TMI Blog1990 (10) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the original partnership deed. Since the claim for registration was filed by the assessee after the close of the accounting period, the Income-tax Officer considered the same to be belated. On a show-cause notice being issued, the assessee explained that one of its partners, Sri Nagarmal, had suddenly died on August 3, 1973, and, therefore, the firm had to be dissolved on August 5, 1973. Otherwise, the accounting period adopted by the assessee would have ended on October 8, 1973. It was contended by the assessee that it was because of this sudden contingency that the firm had to be dissolved and, consequently, the accounting year of the assessee had to come to a close. It was further contended that had the death of Sri Nagarmal not taken place, the application for registration would have been in time. The Income-tax Officer, however, held that the application for registration being not filed in time, the assessee was not entitled to registration. He, accordingly, refused to register the firm after rejecting the application for condonation of delay in filing the said application for registration. Aggrieved against the aforesaid order passed by the Income-tax Officer, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties, found that the claim of the Department that no appeal lay against the order of the Income-tax Officer refusing to condone the delay under section 184(4) of the Act was no doubt supported by a decision of the Madras High Court in the case of A. S. S. S. S. Chandrasekaran and Brothers [1974] 96 ITR 711 but it also noticed that the Gujarat High Court had, in a later decision in the case of Dineshchandra Industries [1975] 100 ITR 660, taken a contrary view. The Tribunal also felt that the view of the Gujarat High Court was supported by the ratio of the decision of the Supreme Court in the case of Mela Ram and Sons [1956] 29 ITR 607. Therefore, what the Tribunal held was that even a belated application for registration was an application in the eye of law and, when it was rejected on the ground of delay, the order rejecting such application was, in law, an order passed under section 185 of the Act and, therefore, was clearly appealable. The Tribunal accordingly confirmed the order passed by the Appellate Assistant Commissioner and dismissed the appeal filed by the Department. As we have already stated above, at the instance of the Commissioner of Income-tax, the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on the ground of delay. It has distinguished the case of the Allahabad High Court in the case of Ashwani Kumar Maksudan Lal [1972] 83 ITR 854 on the ground that it was a case of continuation of registration. The Andhra Pradesh High Court, in the case of Addl. CIT v. Chekka Ayyanna [1977] l06 ITR 313, has also taken the view that if an application for registration is rejected as belated, an appeal lies against the same. In arriving at its conclusion, it has followed the aforesaid decision of the Gujarat High Court in the case of CIT v. Dineshchandra Industries [1975] 100 ITR 660 and has dissented from the view of the Madras High Court in the case of A. S. S. S. S. Chandrasekaran [1974] 96 ITR 711. Next comes a Division Bench decision of this court in the case of ITO v. Vinod Krishna Som Prakesh 1979] 117 ITR 594. In this case, our court has relied upon the decision of the Gujarat High Court in the case of CIT v. Dineshchandra Industries [1975] 100 ITR 660 and the decision of the Andhra Pradesh High Court in Addl. CIT v. Chekka Ayyanna [1977] 106 ITR 313 and held that an appeal lies under section 246(j) of the Act against an order refusing to condone delay in an application f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO v. Vinod Krishna Som Prakash [1979] 117 ITR 594. The Gujarat High Court has, in the case of Patel and Co. v. CIT [1986] 161 ITR 568, taken the view that an appeal ties against an order rejecting an application for registration on the ground of delay. We have carefully gone through the aforesaid decisions cited before us, and the relevant provisions of law. The relevant provisions of the Act for the purpose of our case are as follows : "184. Application for registration.-(1) An application for registration of a firm for the purposes of this Act may be made to the Incometax Officer on behalf of any firm, if (i) the partnership is evidenced by an instrument; and (ii) the individual shares of the partners are specified in that instrument. (2) Such application may, subject to the provisions of this section, be made either during the existence of the firm or after its dissolution . . . (4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought Provided... (5) The application shall be accompanied by the original instrument evidencing the partnership, together with a copy thereof;... (7) Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year." "246. Appealable orders.-(1) Subject to the provisions of subsection (2), any assessee aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order ... (j) an order under clause (b) of sub-section (1) or under subsection (2) or sub-section (3) or sub-section (5) of section 185." From a perusal of the aforesaid provisions it is clear that, in law, there is no distinction in so far as the matters relating to the grant of registration of a firm or its continuation of registration are concerned. The principle in regard to the two are the same. In our considered view, therefore, no distinction in that regard can be drawn. The moot question that remains for examination, however, still is as to whether an appeal lies against an order of the Income-tax Officer refusing to condone the delay in filing an application for registration. Let us examine this controversy. Section 2, clause (31), of the Act says that the word "person" includes a firm. In the case of a firm, if registration is granted to it, it is assessed as a registered firm. In case registration is not granted to a firm or it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) of section 185 deals with the procedure to be followed when a declaration is furnished under section 184(7). In a case where the application is beyond time, then after receipt of the application or declaration under section 184(7), the Income-tax Officer has to give notice under sub-section (3) to the assessee stating that the application is not in order. He has to intimate the defect to the firm and give it an opportunity to rectify the same. In our opinion, to rectify such defect, the only course open to an assessee is to urge that there was sufficient ground for condoning the delay. Now, suppose the Income-tax Officer does not agree with the explanation of the assessee for condonation of delay, then the result is that the defect of being barred by time in the application mentioned in section 185(3) has not been remedied and the Income-tax Officer will have to pass an order refusing to condone the delay. Such an order, in our opinion, is "in effect" an order passed under section 185(3) on a defective application and is not an order passed under section 184(7) of the Act. Once it is an order passed under section 185(3) of the Act, the said order becomes appealable under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principles. Therefore, if an appeal is admitted without the fact of delay in presentation having been noticed, clearly it must be open to the Department to raise the objection at the time of the hearing of the appeal. That would also appear to be the practice obtaining before the Income-tax Tribunal, as appears from the decisions cited before us, and that, in our opinion, is right. Similar considerations would apply to other objections of a preliminary character, such as the one based on section 30, sub-section (3). We should be slow to adopt a construction which deprives parties of valuable rights. We are, therefore, of the opinion that contentions relating to preliminary issues are open to consideration at the time of the hearing of the appeal, and that the jurisdiction of the Appellate Assistant Commissioner is not limited to the hearing of the appeal on the merits of the assessment only. In this view, the orders of the Appellate Assistant Commissioner holding that there were no sufficient reason for excusing the delay and rejecting the appeals as time-barred would be orders passed under section 31 and would be open to appeal, and it would make no difference to the position whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... presented before the appropriate authority, it may result in finality of the order passed by a subordinate authority and may even operate as res judicata but it cannot be considered to have been examined by a higher authority." Thus, the emphasis put by this court in such a situation was as to whether the impugned order puts a finality on the controversy involved, that is to say an order dismissing the appeal as barred by time may be construed as an order passed in appeal. On a careful consideration of the matter, we are of the opinion that, on the analogy of the ratio of the decision in the case of Mela Ram and Sons [1956] 29 ITR 607 (SC) and Radhey Shyam v. CIT [1984] 146 ITR 374 (All) as discussed above, it could safely be held that the impugned order passed by the Income-tax Officer refusing to condone the delay was an appealable one. This will be more so on the further principle that the court will lean in favour of putting an interpretation conferring a right of appeal in a case like the present one. Thus, in our opinion, against an order passed by the Income-tax Officer, an appeal lies to the Appellate Assistant Commissioner. At this stage, it will be pertinent to noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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