TMI Blog2004 (1) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... cts in holding that the provisions of section 186(2) of the Income-tax Act were applicable in the instant case though the order of the Income-tax Officer in effect was an order refusing to grant registration and not cancelling the registration? 2. Whether the Appellate Tribunal is right in law and on facts in holding that the provisions of section 186(2) are applicable and that the requirements of the said section are not complied with?" The respondent-assessee is a firm treated as unregistered firm (URF) by the Income-tax Officer vide order dated February 21, 1985. The ex parte assessment was made against the respondent-assessee unregistered firm and the order came to be passed as a result of persistent non-compliance with the notices issued by the Income-tax Officer from time to time under sections 143(2) and 142(1) of the Act. It appears from the record of the case that on some of the dates fixed for hearing, adjournment applications were moved on behalf of the assessee whereas on some other dates there was no compliance at all. As a result thereof, the Income-tax Officer fixed the hearing of the case on February 18, 1985. In the letter dated February 8, 1985, it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s cited by learned counsel for the appellant support the aforesaid proposition. We, however, find that certain relevant facts are not available on record, viz., the compliance by the appellant with all the necessary formalities entitling it to registration. Even the date on which the application in Form No. 12 has been filed is not indicated. For this limited purpose we restore the matter back to the file of the Income-tax Officer accepting at the same time the arguments advanced on behalf of the appellant." It is this finding and resultant order which has given rise to the instant reference at the instance of the Revenue. We have heard Mr. Manish R. Bhatt, learned standing counsel for the Revenue. Though the respondent-assessee is not served, we thought it fit not to wait till the service is effected on the respondent-assessee, as the questions referred in this reference are required to be answered in favour of the assessee and against the Revenue. The only contention which is raised by Mr. Bhatt, learned standing counsel for the Revenue, is that the Tribunal has misdirected itself in invoking the provisions of section 186 of the Act which contemplates cancellation of reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a firm under the Act. Subsection (5) thereof reads as under: "185. (5) Notwithstanding anything contained in this section, where, in respect of any assessment year, there is, on the part of a firm, any such failure as is mentioned in section 144, the Income-tax Officer may refuse to register the firm for the assessment year." Section 186 provides for cancellation of a firm which has already been registered or registration of which continues under section 184(7). Sub-section (2) of section 186 reads as under: "186. (2) If, where a firm has been registered or its registration has effect under sub-section (7) of section 184 for any assessment year, there is, on the part of the firm, any such failure in respect of the assessment year as is mentioned in section 144, the Income-tax Officer may cancel the registration of the firm for the assessment year, after giving the firm not less than fourteen days' notice intimating his intention to cancel its registration and after giving it a reasonable opportunity of being heard." Since both section 185(5) and section 186(2) refer to failure mentioned in section 144, the said section is also reproduced: "144. If any person- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t assessment year provided that there is no change in the constitution of the firm or the shares of the partners and at the time of filing the return of income within the time limit allowed under section 139, the firm makes a declaration in the prescribed form and manner that there is no change in the constitution of the firm or the shares of the partners as evidenced by the partnership deed on the basis of which the registration was granted. The Tribunal's order, therefore, proceeds on the basis of the aforesaid factual condition precedent. Nothing is shown from the record that this factual assumption made by the Tribunal is incorrect Of course, Mr. M. R. Bhatt, learned counsel for the Revenue, has submitted that in view of the absence of any categorical statement in the statement of case about the assessee-firm having been registered for any previous assessment year, the matter may be kept open. Although we would not have acceded to such request, as the dispute is about registration for the assessment year 1983-84 and the Tribunal had also decided the matter in the year 1990, since the Tribunal itself has restored the matter before the Income-tax Officer for verification of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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