ORDERGranting of registration to firm in appeal filed against assessment orderThe revenue contended that against the order passed under the then section 185(1)(b), an appeal lay under section 246. A separate appeal lay against the order of assessment. Therefore, the first appellate authority was not justified in allowing registration to firm in the appeal filed against the assessment order.
Held : Under section 246 an appeal lies against assessment order as also against status under which assessee is assessed.
Income Tax Act, 1961 s.246 In the Allahabad High Court R.K. Agarwal & K.N. Ojha, JJ.
ORDER The Income Tax Appellate Tribunal, Allahabad has referred the following two questions of law under section 256(1) of the Income Tax Act, (hereinafter referred to as the Act), for opinion of this Court "1. Whether, on the facts and in the circumstances of the case, the Appellate Assistant Commissioner could decide the point regarding registration in an appeal filed by the assessee against the assessment framed under section 143(3) of the Act ?
2. Whether, on the facts and in the circumstances of the case, the assessee was entitled to registration under section 185(1)(b) of the Act ?"
2. Briefly stated facts giving rise to the present reference are as follows :
2. Briefly stated facts giving rise to the present reference are as follows :
While making the assessment for the assessment year 1977-78, the Income Tax Officer rejected the assessees opposite parties application for registration under section 185(1)(b) of the Act in the following manner :
"During the course of assessment proceedings, it has come to my notice that assessee has filed partnership deed dated 17-3-1975 and Form No. 11 has been filed mentioning assessment year 1976-77. The partnership deed do not specify the share of the partners and also do not indicate when accounts shall be closed. Moreover, there is no application for registration in the prescribed Form, i.e., Form No. 11 for assessment year 1977-78. The assessee was required vide this office letter dated 6-11-1979 why registration should not be refused in his case. In his reply the assessee has submitted that addendum to partnership showing ratio of the partners has been enclosed. The addendum is dated 17-3-1975. It was further contended that the closer of the account was decided mutually between the partners. Regarding the application for registration, it has only been mentioned that the registration was requested for 1977-78 but no application was filed. In view of the reply of the assessee, I am of the view that no genuine firm came into existence during this year. As such, registration is refused".
3. Feeling aggrieved by the order, the assessee preferred one single appeal which was against the assessment as well as declining to grant registration. The Appellate Assistant Commissioner allowed the appeal and granted registration to the firm. The appeal filed by the revenue has been dismissed.
3. Feeling aggrieved by the order, the assessee preferred one single appeal which was against the assessment as well as declining to grant registration. The Appellate Assistant Commissioner allowed the appeal and granted registration to the firm. The appeal filed by the revenue has been dismissed.
4. We have heard Shri A.N. Mahajan, learned counsel appearing for the revenue. Nobody has put in appearance on behalf of the assessee, opposite party. The learned counsel for the revenue submitted that against the order passed under section 185(1)(b) of the Act, an appeal lies under section 246 of the Act. Separate appeal lies against the order of assessment. Thus, the assessee, opposite party ought to have filed two separate appeals even though the order was passed on the same date and the registration was refused in the order of the assessment itself. He, thus, submitted that the Appellate Assistant Commissioner was not justified in allowing the registration in the appeal filed against the assessment order. The submission is misconceived. Under section 246 of the Act, an appeal lies against the assessment order as also against the status under which the assessee is assessed. By declining to grant registration, the status of the assessee has been changed and, therefore, in the appeal filed against the assessment order, question of status under which the assessee has been assessed can very well be gone into. In the case of CIT v. Rupa Traders (1979) 118 ITR 412 (Cal), the Calcutta High Court has held that :
4. We have heard Shri A.N. Mahajan, learned counsel appearing for the revenue. Nobody has put in appearance on behalf of the assessee, opposite party. The learned counsel for the revenue submitted that against the order passed under section 185(1)(b) of the Act, an appeal lies under section 246 of the Act. Separate appeal lies against the order of assessment. Thus, the assessee, opposite party ought to have filed two separate appeals even though the order was passed on the same date and the registration was refused in the order of the assessment itself. He, thus, submitted that the Appellate Assistant Commissioner was not justified in allowing the registration in the appeal filed against the assessment order. The submission is misconceived. Under section 246 of the Act, an appeal lies against the assessment order as also against the status under which the assessee is assessed. By declining to grant registration, the status of the assessee has been changed and, therefore, in the appeal filed against the assessment order, question of status under which the assessee has been assessed can very well be gone into. In the case of CIT v. Rupa Traders (1979) 118 ITR 412 (Cal), the Calcutta High Court has held that :
"Under section 246 of the Income Tax Act, 1961, read with rule 45 of the Income Tax Rules, 1962, and Form No. 35 prescribed under the Rules, where an assessee challenges before the Appellate Assistant Commissioner both a best judgment assessment under section 143 and an order refusing registration under section 185 relating to more than one assessment year, a single consolidated appeal against the order of assessment as well as the orders refusing registration or renewal of registration is valid (p. 412)
5. Similar view has been taken by the Bombay High Court in the case of CIT v. Hansa Agencies (1980) 2 ITR 147 (Bom) and the Gujarat High Court in the case of Patel & Co. v. CIT (1986) 161 ITR 568 (Guj) and by the Rajasthan High Court in the case of Ansari Jewellers v. CIT (1987) 167 ITR 380 (Raj).
