K.C. Sen, J.
1. This is a reference under Section 66(2) of the Income-tax Act, 1922 hereinafter described as the Act. The following question of law has been referred to this Court for its opinion:
'Can an appeal under Section 30 of the Indian Income Tax Act against the claim of the best judgment assessment also combine an appeal against the refusal of registration when the assessment and the refusal are made in the same order under Section 23(4) of the Income Tax Act?'
The assessee Messrs. Fuel Supply Company is a partnership firm carrying on a business in colliery materials tools and other things. The assessment year in question is 1956-57 and the corresponding accounting year is the Diwali year 2011/12. This partnership firm was registered under Section 26A of the Income-tax Act ever since the assessment year 1946-47. A notice under Section 22(2) of the Act was served on the assessee on the 26th July 1956. There was no compliance with the notice by the assessee till the 16th September 1957. Thereafter a notice under Section 22(4) was also served upon the assessee to produce the books of accounts on the 10th September 1957 and the date of hearing before the Income-tax Officer was fixed on the 13th September, 1957. This notice was not also complied with. Accordingly, the Income-tax Officer completed the assessment under Section 23(4) on the 16th September 1957 to the best of his judgment and in the same order renewal of registration of the 'firm was refused. The assessee appealed to the Appellate Assistant Commissioner and its original grounds of appeal were confined only to the quantum of assessment and to the propriety of assessment under Section 23 (4). An additional ground was allowed to be raised by the Appellate Assistant Commissioner regarding the order of refusal of registration. It runs as follows:
'For that the learned Income Tax Officer was wrong in cancelling the registration of the firm and assessing the firm in the status of unregistered firm without giving the assessee any opportunity of being heard as laid down in the proviso to Section 23 (4) of the Income Tax Act.'
2. It will appear from the statement of the case, in which the order of the Appellate Assistant Commissioner has been quoted, that the quantum appeal was dismissed by the Appellate Assistant Commissioner, but in the same order it was found that even though the application for renewal of registration was submitted long before the assessment order was passed, there was no specific order under Section 26-A, Accordingly, it was directed that the Income-tax Officer should consider the application under Section 26-A in accordance with law,which was submitted before the Income Tax Officer on the 29th June 1956.
3. The department was aggrieved by thedecision and in the appeal before the Appellate Tribunal, it was contended that the appellate Assistant Commissioner erred in assuming jurisdiction for going into the question whether the Income Tax Officer was right or wrong in not disposing of the application under Section 26A, while hearing an appeal against an assessment made under Section 23(4) of the Act. Before the Tribunal it was contended on behalf of the assessee that when an appeal was taken against the best judgment assessment made under Section 23(4), the assessee had a right to agitate against the order of refusal of registration passed in the same order under Section 23 (4) The Tribunal after hearing the parties came to the conclusion that the quantum and registration appeals are two different matters and if the assessee wanted to agitate against the order of refusal of registration he ought to have filed am appeal in Form No. DII and could not agitate it in the quantum appeal. Furthermore, it was observed that in the appeal to the Appellate Assistant Commissioner the assessee had nowhere asked for relief under Section 26A and, therefore, the Appellate Assistant Commissioner acted without jurisdiction in taking upon himself the power to grant the assessee a relief which was not asked for. In terms of the Tribunal's order, it appears that although a composite order was passed by the Income Tax Officer, it was the bounden duty, under the statutory provision, on the part of the assessee to file two separate appeals viz., (i) Quantum appeal in the Form No. B and (2) Refusal of registration appeal in Form No. DII.
