passed under Sub-section (7) of Section 184 lies to the Appellate Assistant Commissioner in terms of Section 246 of the said Act ?'

5. Mr. N. M. Ranka, appearing on behalf of the assessee, submitted that an appeal lies under Section 246(c) and (j) of the Act. He further submitted that from a perusal of the order of assessment passed by the Income-tax Officer, it is clear that the order is a composite order and an addition of Rs. 4,000 was also made. It was further contended that the order under appeal was an order challenging the status granted to the assessee-firm. Mr. Ranka, appearing on behalf of the assessee-firm, has invited our attention to Section 143(3) and (2) and submitted that 'status', in relation to an assessee, means the classification of the assessee as an individual, a Hindu undivided family or any other category of persons referred to in Clause (31) of Section 1, and where the assessee is a firm, its classification as a registered firm or an unregistered firm. Mr. Ranka farther submits that this amendment has come into force from April 1, 1971. He submits that under Section 2, the word 'person' has been defined and a firm falls within the definition of person. In support of his contention, he has cited before us the case of Addl. CIT v. Ckekka Ayyanna : [1977]106ITR313(AP) , in which their Lordships of the Andhra Pradesh High Court, after considering the law, came to the conclusion that (at p. 322):

'We are of the opinion that looking at the question from the point of view of either Section 185(1)(b) or Section 185(3) of the Act, the order of the Income-tax Officer refusing 'to allow continuation of registration to the assessee-firm' tantamounts to refusing to register the firm and, therefore, comes within the ambit of Section 185(1)(b) of the Act and also since the declaration was defective and the assessee-firm had not rectified the defect within the time when called upon to do so, it would be considered as an order under Section 185(3) and, therefore, such an order was appealable under Section 246(j) of the Act.'

6. Mr. Ranka has also cited before us the decision of the Allahabad High Court in ITO v. Vinod Krishna Som Prakash : [1979]117ITR594(All) , in which their Lordships of the Allahabad High Court, after considering the various provisions of law, held as under (at p. 597):

'It is clear that the assessment of a firm as a registered firm or as an unregistered firm is a matter of status, and a dispute that a firm was entitled to be assessed as a registered firm and not as an unregistered one is a dispute relating to the status in which the assessee-firm is liable to be assessed. It is clearly within the ambit of Clause (c) of Section 246 of the Act.

The effect of the Income-tax Officer's order refusing to condone the delay in the filing of the declaration in Form No. 12 is refusal to assess the firm as a registered firm. If the assessee claims that it was not liable to be assessed as an unregistered firm but was entitled to be assessed as a registered firm, the claim relates to the status under which the assessee is assessed within the meaning of Clause (c) aforesaid. The assessment order itself could be appealed against on the ground that the assessee was assessed in a wrong status. Since the main reason was the refusal to condone the delay which led to the assessment as an unregistered firm, the same could be questioned in an appeal under Clause (c). The order refusing to condone the delay was hence appealable to the Appellate Assistant Commissioner under Clause (c) as well.'

7. Mr. Ranka has also cited before us the case of National Tractor Co. v. ITO . In that case, the assessee submitted an application for condonation of delay on the ground that it had no knowledge about the amendment of the provisions of Section 184(7) of the Act with effect from April 1, 1971, but the Income-tax Officer declined to continue the registration. An appeal was preferred before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner also confirmed the order of the Income-tax Officer. On further appeal, the Tribunal held that the fact of declaration in Form No. 12 having been signed on September 3, 1971, was not determinative of the assessee's knowledge of the changed law requiring the filing of the declaration by September 30, 1971, even if the return of income was filed later, and that, therefore, the assessee's plea as to its bona fide belief that the declaration could be filed along with the return of income as under the law effective until March 13, 1971, could not be rejected. The Tribunal, however, dismissed the assessee's appeal on the ground that since the appeal before the Appellate Assistant Commissioner itself was not competent, the appeal to the Tribunal was also not competent. A writ petition was preferred against the said order before the High Court. The writ petition was allowed and it was held that an appeal lies to the Appellate Assistant Commissioner.

