COMMISSIONER OF INCOME TAX Vs. PUSHPAKA TRAVELS

JUDGEMENT

(1.) THIS a reference at the instance of the Revenue. The assessee is a firm of five partners carrying on the business of passenger transport. The firm was constituted under a partnership deed dated September 15, 1971. For the assessment year 1974-75, the assessee filed the return on October 22, 1974, along with a declaration in Form No. 12. The ITO held that there is no satisfactory explanation for condoning the delay in furnishing the declaration in Form No. 12. Therefore, by annexure A order dated September 5, 1975, the ITO informed the assessee that continuation of registration is not granted to the assessee for the assessment year 1974-75. The assessee took up the said order in appeal before the AAC. By the said appeal (grounds of appeal is annexure B), the assessee prayed that "the order refusing continuation of registration may be set aside and the appeal allowed". The AAC by annexure C order took the view that there was no delay in filing the declaration in Form No. 12 and directed the ITO to allow continuation of registration for the appellant-firm. The Revenue preferred a second appeal before the Appellate Tribunal contending that annexure A order of the ITO is not an appealable order. The Income-tax Appellate Tribunal by annexure A order held that the said order is appealable. Holding so, the Tribunal dismissed the Departmental appeal. The Revenue sought for a reference of the matter to this court under Section 256(1) of the I.T. Act, 1961. Accordingly, the Income-tax Appellate Tribunal, Cochin Bench, has referred the following question to this court :

(2.) THE relevant provisions governing the case on hand are Sections 184(7), 185(3), 185(4) and 246(j). We may read these sections:

(3.) SUB-s. (7) of Section 184 does not in fact provide for the passing of any order by the ITO. That section says that registration to the firm once granted shall have effect for every subsequent assessment year provided the conditions mentioned in the proviso thereto are obtained. One of the conditions as mentioned earlier is furnishing of the declaration in Form No. 12. There is a time-limit for furnishing of that declaration. However, the ITO has power to receive a declaration furnished beyond that time, but at any time before the assessment is made provided he is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time allowed. Section 185 provides for the procedure on receipt of an application for registration of the firm and on receipt of the declaration furnished by the firm as envisaged by Section 184(7) of the Act. SUB-section (3) of Section 185 says that if the ITO is of the view that the declaration furnished by a firm under SUB-section (7) of Section 184 is not in order, he shall intimate the defect to the firm giving the firm an opportunity to rectify the defect in the declaration within a period of one month from the date of such intimation. SUB-section (3) further says that if the defect is not rectified within the period of one month from the date of such intimation, the ITO shall in writing declare that the registration granted to the firm shall not have effect for the relevant assessment year. The submission on behalf of the assessee is that annexure A order passed by the ITO is one falling under SUB-section (3) of Section 185 of the Act. The Revenue contends that in so far as annexure A order has been passed declaring that the registration granted to the firm shall not have effect for the relevant assessment year (1974-75) for the reason that a declaration in Form No. 12 was not furnished within the time allowed, and consequent upon the fact that the ITO was not satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time allowed, the said order cannot be said to be an order passed by the ITO on account of the fact that the assessee failed to rectify "the defect" within the period of one month from the date of such intimation. In other words, the submission is that the delay in furnishing the declaration in Form No. 12 is not "a defect" falling under SUB-section (3) of Section 185 ; that furnishing of a belated declaration after the time allowed in that behalf does not call for giving an opportunity to the assessee to rectify the same; and that there is no question of the assessee rectifying the delay in furnishing the declaration in Form No. 12. In short, the submission is that " the defect" mentioned in SUB-section (3) of Section 185 is a defect that can be rectified by the assessee and is not such a defect which could be rectified depending upon the satisfaction or otherwise of the ITO on the question as to whether the firm was prevented by sufficient cause from furnishing the declaration within the time allowed. The learned counsel for the Revenue argues that where the exercise of the ITO's discretion to allow the assessee or not to allow the assessee to furnish the declaration is called for, the same would not be a defect which the ITO should intimate to the assessee giving him an opportunity to rectify the same and on default of which, the ITO could pass the order contemplated by SUB-section (3) to Section 185 declaring that the registration granted to the firm shall not have effect for the relevant assessment year.