4. Mr. H. N. Ghosh, the learned counsel appearing for the assessee contends that the order of the Income Tax Officer under Section 23(4) is both, an order of assessment and an order refusing registration of the Firm. This is one composite order as contemplated in Section 23(4). If two separate orders were passed by the Appellate Assistant Commissioner, a question might have arisen as to whether two appeals, one in B Form and the other in DII Form were to be filed. According to Mr. Ghosh, in terms of Rule 21 of the Rules under the Income Tax Act Form B is the residuary form and an appeal of the nature as filed by the Assessee before the Assistant Appellate Commissioner was in order. Furthermore, according to the provisions contained in the forms, it is incumbent that in appeals under Section 30 the demand notice has to be attached to the appeal in Form No. D.II and if an appeal is filed in Form B against the quantum of assessment, which also requires the filing of the demand notice, it becomes impossible for the assessee to annex the same in the appeal in Form No. D.II. His main contention is that it would be unjust in the circumstances like this, to call upon the assessee to file two appeals and the Appellate Assistant Commissioner was justified in passing the order in the manner he did, as the composite order of the Income-tax Officer was before him.
5. Before entering into the merits as involved in the question it is necessary to refer to the relevant provisions of the Act. Sub-section (4) of Section 23 contains the following three alternative ingredients where best judgment assessment can be made:
1) Where the assessee has failed to make the return required by a notice under Section 22(2), and has not made a return or a revised return under Section 22(3).
2) Where there has been a failure to comply with the terms of the notice issued under Section 22(4), requiring the assessee to produce accounts or other, documents or information specified therein and
3) Where the return has been made, but the Income-tax Officer considers it to be incorrect or incomplete and serves a notice under Section 22(3) against an assessee requiring his appearance or the production by him the evidence in support of his return, but the assessee does not comply with the terms of the notice.
Further, if the assessee is a firm the Income-tax Officer may in his discretion in any of the three contingencies mentioned above refuse to register the firm or may cancel its registration if it is already registered, subject to the proviso that the registration' of the firm can only be cancelled after the lapse of 14 days from the issue of a notice by the Income-tax Officer to the firm intimating his intention to cancel its registration. The ingredients of this Section would clearly go to show that the order regarding quantum of assessment and the order refusing registration, as in the instant case, was indissolubly connected with the assessment order. Therefore the moot question for consideration would be whether, a composite appeal in Form B in which an additional ground as stated before was permitted to be taken under Section 31 Sub-section 2-A, should be treated as a valid appeal under the statutory provision.
6. Section 30 provides for appeal against assessment under this Act. It provides inter alia that any assessee objecting to the amount of income assessed under Section 23 or Section 27...... or objecting to the cancellation by an Income-tax Officer of the registration of a firm under Sub-section (4) of Section 23 or to a refusal to register a firm under Sub-section (4) of Section 23 or Section 26-A...... may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order. Although the order under Section 23(4) is required to be a composite order and consequent upon the best judgment assessment, yet in Section 30 it appears clear that the tight of appeal against an assessment order under Section 23 and a right to appeal against an order of refusal under Section 23(4) are distinct rights, being disjunctive and not conjunctive. Therefore in the first blush it appears that the Legislature was not oblivious of the provision of Section 23(4) and in spite of it, this separate right of appeal as aforesaid has been provided for and nowhere in Section 30 or in any other Section it has been provided that a composite appeal ought to be filed against an order under Section 23(4).
7. Rule 21 prescribes the forms in which several appeals need be filed. It has been specifically provided for therein that an appeal under Section 30 against an order of refusal of registration by the Income-tax Officer under Section 26-A should be filed in Form DI. In the case of an appeal against the order of refusal by the Income-tax Officer to register a firm or the cancellation of the registration of a firm under Sub-section (4) of Section 23 should be filed in Form DII ...... and in other cases in Form B. The rule does notspecifically provide for any form regarding quantumappeal under Section 23(4). In the absence of aspecific provision such an appeal should be filedin form B, which has been done in the instantcase. The heading of Form B shows that it is anappeal against assessment to income-tax and itseems to me that the assessee was right in filingan appeal against the quantum assessment in thisform but in Rule 21 there being a specific provisionthat an appeal against an order of refusal underSection 23(4) should be filed in form DII, we arefaced with a vexed question whether appeal inB form against a composite order under Section 23(4)would be competent. Form D.II shows that theRule Making Authority was not oblivious of thefact that the order of refusal is a consequentialorder to the best judgment assessment order passedby the Income-tax Officer under Section 23(4).It runs as follows: ,
'In making an assessment on the petitioner firm under Sub-section (4) of Section 23 of the Income-tax Act, 1922,' the Income-tax Officer has refused to register/has cancelled the registration of the firm.'