8. Mr. Ranka has also cited before us the case of Madhur Jalpan v. CIT : [1983]143ITR351(Patna) , in which their Lordships of the Patna High Court were of the view that because of the provisions contained in Clause (2) to the Explanation to Section 143, an appeal lies. Their Lordships further held that where a composite order is passed, both rejecting the status of the assessee as a registered firm as well as passing an assessment order assessing it as an unregistered one, the assessee would be at liberty to take both the grounds in the appeal, a right which has been conferred upon it under Section 246.

9. Mr. Ranka has also cited before us the case of CIT v. Jabalpur Transport Development Co. : [1983]143ITR964(MP) , in which their Lordships of the Madhya Pradesh High Court, after considering the various provisions of law, held that an application for continuation of registration even if filed beyond time, can be condoned and if the application for condonation of delay is rejected, even then an appeal lies to the Appellate Assistant Commissioner under Section 246(j).

10. Mr. Ranka has also cited before us the case of CIT v. Hansa Agencies : [1980]121ITR147(Bom) , in which it has been held that a composite appeal was maintainable.

11. On behalf of the Revenue, Mr. Surolia has vehemently opposed the submissions made by learned counsel for the assessee. Mr. Surolia contends that under Section 184(7), there is no provision for filing an appeal. An order passed under Sub-section (7) of Section 184 is revisable and no appeal lies. Mr. Surolia submits that under Section 185(2), the Income-tax Officer considers the application for registration and, if he finds that the application is not in order, he is duty bound to intimate the defect to the firm and give it an opportunity to rectify the defect in the application 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, reject the application. He further submits that under Sub-section (3) of Section 185, it is provided that the Income-tax Officer while considering the declaration furnished by a firm in pursuance of Sub-section (7) of Section 184, finds that it 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. Thus, he submits that the word 'defect' as used in Sub-section (3) of Section 185 shows that there should be in existence a declaration and, if the defect is there, then it shall be pointed out by the Income-tax Officer. He further submits that if there is no declaration, the question of defect does not arise at all and the question of continuation of registration and allowing the registration does not arise at all. He further submits that where a declaration under Sub-section (7) of Section 184 is furnished by the firm, then the registration is continued for the relevant subsequent year. He has also invited our attention to the provisions of Section 246(1) and (3) and submits that the question of status arises only when there is a dispute about the grant of a particular status. He points out that there may be a case where the declaration in Form No. 12 is filed before the Income-tax Officer by the assessee and the declaration is not accepted by the assessing authority and, in such circumstances, the question of status may fall within the ambit of Clause (c) of Sub-section (1) of Section 246. He further submits that where there is no controversy about non-filing of declaration in Form No. 12, the provisions of Clause (c) of Sub-section (1) of Section 246 do not come into operation at all. He further submits that Clause (j) of Section 246 also does not come into play as no order has been passed under Clause (b) of Sub-section (1) or Sub-section (2) or Sub-section (3) or Sub-section (5) of Section 185. He further submits that the Legislature in its wisdom has specifically omitted the provisions of appeal so far as Sub-section (7) of Section 184 is concerned. Mr. Surolia submits that a right of appeal is a creation of the Legislature and the Legislature has, in its wisdom, not granted the right of appeal and, as such, any of the provisions of Section 246 cannot be made applicable in the instant case. Mr. Surolia also takes the assistance of the provisions of Section 251 of the Act, which deal with the power of the assessing authority. An appellate authority in an appeal against an order of assessment may confirm, reduce, enhance or annul the assessment, or may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner (or, as the case may be, the Commissioner (Appeals)). He submits that the power to set aside the assessment and the power to reduce, enhance or confirm the assessment is altogether a different matter and it relates to the question of quantum of assessment. According to Mr. Surolia, the order passed under Sub-section (3) of Section 184 cannot be set aside, confirmed or varied by the appellate authority as it does not amount to annulling, reducing, confirming or enhancing the amount of assessment. In support of his contention, Mr. Surolia has cited before us the case of CIT v. Pushpaka Travels : [1985]152ITR717(Ker) , wherein their Lordships, after considering the various provisions of Sections 184(1), 185(3) and (4) and Section 246(j), held that no appeal lies to the Appellate Assistant Commissioner against the order refusing to condone the delay. Their Lordships considered the various judgments cited by counsel for the assessee and distinguished many of them. Mr. Surolia submits that this judgment applies to the facts of the instant case. It was pointed out by Mr. Surolia that their Lordships have considered the word 'defect' contained in Sub-section (3) of Section 185 and their Lordships were of the view that the defect mentioned in the said section is a defect that can be rectified by the assessee without invoking the discretionary jurisdiction of the Income-tax Officer. Though it cannot be said that the delay in furnishing a declaration in Form No. 12, as required by Clause (ii) of the proviso to Sub-section (7) of Section 184, is a defect coming under Section 185 of the Act, he has also pointed out that the declaration has been submitted under Sub-section (7) of Section 184 by the firm and the same can be considered for the purpose of the applicability of Section 185 to arrive at the conclusion whether the declaration so submitted is defective or not. He has also submitted that Sub-section (4) of Section 184 is also relevant. In order to entertain an application for registration, it should have been presented before the end of the previous year for the assessment year in respect of which registration is sought. If there was any delay in filing the declaration and the delay is explained to the satisfaction of the Income-tax Officer, he will entertain the application even after the end of the previous year. Only after the application is entertained as being in time, it is required to be considered on merits. It can be dealt with only under Section 185. Section 185 provides the procedure on receipt of application and entertaining the same on merits, while Section 184(4) has no concern over the merits of the application for registration. He submits that if the application is not submitted in time and the delay in filing the same has not been condoned by the Income-tax Officer, there is no application in the eye of law to be dealt with under Section 185. Mr. Surolia submits that, in the instant case, the application was not filed in time and the delay has not been condoned by the Income-tax Officer. As such, the application cannot be considered on merits and it should be deemed that no application has been filed and the provisions of Section 185 of the Act are not applicable. Mr. Surolia has further relied on CIT v. Pohop Singh Rice Mill : [1981]132ITR390(Orissa) , in which their Lordships of the Orissa High Court after considering the various provisions of law held that no appeal lies to the Appellate Assistant Commissioner.

