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TMI Blog1971 (12) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm showing the total income during the previous year ended November 8, 1961, was filed with the Income-tax Officer. It was received by the Income-tax Officer on December 1, 1962. In Part III(b) of the return of income, the names of the partners of the firm were: Saraswati Kumar, Giani Ram, Prahlad Rai, Kashmiri Lal, Kanhiya Lal and Lahori Mal. In column 3 of the Table as prescribed in Part III(b) of the return the extent of share of the various partners were given as follows: 12 1/2 months 15 days Rs. As. Ps. Rs. nP. Saraswati Kumar 0 4 0 0 25 Giani Ram 0 4 0 0 25 Prahlad Rai 0 4 0 0 20 Kashmiri Lal 0 1 6 ------------- Kanhiya Lal 0 1 6 0 15 Lahori Mal 0 1 0 0 15 In Part VII of the return of income also the assessees stated that the profit or loss as per profit and loss account was for the period ending November 8, 1961. Along with the return the assessee filed a declaration in Form No. 12 dated November 16, 1962. The note below the declaration indicated that the words "or to the date (... 19) of dissolution of the firm" were applicable only if the firm had been dissolved before the date of this declaration. The date as required in this form of declaration was not fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p business were to be prepared and the profit or loss of the partnership was to be credited or debited respectively in the accounts of the parties. The previous year for the assessment year thus comprised the period extending from October, 1960, to November 8, 1961. The firm was registered under the Income-tax Act, 1922, for and up to the assessment year 1961-62. Kashmiri Lal, one of the partners, died on October 21, 1961, within the previous year. On November 13, 1962, return of the income of the firm, Sant Lal Kanhiya Lal, showing the total income during the previous year ending on November 8, 1961, was filed with the Income-tax Officer. It was received by the Income-tax Officer on December 1, 1962. As in the case of Sant Lal Kashmiri Lal, the return contained the necessary particulars and in column No. 3 of the Table as prescribed in Part III(b) of, the return, the extent of share of the various partners was given as follows: 12 1/2 months 15 days Kanhiya Lal 28 nP. 33 nP. Lahori Mal 28 nP. 34 nP. Prahlad Rai 25 nP. 33 nP Kashmiri Lal 19 nP. nil. Similar declarations were also filed in this case and were signed by Lahori Mal, Prahlad Rai and Kanhiya Lal. It was also sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income-tax Officer, the assessee went up in appeal before the Appellate Assistant Commissioner. One of the questions that came up before the Appellate Assistant Commissioner was whether the assessee was aggrieved by an order made by the Income-tax Officer and as such whether an appeal lay to the Appellate Assistant Commissioner. It was urged by the assessee that there was no provision under section 184(7) of the Income-tax Act, 1961, which gave authority to the Income-tax Officer to refuse to register the firm and therefore no provision had been made in the Act conferring any right on the assessee to file an appeal with the Appellate Assistant Commissioner against any order under section 184(7) of the Income-tax Act, 1961. It was, however, contended that the contents of the order made by the Income-tax Officer bore resemblance to an order that may be passed under section 185(1)(b) of the 1961 Act and the Income-tax Officer's order should therefore be treated as an order under section 185(1)(b) and an appeal against that order could therefore be entertained by the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that the order passed by the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder dated July 19, 1963, and since no appeal lay against an order passed by the Income-tax Officer under section 184(7), the order of the Appellate Assistant Commissioner was set aside and that of the Income-tax Officer restored. On the above facts the Tribunal, at the instance of the assessee, referred the following question of law to this court: " Whether an appeal lay to the Appellate Assistant Commissioner against the order of the Income-tax Officer dated July 19, 1963?" In the Act of 1922 the term "registered firm" was defined in clause (14) of section 2. It meant a firm registered under the provisions of section 26A. The later section provided for procedure in registration of firms and read as follows: " (1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income-tax or super-tax. (2) The application shall be made by such person, or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted as shown in the instrument of partnership and that the application has been properly made, he shall enter in writing at the foot of the instrument or certified copy, as the case may be, a certificate in the following form, namely: "This instrument of partnership/certified copy of an instrument of partnership, has this day been registered with me, the Income-tax Officer for . . . in the State of . . . under section 26A of the Indian Income-tax Act, 1922, and this certificate of registration shall have effect for the assessment for the year ending on the 31st day of March 19........" Sub-rule (2) of rule 4 laid down that if the Income-tax Officer was not so satisfied he shall pass an order in writing refusing to recognise the instrument of partnership or the certified copy thereof and furnish a copy of such order to the applicants. Sub-rule (3) Provided that the certificate referred to in sub-rule (1) shall be signed by the Income-tax Officer, who shall thereupon return to the applicants the instrument of partnership or the certified copy thereof, as the case may be, and shall retain the copy or the duplicate copy thereof. Rule 6 dealt with the renewal of a certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 23 or section 26A...may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order." What his Lordship therefore held was that when section 30 provides for an appeal against the orders under section 23(4) and also against order under section 26A, it has incorporated the two forms of orders embodied in section 23(4) and used a general word in providing an appeal against an order under section 26A, for the nature of the order is not described but left to be prescribed under the rules. This reading of the relevant provision was considered by his Lordship as a fair reading of the relevant provisions of the Act and the Rules made thereunder. Sub-section (7) of section 184 of the new Act on which the Income-tax Officer had relied and which the Appellate Assistant Commissioner held did not apply, has already been reproduced above. On the other hand, the Appellate Assistant Commissioner relied upon the provisions of section 186(1) of the new Act which read as under: " (1) If, where a firm has been registered, or its registration has effect under sub-section (7) of section 184 for an assessment year, the Income-tax Officer is of opinion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." The present order, it was claimed, was made under clause (b) of section 185(1) and it was urged that in such circumstances it was incumbent upon the Income-tax Officer to take recourse to sub-sections (2) and (3) of section 185, which read as under: " (2) The Income-tax Officer shall not reject an application for registration merely on the ground that the application is not in order, but 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. (3) If the defect is not rectified within such time, the Income-tax Officer may reject the application." It was further urged on behalf of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to a firm for any assessment year it shall have effect for every subsequent assessment year. It is however, the procedure that is outlined in section 185 that deals with the registration of the firm and in principle there is no distinction between a fresh registration as well as continuation of registration. In either event, the certificate that the Income-tax Officer has to append to the instrument of partnership or on the certified copy submitted in lieu of the original instrument has to be in the same terms. In that view of the matter, it is the procedure laid down in section 185 that has to be taken into account and since the Income-tax Officer did not give an opportunity to the assessee to rectify the defect, the order was made by him under section 185 of the new Act. Under section 246(j), an order refusing to register a firm under clause (b) of sub-section (1) or under sub-section (1) of section 185 is open to appeal before the Appellate Assistant Commissioner. We are, therefore, of the view that an appeal lay to the Appellate Assistant Commissioner from the impugned order, although we are in agreement with the Tribunal that the Appellate Assistant Commissioner was in er ..... X X X X Extracts X X X X X X X X Extracts X X X X
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