This provision requires that a separate appeal has to be filed, although the underlined portion (here into) above shows that the order of refusal was consequential to the order of best judgment assessment. The difficulty of filing a separate appeal as pointed out by Mr. Ghose is that in paragraph 2 of the form there is a provision that the notice of demand served upon the assessee is required to be filed in the appeal. As a matter of fact the assessee is served with one demand notice and it becomes an] impossibility on the part of the assessee to file two demand notices both in form B and in form D.II appeals. This contention as urged by Mr. Ghosh prima facie appears to be sound. The Tribunal has however observed in this connection that in a case like this, a mere mention in one of the appeals that the demand notice has been submitted in the other, would be enough. It seems to me on a reference to the provision of Section 30 and the provisions contained in Rule 21 and in form D.II that the observation of the Tribunal as stated before is based on reasons and if in D.II appeal the demand notice is not filed, it may at best be an irregularity which might at the instance of the Appellate Assistant Commissioner be condoned under the exigencies of the circumstances, with which the assessee is confronted.
8. It will appear from Rule 21 that a separata form has been prescribed in respect of appeals preferred against an order under Section 26-A. I am in agreement with Mr. Balai Pal when he says that the order of refusal to register under Section 26-A and under Section 23(4) stand entirely on a different footing. The procedure in registration of Firms has been provided for in Section 26-A and such procedure is controlled by the Rules framed under the Act. This Section contemplates that a firm's registration might have been renewed from year to year, in the past yet the Income-tax Officer may refuse to renew the registration in a particular year, if the application for renewal is not in order or if the Income-tax Officer is not satisfied that the Firm is genuine and actually existed in terms specified in the instrument of Partnership, Furthermore, cancellation of registration may be effected under Rule 6-B. The provisions in this Section are substantially different from those in Section 23(4) as registration of a firm under this Section may either be refused or be cancelled in any of those contingencies which warrant a best judgment assessment. This being the position, two separate forms of appeal, viz., D.II and D.II have been provided for by the Rule Making Authority and, as such, I am of opinion that if the assessee was aggrieved by the order of refusal of registration it was incumbent on him to file a separate appeal in form D.II and for the reasons discussed above it appears to me that a composite appeal in form B, as in the instant case will not be justified by law.
9. The next question which arises for consideration is whether the view expressed by me above is justified in view of the decision reported in Sm. Durgabati v. Commr. of Income-tax Bihar and Orissa : 30ITR101(Patna) , which has been cited by Mr. Ghosh in support of his contention. Briefly stated what happened in this case was that two ladies' Sm. Durgabati and Sm. Narmada Bala Gupta entered into partnership for carrying on a business. In terms of the partnership, the partnership was not to be dissolved by the death of any of the partners and that on the death of a partner her sons and grandsons would automatically become partners and the partnership would be deemed to be continuing and would continue. In May 1943, one of the partners died leaving a Will by which she bequeathed her share to her two minor sons. For the assessment year 1944-45 registration of the firm under Section 26-A consisting of the surviving partner and the sons of the deceased partner was granted and this was renewed in 1945-46 and 1946-47. For the assessment years 1947-48, 1948-49 and 1949-50 the Income-tax Officer renewed the registration and simultaneously assessed the firm under Section 23(5) in September 1949. The order of registration was in favour of the assessee but as the quantum of assessment was not satisfactory to the assessee an appeal was taken to the Appellate Assistant Commissioner against the quantum of assessment. The order of the Income-tax Officer regarding assessment was either modified or affirmed. Thereafter the Commissioner of Income-tax exercising his powers under Section 33-B called for the record of assessment and after giving notice cancelled the registration order passed by the Income-tax Officer. An appeal was taken to the Appellate Tribunal against the order passed by the Commissioner under Section 33-6 by the assessee. The appeal was, however, dismissed. One of the questions which arose for consideration is as follows:
'Whether in the facts and circumstances of the case the orders passed by the Commissioner of Income-tax cancelling the orders of the Income-tax Officer granting registration of the firm and directing the Income-tax Officer to determine the tax payable by the firm on the basis that no registration has been granted to the firm was valid in law.'