12. Shri Ranka appearing on behalf of the assessee submits that all the citations referred by the Revenue are not applicable in the instant case. Mr. Ranka submits that their Lordships have not considered the provisions of Clause (c) of Sub-section (1) of Section 246 and the question of status has not been considered. He submits that the provisions of Clause (c) of Sub-section (1) of Section 246 have not been considered at all. He placed reliance on the word 'status' and submitted that the provisions of Clause (c) of Sub-section (1) of Section 246 have been considered.

13. Mr. Surolia placed reliance on New Orissa Traders v. CIT : [1977]107ITR553(Orissa) , in which their Lordships of the Orissa High Court after considering the provisions of Section 184 held that no appeal lies from the order of the Income-tax Officer to the Appellate Assistant Commissioner and a second appeal to the Appellate Tribunal does not also lie in the matter of not continuing the registration under Sub-section (7) of Section 184. In A.S.S.S.S. Chandra Sekaran v. CIT : [1974]96ITR711(Mad) , their Lordships of the Madras High Court after considering the provisions of Sub-section (4) of Section 185 held that if the application is not filed in time and the delay in filing the same is not condoned by the officer, there is no application in the eye of law for being dealt with under Section 185. The proviso to Section 184(4) enabling the officer to entertain an application made after the end of the previous year on sufficient cause being shown implies also a power to refuse to entertain the application if he is not satisfied with the explanation. The case of Indo Traders v. CIT : [1978]111ITR355(Cal) , was also referred to by Shri Surolia appearing on behalf of the Revenue.

