TMI Blog1978 (5) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... upon it to show cause why the firm may not be assessed as an association of persons. In reply, the firm filed a fresh return showing the same amount as income, and with the said return it filed a declaration in Form No. 12 under s. 184(7) of the Act. The ITO refused renewal of registration on the ground that the firm had not been granted continuation of registration in the last two preceding years, and the declaration in Form No. 12 ought to have been filed along with the return. He assessed the firm in the status of an association of persons. On appeal, the AAC held that the return which was filed on 6th March, 1970, was not a valid one. It could not be treated as a revised return, because it had not been filed due to discovery of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any firm for any assessment year, it shall have effect for every subsequent year, and the proviso thereto states that-- (i) there is 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 ; (ii) the firm furnishes, along with its return of income for the assessment year concerned, a declaration to that effect in the prescribed form and verified in the prescribed manner. Sub-section (8) of s. 184 requires that where any such change has taken place, the firm shall apply for fresh registration. Under sub-s. (2) of s. 185, the ITO cannot reject an application merely on the ground that there are some defects in it. He is to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in that case. The assessee did not dispute the position that the filing of the return with the declaration was a necessary condition. The view taken by the Mysore High Court in the aforesaid case was reiterated in Shanti Trading Co. v. CIT [1973] 87 ITR 38 (Mys). In this case, the Mysore High Court looked at the language of the proviso without considering the effect of the allied provisions. The essence of s. 184(7) is that once registration has been granted to a firm, it is to have effect for every subsequent year, in case there has been no change in the constitution of the firm or in the shares of its partners. The other requirements are merely to evidence this fact. The requirement that the firm shall furnish a declaration in Form N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o continuation of the registration, it does not then stand to reason that an assessee who is prompt and files a return before the time prescribed under sub-s. (1) or sub-s. (2) of s. 139 should suffer merely because the declaration was not filed physically along with it. This is a pure technicality. The Taxation Laws (Amendment) Act, 1970, which came into force on 1st April, 1971, repealed and re-enacted s. 184(7). Now, the requirement that the declaration should accompany the return has been given up. The declaration has to be filed before the expiry of the time allowed under sub-s. (1) or sub-s. (2) of s. 139 for furnishing the return of income. In addition, the ITO has been authorised to condone the delay and to allow the firm to furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference. The provision was held to be directory. In our opinion, the Tribunal was justified in taking the view that the assessee was entitled to continuation of registration because it had filed the requisite declaration before the assessment was made. Neither the statement nor the Tribunal's order indicates the nature of the defects in the declaration. Section 185(2) enables the assessee to rectify formal defects, if any. We presume that there may have been some such defects and hence the Tribunal was justified in directing the assessee to rectify the defects within the meaning of s. 185(2). We, therefore, answer both the questions referred to us in the affirmative, in favour of the assessee and against the department. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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