10. The matter came up before Ramaswami, J. as he then was and Misra, J. There was a difference of opinion between them, the former holding that in spite ,of the fact that a decision in favour of the assessee was made by the Appellate Assistant Commissioner, the Commissioner of Income-tax had jurisdiction to pass an order under Section 33-B. The latter was pleased to hold that such a position was not tenable in law in view of the fact that the Appellate Assistant Commissioner was in seisin of the case and in view of the order passed by him the Commissioner of Income-tax could not have exercised his powers under Section 33-B. For this difference of opinion, the matter was referred to the Third Judge (S. K. Das, C. J.) who concurred with the view expressed by Misra, J. although on some different reasons.
11. Both the learned Judges (Ramaswami and Misra, JJ.) in their separate judgments dealt with the question as to whether one appeal should lie against a composite order passed by the Income-tax Officer. Ramaswami, J., it seems, expressed his opinion, almost on the same lines as indicated by me before whereas Misra, J. was pleased to observe as follows at p. 124:
'If, however, an order refusing registration or cancelling registration under Section 23(4) is passed by him in course of the assessment proceeding, and the assessee goes up in appeal against the quantum of assessment, the entire order passed by the Income-tax Officer, in my opinion is before the Appellate Authority. The order will thus relate not only to the amount actually determined upon the assessee but also to any other conclusion arrived at by the Income-tax Officer in course of the proceeding although it may relate to a refusal to register which might in certain circumstances have been the subject-matter of an independent order. If however, such a refusal to register, in fact, is not an independent order but is a part of the order of assessment, I can see no reason why the matter cannot be reopened at the instance of the Income-tax Department before the Appellate Assistant Commissioner.'
12. The above is the passage on which reliance has been placed by Mr. Ghosh. It appears to me from the said decision that the Income-tax Officer passed an order granting the registration under Section 26-A. Against such an order there is no scope of appeal by the Department. Accordingly, it was observed in the aforesaid judgment by Misra, J. that the Income-tax Department was within its rights to agitate the propriety of the order of granting registration while the entire appeal was before the Appellate Assistant Commissioner. In the instant case, the position is rather different as there was a dissatisfaction as to the quantum of assessment and also against the order of refusal of registration. Regarding both the matters the Department had nothing to do with 'the appeal, as it was not aggrieved by the order of the Appellate Assistant Commissioner. In these circumstances the question has arisen whether two separate appeals need be filed by the assessee under Section 30 of the Act. The observations by Misra, J. were made on different set of facts and the question was to the effect whether after the appellate order passed by the Appellate Assistant Commissioner the Commissioner of Income-tax could have jurisdiction to pass an order under Section 33-B. It will appear that S. K. Das, C.J. in his order did not actually come to the decision regarding the question whether two separate appeals need be filed as stated by both the learned Judges. His Lordship S. K. Das C.J. was pleased to observe as follows:
'I do not, therefore, think that the answer to the question depends on whether each of the; order of the Income-tax Officer dated 24th September 1949 and 21st December 1949 is to be treated as consisting of two separate orders or not. The real point to consider is whether the third restrictions of Section 33-B of the Indian Income-tax-Act has been over stepped or not.'
This observation shows that whatever was statedi by the two respective learned Judges, Ramaswami,. J. and Misra J. regarding filing of one appeal or two appeals against a composite order under Section 23(4) did not seem to have actually arisen in deciding the question referred to the Patna High Court. S. K. Das, C.J. however, pointed out in deciding the question in favour of the assessee that the order of best judgment assessment and of allowing the registration under Section 26-A, was an indissoluble order and while the Appellate Assistant Commissioner was in seisin of the matter the Commissioner of Income-tax had no jurisdiction to exercise the power of revision under Section 33-B.
13. This being the position, I am of opinion that the instant case is distinguishable from the reported decision of the Patna High Court referred to above and, as such, it seems to me that the stand taken by Mr. Ghosh on this decision is not sustainable.
