RAJPUT TRANSPORT CO Vs. COMMR OF INCOME TAX

JUDGEMENT

(1.) In this case the Income-tax Appellate Tribunal has referred the following question of law for the opinion of the High Court :

(2.) The assessee is a firm consisting of four partners. For the assessment year 1947-48 and 1948-49 the assessee was assessed in the status of an unregistered firm, as no application for registration was made under Section 26A of the Act. For the assessment year 1949-50 the firm filed an application for registration under Section 26A of the Act in the prescribed form. The Income-tax Officer accepted the application and registered the firm "for the assessment for the year ending on 31-3-1950" and endorsed the following certificate on the instrument of partnership :

(3.) For the assessment year 1950-51 the Income-tax Officer served upon the assessee a notice under Section 22(2) of the Act calling upon the assessee for a return of the income within 35 days of the receipt of the notice. But the assessee firm did not file the return of its income, nor did it apply for extension of time for filing the return. The Income-tax Officer, therefore, proceeded to make an assessment under Section 23(4) of the Act and determined the total income of the assessee to be Rs. 20,000/-. No application for renewal of registration was made before the Income-tax Officer on behalf of the assessee firm, and therefore the Income-tax Officer proceeded to determine the assessment of the firm for 1950-51 in the status of an "unregistered firm". Against the order of the Income-tax Officer an appeal was taken by the assessee to the Appellate Assistant Commissioner. It was contended on behalf of the assessee that the Income-tax Officer should have given a notice prescribed by the proviso to Section 23(4) before treating the assessee as an unregistered firm. This contention was accepted by the Appellate Assistant Commissioner who allowed the appeal and ordered the Income-tax Officer "to treat the firm as registered subject to due compliance by the firm of the formalities of such registration". The Income-tax Officer appealed to the Appellate Tribunal against the order passed by the Appellate Assistant Commissioner. It was Contended for the Income-tax Officer that no notice, under Section 23(4) of the Act was necessary as registration has not been granted for the assessment year 1950-51 and consequently the question of cancelling such registration did not arise. The Tribunal accepted the argument advanced by the Income-tax Department and set aside the order of the Appellate Assistant Commissioner and restored the order of the Income-tax Officer treating the firm as an unregistered firm.