5. Similar view has been taken by the Bombay High Court in the case of CIT v. Hansa Agencies (1980) 2 ITR 147 (Bom) and the Gujarat High Court in the case of Patel & Co. v. CIT (1986) 161 ITR 568 (Guj) and by the Rajasthan High Court in the case of Ansari Jewellers v. CIT (1987) 167 ITR 380 (Raj).
6. We are in respectful agreement with the views taken in the aforesaid cases and hold that a single appeal was maintainable against the order of assessment and refusal to grant registration.
6. We are in respectful agreement with the views taken in the aforesaid cases and hold that a single appeal was maintainable against the order of assessment and refusal to grant registration.
7. In view of the foregoing discussions, we answer the first question in the affirmative, i.e., in favour of the assessee and against the revenue.
7. In view of the foregoing discussions, we answer the first question in the affirmative, i.e., in favour of the assessee and against the revenue.
8. So far as the second question is concerned, we find that the Appellate Assistant Commissioner had recorded the finding which has been upheld by the Tribunal that there was certain typing errors and technical defaults committed due to the ignorance of the partners which defects have been removed subsequently when pointed out to the Income Tax Officer during the course of assessment proceedings. The assessment year mentioned in Form No. 11 was on account of typographical mistake. The share in profits and loss was specified by way of addendum dated 17-3-1975, i.e., the date of partnership deed itself and was filed before the Income Tax Officer. The other defect regarding closing of accounts was also mutually agreed in between the partners. Thus the finding given by the appellate authorities was that there was a valid partnership and the shares was duly specified and there were only certain technical errors due to inexperience of the partners. The aforesaid findings are essentially findings of fact which has been arrived at on consideration of relevant materials and evidence oil record which does not suffer from any infirmity.
8. So far as the second question is concerned, we find that the Appellate Assistant Commissioner had recorded the finding which has been upheld by the Tribunal that there was certain typing errors and technical defaults committed due to the ignorance of the partners which defects have been removed subsequently when pointed out to the Income Tax Officer during the course of assessment proceedings. The assessment year mentioned in Form No. 11 was on account of typographical mistake. The share in profits and loss was specified by way of addendum dated 17-3-1975, i.e., the date of partnership deed itself and was filed before the Income Tax Officer. The other defect regarding closing of accounts was also mutually agreed in between the partners. Thus the finding given by the appellate authorities was that there was a valid partnership and the shares was duly specified and there were only certain technical errors due to inexperience of the partners. The aforesaid findings are essentially findings of fact which has been arrived at on consideration of relevant materials and evidence oil record which does not suffer from any infirmity.
9. In view of the findings recorded by the appellate authority, we are of the considered opinion that the assessee, opposite party was entitled to registration under section 185(1)(b) of the Act and, accordingly, we answer the second question also in the affirmative, i.e., in favour of the petitioner and against the revenue. However, there shall be no order as to costs.
9. In view of the findings recorded by the appellate authority, we are of the considered opinion that the assessee, opposite party was entitled to registration under section 185(1)(b) of the Act and, accordingly, we answer the second question also in the affirmative, i.e., in favour of the petitioner and against the revenue. However, there shall be no order as to costs.