14. The assessee-firm made an application for registration in the year 1962. During the pendency of the application, the firm filed its return for the assessment year 1963-64. The firm also submitted a declaration on February 2, 1964. Their Lordships held that the declaration has not been filed within the time provided under the statute. The assessee was not entitled to claim the relief permitted for making the application for registration. Mr. Surolia has also referred to the case of Nilamani Ghosh & Partners v. CIT : [1977]106ITR281(Orissa) , in which their Lordships have considered the provisions of Section 246(c) and were of the view that the term 'status' occurring in Clause (c) of Section 246 of the Income-tax Act, 1961, providing for appeal to the Appellate Assistant Commissioner against the order of the Income-tax Officer cannot take within it a dispute arising out of disallowance of registration of a firm for which special provisions have been made in Clauses (j) and (k) of the section. Therefore, the Appellate Tribunal was right in holding that in an appeal under Section 246(c) of the Act, the issue regarding registration of the firm cannot be raised by way of agitating the question of status taken in the assessment order.

15. We have heard the rival contentions of learned counsel for the parties and have also gone through the law laid down by the various High Courts in various cases. We consider it proper to reproduce the various provisions of law dealing with the matter : '2(31) 'person' includes-

(i) an individual,

(ii) a Hindu undivided family,

(iii) a company,

(iv) a firm,

(v) an association of persons or a body of individuals, whether incorporated or not,

(vi) a local authority, and

(vii) every artificial juridical person, not falling within any of the preceding sub-clauses.'

'143, Explanation (2):

'Status', in relation to an assessee, means the classification of the assessee as an individual, a Hindu undivided family, or any other category of persons referred to in Clause (31) of Section 2, and where the assessee is a firm, its classification as a registered firm or an unregistered firm.' '184. (3) 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....

184. (4)...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.

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 ofthe partners as evidenced by the instrument of partnership on the basis ofwhich 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. (1) On receipt of an application for the registration of a firm, the Income-tax Officer shall inquire into the genuineness of the firm and its constitution as specified in the instrument of partnership, and

(a) if he is satisfied that there is or was during the previous year in existence a genuine firm with the constitution so specified, he shall pass an order in writing registering the firm for the assessment year;

(b) if he is not so satisfied, he shall pass an order in writing refusing to register the firm.

Explanation :--For the purposes of this section and Section 186, a firm shall not be regarded as a genuine firm if any partner of the firm was, in relation to the whole or any part of his share in the income or property of the firm, at any time during the previous year, a benamidar-

(a) of any other partner to whom the first mentioned partner does not stand in the relationship of a spouse or minor child, or

(b) of any person, not being a partner of the firm, and any of the other partners knew or had reason to believe that the first mentioned partner was such benamidar and such knowledge or belief had not been communicated by such other partner to the Income-tax Officer in the prescribed manner.

(2) Where the Income-tax Officer considers that the application for registration is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the application 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, reject the application.

(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.

(4) Where a firm is registered for any assessment year, the Income-tax Officer shall record a certificate on the instrument of partnership or on the certified copy submitted in lieu of the original instrument, as the case may be, to the effect that the firm has been registered under this Act, for that assessment year; and where a declaration under Sub-section (7) of Section 184 is furnished by the firm, for the relevant subsequent assessment year.'

'246. (1) (c) an order against the assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;......

(j) an order under Clause (b) of Sub-section (1) or under Sub-section (2) or Sub-section (3) or Sub-section (5) of Section 185;...... (5) Explanation:--For the purposes of this section,--

(a) 'appointed day' means the date appointed under Section 39 of the Finance (No. 2) Act, 1977 ;

(b) 'status' means the category under which the assessee is assessed as ' individual', 'Hindu undivided family' and so on.

251. (1)(a) in an appeal against an order of assessment, he may confirm, reduce, enhance, or annul the assessment; or he may set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by the Appellate Assistant Commissioner (or, as the case may be, the Commissioner (Appeals) and after making such further inquiry as may be necessary, and the Income-tax Officer shall thereupon proceed to make such fresh assessment and determine, where necessary, the amount of tax payable on the basis of such fresh assessment;

(b) ............

(c) in any other case, he may pass such orders in the appeal as he thinks fit.'

