TMI Blog1999 (5) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... income on 29-3-1994 and has declared therein total income at Rs. 15,00,300. The return filed by the assessee was not processed under section 143(1)(a) for the reason that this would result in refund. In response to notice under section 143(2) of the Act, Sri R.R. Paliwal, Accountant of the firm attended from time to time and explained the return with the help of books of account, bill, vouchers, etc. 3. The assessee, in the return of income filed by it on 29-3-1994 has shown and treated the status as unregistered firm while finalising the assessment, the Assessing Officer found that the assessee has filed partnership deed along with the Form No. 11A on 3-5-1990 and has also filed Form No. 12 on 23-8-1991. He further observed that in addition to that the assessee has enclosed a photocopy of the partnership deed along with the return. In view of the above, the Assessing Officer denied the claim of the assessee and treated the firm as registered firm. He passed an order under section 185 which is reproduced as under :--- "There was a change in the constitution of the firm as one of the partners Shri Rajendra K. Sancheti retired w.e.f. 31-3-1990, and two new partners entered in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply to the facts of the case, as in this case, the assessment has been taken for the first time under section 143(3) r/w 147 and no assessment prior to one under reference was ever made. It was also clarified that there are 5 partners with 20% share. 5. The CIT (Appeals) was entirely in agreement with the assessee-counsel's contentions and arguments that the status of the firm cannot be changed to registered firm when the return was filed in the status of 'unregistered firm and that no legal provisions are invoked or applicable to change the status. According to CIT (Appeals) merely because the Form Nos. 11A and 12 are filed, registration cannot be thrusted on the assessee when section 183(b) is not invoked. He also pointed out that infact taxing the firm as 'unregistered firm' is in the interest of the Revenue and accordingly he allowed the appeal of the assessee. 6. Being aggrieved by the order of the CIT (A), the revenue has preferred this appeal to the Tribunal on the grounds mentioned in para- 1 7. The learned Departmental Representative invited our attention to para 9 of the assessment order, order under section 185 and para-4 of the CIT (A)'s order and submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion under section 184 is rejected. Placing reliance on Orissa High Court's decision i n the case of CIT v. Mahabir Fancy Store [I 993] 202 ITR 553/67 Taxman 32 1, the learned counsel for the assessee further pleaded that two separate appeals should be filed in such cases. 8. In reply, the learned Departmental Representative submitted that the loss of revenue is heavy if the status of the assessee is treated as unregistered firm. 9. We have carefully considered rival contentions, relevant facts and materials placed on record and we have also gone through the case laws on which reliance is placed by both the parties. 10. The first contention of the assessee is that the return was filed showing the status as 'unregistered firm'. In our opinion, the status of the 'unregistered firm' as claimed in the return cannot be treated as final and concluded as the ratio of Supreme Court's decision in the case of CIT v. Sun Engg. Works (P.) Ltd is not applicable and as accepted by the CIT (Appeals) that no assessment prior to the one under consideration was ever made and that this is the first assessment under section 143(3), read with section 147, the status claimed as unregistered firm c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tnership deed and the registration was granted after the Assessing Officer was satisfied that application is in time and order and genuine firm has come into existence. Thus, the contention of the assessee that at no stage claim for registration is made, is reversed by the documentary evidence. 12. We find that the points mentioned at sub-paras (3) and (4) of para 3 of the CIT (A)'s order relating to application of provisions of section 183(b) of the Income-tax Act are absolutely irrelevant as the Assessing Officer has neither invoked nor applied the same as admitted by the assessee. 13. The 5th contention of the assessee before the CIT (Appeals) was that the status shown by the assessee cannot be changed automatically unless there is any legal basis which is not the case here, is also neither correct nor tenable. Firstly, because the status of the assessee has not been changed automatically, but it has been changed deliberately by the Assessing Officer after discussion with the authorised representative of the assessee who explained the return including the status claimed therein. Secondly, there is a legal basis available to the Assessing Officer and therefore the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complied with and fulfilled and therefore in our opinion the registration has correctly been granted by the Assessing Officer to the assessee-firm. 16. We further notice that the CIT (A)'s conclusion that merely because Form Nos. 11A and 12 are filed, registration cannot be thrusted on the assessee when the provisions of section 183(b) are not invoked is not only irrelevant but also legally incorrect. The application for registration in Form No. 11A addressed to the Assessing Officer is filed by the partners on behalf of the assessee firm in accordance with the provisions of Rule 22(2)(ii) of Income-tax Rules, 1962 giving prescribed particulars, declaration and certificate therein. Likewise, the declaration under section 184(7), r/w Rule 24 in Form No. 12 addressed to the Assessing Officer is filed by the partners on behalf of the assessee. As the declaration in Form No. 12 and these applications in Form Nos. 11 and 11 A are not withdrawn by the partners on behalf of the assessee-firm, the Assessing Officer has rightly and legally acted upon because they were in time and order particularly the application in Form No. 11 which is relevant in this case. In view of this, the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be upheld. Moreover, by taxing the assessee as a registered firm, even if there is loss to revenue since the assessee-firm, has fulfilled all the essential conditions, it cannot be denied registration. In the case of Nagappa Abdulpurkar in the Bombay High Court has held as under :--- "Held that, in view of the clear finding of the Tribunal that the partnership was both valid and genuine and since there was no legal bar to the formation of such partnership, the firm was entitled to registration under section 26A of the Indian Income-tax Act, 1922, and such a firm cannot be denied registration merely because there would be some loss of revenue." 17. In order to support the contentions and arguments, the learned counsel for the assessee has placed reliance on the decision of Orissa High Court in the case of Mahabir Fancy Store wherein it was held as under :--- "An order of assessment and an order refusing registration to a firm are separate and distinct orders requiring separate appeals. Even if the Income-tax Officer passes one single order making a best judgment assessment and refuses registration to a firm under section 185(5) of the Income-tax Act, 1961, separate appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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