PURUSOTTAM LAL KISHORILAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner in this application under Articles 226 and 227 of the Constitution of India is a partnership firm carrying on its business at Khagaria, in the district of Monghyr, and has filed this application through one of the partners, Kishori Lal. THE main relief sought in this application is for the issuance of a writ of certiorari quashing that part of the ITO's order, dated the 27th October, 1971, as contained in annexure 1, whereby the petitioner-firm has not been allowed registration for the assessment year 1967-68,'with which we are concerned in the instant case, and, further, for a writ of mandamus directing the respondents to recognise the petitioner as a registered firm under the provisions of Section 1 84(7) of the I.T. Act, 1961, and to give such incidental and consequential reliefs as a result of such registration as the law may warrant.

(2.) THE relevant facts for the disposal of this case are not in controversy. THE petitioner had been, admittedly, granted renewal of registration up to the assessment year 1965-66. For the assessment year 1966-67, however, although the petitioner-assessee had filed a declaration in Form No. 12, as envisaged by Section 184 of the Act, along with the return, the ITO reckoned the petitioner's status as an unregistered firm and assessed an income to the tune of Rs. 2,256 for which there was no tax liability. THE petitioner, therefore, did not file an appeal against that order. For the assessment year 1967-68, which is the subject-matter of the present petition, the petitioner filed along with its return of income a declaration in Form No. 12 asserting further that there had been no change in the constitution of the firm and that, therefore, the petitioner was entitled to an automatic renewal of the registration of the firm by virtue of the provisions of Section 184(7) of the Act. Although this point was not separately dealt with by the learned ITO, Ward B, Begusarai (respondent No. 3), in the last paragraph of his assessment order under Section 143(3) of the Act, it was observed as follows :

(3.) THAT being the settled legal position and there being nothing in the order of the ITA Tribunal as contained in annexure 3 to show that there had been any change in the constitution of the firm or readjustment of the shares of the partners in the existing firm, merely because the firm was not allowed the benefits of continuance of registration during the immediately preceding year 1966-67, it was not a sufficient legal justification for the ITO to have refused to recognise the renewal of the registration of the firm which, on the materials available on record, had not undergone any change either in its constitution or in the allocation of shares. THAT being so, the advantage of continuance of registration under Section 184(7) of the Act was, undoubtedly, available to the petitioner-firm for the year in question, viz., the assessment year 1967-68. All orders consequent upon the, refusal of such registration by the learned ITO must, therefore, inevitably be held to be illegal. The initial prayer made in the petition was also for quashing of the ITA Tribunal's order as contained in annexure 3, but that prayer was rightly abandoned by Shri Rajgarhia appearing for the petitioner at the hearing of this case since the order of the Tribunal could not be held to be suffering from any error apparent on the face of the record. THAT notwithstanding, the order of the ITO refusing to recognise the renewal of registration of the petitioner-firm must be held to be without jurisdiction and liable to be quashed.