RAJENDRASINGH BHARATSINGH CHOUHAN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference under Section 256(1) of the Income-tax Act, 1961, is at the instance of the assessee for answering the following question of law, namely :

(2.) THE material facts are these. THE relevant assessment year is 1973-74. During that year, the assessee filed an application seeking (declaration of) registration as a (registered) firm under Section 185 of the Income-tax Act, 1961. THE Income-tax Officer, by order dated February 12, 1976, refused registration under Section 185(5) of the Act and completed the assessment. THE assessee filed an appeal to the Appellate Assistant Commissioner against the refusal of registration by the Income-tax Officer under Section 185(5) of the Act. THE appeal was obviously filed under Section 246(j) of the Act. Subsequently, the assessee also made an application under Section 146 to the Income-tax Officer for cancellation of the ex parte assessment. By an order dated September 10, 1976, the Income-tax Officer, without even referring to the earlier order dated February 12, 1976, refusing registration under Section 185(5) of the Act, granted registration to the assessee and completed the assessment. THE assessee thereafter withdrew the appeal pending before the Appellate Assistant Commissioner against refusal of registration by the earlier order dated February 12, 1976. In these circumstances, the Commissioner of Income-tax exercised the power under Section 263 of the Act and held that the Income-tax Officer had no jurisdiction to pass another order granting registration under Section 185 of the Act after having refused to grant registration by an earlier order which had not been set aside by any competent authority. On this conclusion, the Commissioner of Income-tax directed the Income-tax Officer to pass a fresh order in accordance with law. On appeal, the Tribunal upheld the Commissioner's conclusion that the Income-tax Officer had no jurisdiction to pass a fresh order granting registration under Section 185 of the Act after having refused the registration earlier without the order refusing registration being set aside. However, it further held that on this conclusion rightly reached by the Commissioner, the only course open to the Commissioner was to cancel the subsequent assessment order made by the Income-tax Officer and no remand to the Income-tax Officer was called for. It was, therefore, only this part of the Commissioner's order which was modified by the Tribunal. THE above question of law has been referred for decision by this court at the instance of the assessee under these circumstances.

(3.) THE Revenue shall get costs of this reference from the assessee. Counsel's fee Rs. 200, if certified.