16. Under Clause (31) of Section 2, the definition of 'person' has been given. This definition is not exhaustive. It provides that 'person' includes an individual, a Hindu undivided family, a company, a firm, an association of persons or a body of individuals, whether incorporated or not, a local authority and every artificial juridical person. Under Section 143, Explanation (2), 'status' has been explained, as in relation to an assessee, to mean the classification of the assessee as an individual, a Hindu undivided family or any other category of persons referred to in Clause (31) of Section 2, and where the assessee is a firm, its classification as a registered firm or an unregistered firm. Initially, under Clause (31) of Section 2, there might be an ambiguity whether an unregistered firm is a person or not, as defined in it. But after the statutory amendment in Section 143, Explanation (2), referred to above, there remains no ambiguity and even an unregistered firm is having its own status. There is a reasonable classification between a registered firm and an unregistered firm given in the Explanation (2) to Section 143 of the Act. In the Explanation to Sub-section (5) of Section 246, again, the word 'status' has been defined. 'Status' means the category under which the assessee is assessed as 'individual', 'Hindu undivided family' and so on. Mr. Ranka appearing on behalf of the assessee submits that from a perusal of the Explanation to Sections 143 and 246, it is clear that the category under which an assessee is assessed is the status for the purposes of assessment. He submits that in the instant case, from a perusal of the order of the Income-tax Officer as well as other authorities, it is clear that the status shown at the time of assessment of the assessee is that of an unregistered firm. He further submits that the words used in Section 246(1)(c) are that an order against the assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the status under which he is assessed, an appeal lies. The contention of Mr, Ranka is that the assessment order is a composite order and he is having the right of appeal on two counts. A lumpsum amount of Rs. 4,000 has been added to the income and, in this way, he gets right to appeal against the assessment. Secondly, he submits that the question of status is involved and the assessee has been assessed as an unregistered firm. He can take it >as a ground independently also and make a submission to the concerned authorities that the assessing authority has not rightly assessed him in the category in which he should have been assessed.

17. Mr. Surolia, on the other hand, submits that if the right of appeal is given, then the provisions of Section 184(7) would become nugatory and in every case a party will have a right of appeal. Mr. Surolia contends that the word 'status' as used in Section 246 should be given a restricted interpretation and should not be given a wider interpretation. He submits that the term 'status' incorporated in Section 246 provides an appeal to the Appellate Assistant Commissioner against the order of the Income-tax Officer cannot but take within it a dispute arising out of disallowance of registration of a firm for which special provisions have been made in Clauses (j) and (k) of the section. Mr. Surolia has, for this purpose, mainly relied upon Nilamani Ghosh and Partners v. CIT : [1977]106ITR281(Orissa) and CIT v. Pushpaka Trawls : [1985]152ITR717(Ker) . It will not be out of place to mention here that so far as Nilamani Ghosh's case : [1977]106ITR281(Orissa) is concerned, it relates to the assessment year 1968-69 covering the accounting period from October 1, 1967 to March 31, 1968. This is a case in which the provisions of the Act as it existed prior to the amendment have been considered by their Lordships. Apart from that, their Lordships have held that there is no clear indication in the Explanation that a registered firm is also a status for the purpose of Clause (j) of Section 246. Their Lordships were of the view that the said provisions have not been made in Clauses (j) and (k) to meet the situation regarding the dispute of registered or unregistered firm. They did not consider it proper to consider that the reference to the status under Clause (c) can cover the same field. So far as the case of CIT v. Pushpaka Travels : [1985]152ITR717(Ker) is concerned, the provisions of Clause (c) of Section 246 have not been considered in detail. Their Lordships were discussing the case of ITO v. Vinod Krishna Som Prakask : [1979]117ITR594(All) . Their Lordships after discussing the same observed in Pushpaka Travels' case as under : [1985]152ITR717(Ker) :

'As regards the proposition that the refusal to condone the delay which led to the assessment as an unregistered firm could be questioned in an appeal against the assessment order under Clause (c), there can be no dispute. But we do not see how an order refusing to condone the delay falls under that clause.'