14. AS regards the merits, it appears that the assessee did not in his additional ground of appeal specify that he was dissatisfied with the order of the Income-tax Officer regarding refusal of registration, but; pressed the ground for the reasons that the firm of the assessee was assessed in the status of unregistered firm without giving the assessee any opportunity of being heard as laid down in the proviso to Section 23(4) of the Indian-Income-tax Act. Although such a ground was-taken, the Appellate Assistant Commissioner directed the Income-tax Officer that the application, under Section 26-A which was pending before him should be decided on its merits. We are not, however, concerned with this aspect of the casein the present reference and, therefore, any discussion on this point would be more or less-academic.
15. Mr. Balai Pal appearing for the department has contended that the appeal before the Appellate Assistant Commissioner regarding refusal of registration was infructuous as it will appear from the order of the Appellate Assistant Commissioner that the petition under Section 27 was rejected and the appeal against the order of the Income-tax Officer under Section 27 was also dismissed. The question, therefore, arises whether an appeal under Section 30 against the order of refusal of registration is competent in view of the order passed under Section 27. In my opinion, the present appeal before the Income-tax Officer was not incompetent as Sections 27 and 30 are independent of each other and the two co-exist. The assesses under the circumstances can avail of one or both the remedies. By the Amending Act of 1939, a right of appeal has been given against best judgment assessment made under Section 23(4), in addition to the right to apply for cancellation of the assessment under Section 27. Prior to 1939, the only relief available to the assessee against a best judgment assessment was that provided by Section 27. Section 27 provides that cancellation of assessment may be made if an assessee was satisfactorily found to have been prevented by sufficient cause from complying with the terms of the relevant notice under Section 22, whereas Section 30 gives a right of appeal on merits. Accordingly in my opinion the contention as raised by Mr. Balai Pal in this regard cannot be accepted.
16. Mr. Ghosh has further advanced the argument that even assuming that two appeals need be filed, against the composite order passed under Section 23(4), yet if resort was not had tosuch a procedure, it may at best be said that the challenge of the two orders contained in the composite order passed by the Income-tax Officer in one appeal in form B, should at best be treated as an irregularity. In support of his contention he has referred us to a decision of this Court reported in Sheonath Singh v. Commr. of Income-tax, West Bengal, . In my opinion, the decision of this case is not of much assistance to the assessee in view of the fact that it appears in the reported decision that an appeal was filed in the appropriate form but the assessee did not sign the memorandum of appeal within the period of limitation. The Income-tax Tribunal held that as the memorandum of appeal was not signed by the appellant within the period of limitation it was incompetent. But Chakravartti, C. J. sitting with Guha, J. was pleased to hold amongst others that the absence of or defect in the signature of the appellant in the memorandum of appeal was not an illegality or fatal but only an irregularity which could be rectified by amendment, the amendment taking effect from the date when the document had originally been filed. The memoranda as originally filed were not nullities and the Tribunal has power to accept them in the condition in which they found them at the time they were hearing the appeal provided they were satisfied that the assessee had, in fact, intended the appeal to be placed before them and had done so through the authorised representative although he had not himself signed the memorandum. I am afraid that this decision will not be of any assistance to the assessee in view of the fact that no question of irregularity in the instant case arises, as no compliance with the statutory provision has been made in filing the appeal against the order of refusal of registration passed by the Income-tax Officer. 'If after filing two separate appeals any irregularity was noticed, it might according to the discretionof the Appellate Assistant Commissioner, be condoned. It has already been pointed out that if the demand notice could not be filed in Form D.II appeal, it might at best be treated as an irregularity and not an illegality.
17. To sum up my decision is that in view of the provisions contained in Section 23(4), Section 30 and the statutory forms prescribed, viz., forms B. DI and DII, it appears that two appeals in a case like this are required to be filed.
18. In the premises our conclusion is that the question should be answered in the negative.
19. Considering the circumstances, each party in this reference is directed to bear its own costs. Certified for counsel as against respective clients.
20. S.P. Mitra, J. : I agree.