2004 (9) TMI 64 - HC - Income Tax

Firm cancellation of registration - under section 185 registration is granted under section 186 it can be cancelled - provision of section 186 cannot be invoked by the assessing authority in case where the registration has been granted in compliance with an appellate order Held that the Tribunal has not committed any error in upholding the order of the Appellate Assistant Commissioner vacating the order of cancellation of registration passed under section 186(1) - Held that the Income-tax Officer can derive mandate from section 186(1) only in respect of the orders passed under section 185(1)(a and once the provisions of section 185(1)(b) are invoked section 186(1) simply cannot be brought to play any role revenue appeal dismssed

Summary

Issues:
Interpretation of sections 185 and 186 of the Income-tax Act, 1961 regarding registration and cancellation of registration for a firm for the assessment year 1974-75.

Analysis:
The case involved a firm whose registration was initially rejected by the Income-tax Officer for the assessment year 1974-75 due to late submission of information about the formation of partnership. However, the Appellate Assistant Commissioner reversed this decision and directed the Income-tax Officer to grant registration, which was accepted by the Revenue. Subsequently, the Income-tax Officer initiated proceedings under section 186(1) of the Act to cancel the registration for the years 1974-75 to 1978-79, leading to the cancellation of registration for all these years. The firm challenged the cancellation for the assessment year 1974-75 before the Appellate Assistant Commissioner, who allowed the appeal based on a decision of the Assam High Court. The Revenue's appeal before the Tribunal was unsuccessful.

During the hearing, the counsel for the Revenue argued that sections 185 and 186 of the Act operate in different contexts, with section 185 dealing with registration and section 186 allowing for cancellation under specific circumstances. However, it was contended that section 186 cannot be invoked by the assessing authority if registration has been granted in compliance with an appellate order. The court agreed with this argument, emphasizing the importance of following judicial doctrine and hierarchy. Consequently, the Tribunal's decision to uphold the Appellate Assistant Commissioner's order vacating the cancellation of registration under section 186(1) was deemed appropriate.

In conclusion, the court answered the question referred to them in the negative, favoring the assessee and ruling against the Revenue. No costs were awarded in this matter.