TMI Blog1994 (4) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Officer was right in refusing to grant registration to the assessee under section 185(5) of the Act? The brief facts of the case are that the firm was constituted by four partners as per partnership deed dated April 10, 1968. Out of four partners, three were lady partners and two lady partners, namely, Smt. Meghi Devi and Krishan Kanta, retired from the partnership with effect from July 31, 1976, and in their place two new lady partners, namely, Smt. Geeta Devi and Smt. Lila Devi, were taken and a new deed of partnership was executed on August 1, 1976. The assessment for 1976-77 was completed under section 144 and the registration was refused under section 185(1)(b) of the Income-tax Act. The reasoning which was taken by the Income-tax Officer that since there was failure on the part of the assessee in accordance with the provisions of section 143(2)/142(1) the assessment has been completed under section 144, and, as such, the assessee is not entitled to registration under section 185(5). It was also taken into consideration that the affidavit, as required in the assessment proceedings on October 4, 1979, of the new partners was not filed nor the confirmations with regard to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd section 142(1). The case was adjourned from time to time and on February 28, 1980, it was found that the compliance of notice under section 142(1) has not been made and the case was finally adjourned for March 15, 1980. On this date again an adjournment was sought, it was not found justified, and on account of not producing the books of account the assessment under section 144 was framed. In appeal before the Commissioner of Income-tax (Appeals), the assessee was granted part relief in respect of the various additions made. The appeal against the order under section 146 was dismissed by a separate order. In the second appeal before the Income-tax Appellate Tribunal besides the various additions which were challenged, an additional ground was raised on the date of hearing, which was as under: " The learned Income-tax Officer has erred in making assessment on the appellant in the status of unregistered firm particularly when he had already made assessment in the cases of the two partners assessed by him taking share from the appellant firm as registered firm. The assessment made in the status of unregistered firm is against law and should be cancelled or set aside or modified wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a revised return under sub-section (4) or sub-section (5) of that section or failure to comply with the terms of a notice issued under sub-section (1) of section 142 or failure to comply with the directions issued under sub-section (2A) of that sub-section or failure to comply with the terms of a notice issued under sub-section (2) of section 143 warranting a best judgment assessment. In such a situation, if the assessee did not receive the notice issued under section 142(1) or section 143(2) or he had no reasonable opportunity to comply with or was prevented by sufficient cause from complying with the terms of the notice issued under section 142(1) or 143(2), then he can apply for cancellation of the best judgment assessment. It is not in dispute that the assessee failed to comply with the notice issued under sections 142(1) and 143(2) and, therefore, the Income-tax Officer had the discretion to refuse the registration on that ground alone. The order passed under sections 144 and 146 has since been upheld up to the stage of the Tribunal and the finding which has been recorded is that the assessee was not prevented by sufficient cause and there was failure on his part to comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere even in the appellate authorities exercisable by the assessing authority at the appellate stage in the same way as the assessing authority would do in assessment. The matter with regard to the power of the Tribunal to entertain a new point was considered by the apex court in Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232, and it was held that the Tribunal has the power to entertain a new point. The rules framed by the Tribunal for regulating its procedure for entertaining an additional ground were held to be merely self-regulating in character and do not in any way circumscribe or control the power of the Tribunal (under section 33(4)) as an appellate body under the Income-tax Act. In CIT v. Mahalakshmi Textile Mills Ltd. [1967] 66 ITR 710 (SC), it was observed that all questions, whether of law or of facts, which relate to the assessment of the assessee may be raised before the Tribunal, and the Tribunal was held to be under a duty to grant relief on the principle that right of the assessee to relief is not restricted to the plea raised by him before the Departmental authorities. The Full Bench of the Bombay High Court in Ahmedabad Electricity Co. Ltd. v. CIT [1993] 199 IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even to permit the raising of a new ground which was not raised at the time of submission of the second appeal. There may be circumstances where the point was not raised before the Income-tax Officer or even before the first appellate authority in respect of any addition or deduction. If the point is purely legal, then on the basis of the evidence on record, a new ground could be raised. For example, if the assessee is entitled to deduction under two sections and the deduction was claimed only under one section, before the Income-tax Appellate Tribunal the new ground could be raised in respect of such deduction that it is allowable under the other sections as well, or alternatively, and since sufficient evidence exists on record, the power could be exercised by the Tribunal in entertaining the fresh ground. This power cannot be exercised in respect of a new source of income, or, such a point for which either there is no evidence in existence or the evidence is insufficient. Another point which requires consideration is that if the Income-tax Officer has decided a particular point, and before the first appellate authority that addition or deduction was not challenged and the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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