18. In the above case, their Lordships have clearly held that as regards the proposition that the refusal to condone the delay which led to the assessment as an unregistered firm could be questioned in appeal against the assessment order under Clause (c) there can be no dispute. There are two aspects of the case: one is simple condonation of delay and the second is condonation of delay or Refusa1 of registration, or the continuation of registration may be one of the grounds challenging the assessment order made by the Income-tax Officer. In the instant case, it is not a case of simple appeal against the order refusing to continue the registration, but it is a case of appeal against a composite order of assessment, in which there is an order of not continuing the registration in exercise of the powers conferred under Sub-section (7) of Section 184. In one category of cases, where there is a case simpliciter challenging the refusal to grant continuation of registration we may consider that such cases may not fall within the purview of Clause (c) of Section 246. But where the case is of a composite nature and no separate order has been passed, or where there is a composite order and it cannot be separated, then the provisions of Clause (c) will be attracted. If there is a composite order and an appeal is preferred against that order to the appellate authority on the ground of assessment and on the ground of status, and if a revision is preferred before the other authority, then there is a likelihood that there may be conflicting orders also. In order to avoid such a contingency, a harmonious construction should be given and if the provisions of the Act override each other then the provisions which are beneficial to the assessee, in the matter of procedure, should be applied.

19. Now, we come to the provisions of Section 246(j). So far as the order under Clause (b) of Sub-section (1) of Section 185 is concerned, it is an order which has been passed by the Income-tax Officer on receipt of the application for registration of the firm. Thus, the order which is passed under Sub-section (7) of Section 184 definitely comes within the purview of Clause (b) of Sub-section (1) of Section 185 as the matter relates to the continuation of the registration granted. The second part of the order also relates to the defect in the application for registration submitted under Sub-section (1) of Section 185. In such cases, if the defects are not removed within the time prescribed, the application for registration stands rejected under these provisions. Sub-section (2) of Section 185 is also not similar to the provisions of Sub-section (7) of Section 184. So far as Sub-section (3) of Section 185 is concerned, it relates to the filing of the declaration under Sub-section (7) of Section 184. If the declaration is filed within the prescribed time and there is a defect and the defect is not removed, then the provisions of Sub-section (3) of Section 185 come into operation and the order refusing continuation of registration may fall within Sub-section (3) of Section 185, which is appealable under Clause (j) of Section 246. Sub-section (7) of Section 184 provides that where registration is granted to any assessee firm for one assessment year, it shall have effect for subsequent assessment years. There are only two exceptions to that. One is as provided under Clause (i) of Sub-section (7) relating to the challenge to the constitution of the firm and the second is that as provided under Clause (ii) of Sub-section (7) of Section 184. Sub-section (7) provides that a declaration to that effect, in the prescribed form, should be filed within the prescribed time and if the declaration is not filed, then the Income-tax Officer can allow filing of the declaration at a subsequent stage if he is satisfied that the assessee firm was prevented by sufficient cause from furnishing the declaration. Thus, the time was allowed. However, there is one more restriction, viz., that the Income-tax Officer can allow the filing of a declaration in Form No. 12 only beforethe assessment. Thus, this part is not an overriding provision of Section 246(j). Section 246(j) does not deal with the cases in which nodeclaration has been filed, but it deals with cases in which a declaration has been filed, and it is defective and because of the non-complianceof the order for removal of the defects, continuation has been disallowed.Thus, we do not find that Clauses (c) and (j) of Sub-section (1) of Section 246override each other, although they are operating in their own jurisdiction,and any ground relating to status can be taken by way of appeal under Clause (c) of Section 246.

20. The question of removing, the defects and entertaining the application does not arise where a declaration, has been filed in accordance with law in Form No. 12 and the only mistake is that it is not filed within the prescribed time. In such a contingency, Clause (c), is likely to come into operation.

21. Apart from that, the law has to be interpreted to meet the ends of justice. It should not be hypertechnical arid, if any bona fide mistake is found in the matter of procedure, it should be considered in a way which may lead to a harmonious construction of the statute resulting in justice to the people for whose benefit the law has been enacted.

22. For the reasons stated above, we are of the view that an appeal liesunder Clause (c) of Section 246. In the result, we answer the questionreferred to us in the negative, i.e., in favour of the assessee and againstthe Revenue. There will be no order as to costs.

23. A copy of this order under the seal of this court be forwarded to theTribunal as required by law.


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