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TMI Blog1972 (10) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ribed Form 12, stating that there was no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which registration was granted. The last date for filing the return of income for the assessment year 1965-66, on the basis of service of notice under section 139(2), appears to have been August 5, 1965. The assessee-firm, however, did not file the return at all. On 25th February, 1966, the Income-tax Officer passed an assessment order under section 144 in default, estimating the business income of the assessee at Rs. 50,000 and treating the assessee as an unregistered firm. Coming to know of this order, the assessee made an application under section 146 for the cancellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Since the firm had not filed any return, the provisions of section 184(7) were not satisfied, with the result that the registration of the firm did not have effect for the assessment year 1965-66. In that view, it could not be said that the Income-tax Officer had cancelled the registration. The order of the Appellate Assistant Commissioner was set aside and that of the Income-tax Officer restored. At the instance of the assessee, the Tribunal has submitted this statement of the case for the opinion of this court on the following question of law: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the registration granted to the assessee in the earlier years could not have effect for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Sub-section (8) requires that where any such change has taken place, the firm shall apply for fresh registration. Section 185 gives the procedure for deciding the application for registration. The Income-tax Officer is to enquire into the genuineness of the firm and its constitution, and if he is so satisfied, he is to pass an order in writing registering the firm for the assessment year. Under sub-section (2), the Income-tax Officer is not to reject an application merely on the ground that it is not in order, but he is to give the firm an opportunity to rectify the defects. Sub-section (4) provides that where a firm is registered for any assessment year, the Income-tax Officer shall record a certificate on the instrument ot partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered or its registration has effect under section 184(7). In the present case, the firm did not file any return. The Income-tax Officer could have under section 186(2) cancelled the registration or refused registration under section 185(5) in cases of an application for registration made for the first time. Both these actions require a specific order of refusal or cancellation. An order of refusal under section 185(5) or cancellation under section 186(3) is appealable under section 246. These provisions suggest that for failure to file return, the Income-tax Officer has to pass a positive order of refusal or cancellation. He has not been authorised to ignore the declaration furnished by the firm under section 184(7), on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (7) of section 184 is that there should be no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted, and that the firm furnishes in the prescribed form and verified in the prescribed manner a declaration to that effect. The further requirement that the declaration should be furnished along with the return of income for the assessment year seems to have no purpose other than to provide the datum line for furnishing the declaration. If the furnishing of the return along with the declaration was a mandatory requirement, the result would be that if the return was not filed, the firm could not be treated as registered and had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirement that the application for registration ought to be made along with the return of income. The subsequent legislative history of section 184(7) leads to the same conclusion. Section 184(7) was repealed and re-enacted by the Taxation Laws (Amendment) Act, 1970. The result was that in place of the phrase "along with the return" the requirement was that the firm furnishes the declaration before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139 (whether fixed originally or by extension) for furnishing the return of income. Now the position was made clear beyond any doubt that the intention was to fix a time limit up to which the requisite declaration was to be filed. In our opinion section 184(7) as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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