Orissa High Court
Commissioner Of Income-Tax vs Narayandas Satyaranjan on 12 February, 1987
Author: R.C. Patnaik
Bench: R.C. Patnaik
JUDGMENT H.L. Agrawal, C.J.
1. The Income-tax Appellate Tribunal, Cuttack Bench, has drawn up a statement of case under Section 256(1) of the Income-tax Act, 1961 (for short "the Act"), and referred the following questions for the opinion of this court :
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order passed by the Income-tax Officer was in fact an order under Section 185 and not an order under Section 184(7)?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the declaration filed by the assessee though not signed by all the partners was merely a defective declaration ?"
2. The assessee is a partnership firm and the reference relates to the assessment year 1974-75. The assessee filed a declaration under Section 184(7) of the Act in Form No. 12 on June 20, 1974, praying for continuation of the benefits of registration for the assessment year 1974-75. The Income-tax Officer found that the application was no doubt filed within the prescribed time but it was not signed by all the partners as required under the law, as one of the partners, namely, Dr. S.K. Guha, did not sign the declaration and his signature had been forged by his son, Sri B.K. Guha, another partner of the firm. The finding of the Income-tax Officer was based on the expert opinion dated March 29, 1975, of the Government Examiner of Questioned Documents and the subsequent admission of Sri S.K. Guha. The Income-tax Officer accordingly issued a show cause letter dated January 17, 1976, asking the assessee as to why the continuation of the benefits of registration should not be refused on that ground. There was no reply from the assessee. The Income-tax Officer accordingly held that the declaration filed by the assessee was not just a defective one in terms of Section 185(3), and it was not valid in the eye of law and so it was not a true declaration. He, therefore, refused to register the firm on that ground by an order passed under Section 185.
3. The assessee appealed to the Appellate Assistant Commissioner and challenged the action of the Income-tax Officer. The Appellate Assistant Commissioner dismissed the appeal on the ground that the order of the Income-tax Officer was really an order under Section 184(7) and not one under Section 185 and consequently no appeal against the same was maintainable.
4. The assessee preferred a second appeal before the Tribunal. The Tribunal, after considering the rival submissions and following the decision in the case of New Orissa Traders v. CIT [1977] 107 ITR 553 (Orissa), held that the Income-tax Officer rejected the assessee's declaration on the ground that it was formally defective and so the order passed by him was one under Section 185(3) which is appealable under Section 246(1)(j). The Tribunal, therefore, set aside the order of the Appellate Assistant Commissioner and restored the appeal to his file with a direction to entertain the same and dispose of the same afresh in accordance with law after allowing the parties concerned opportunity of being heard.
5. After having noticed the facts and the relevant orders, I will now proceed to answer the questions.
6. The proposition that an appeal is a creature of the statute is well settled in law. Section 246 of the Act indicates the appealable orders and the relevant provision which is Clause (j) reads as follows :
"an order under Clause (b) of Sub-section (1) or under Sub-section (2) or Sub-section (3) or Sub-section (5) of Section 185."
7. New Orissa Traders' case [1977] 107 ITR 553 (Orissa) is a converse case. There, the application for registration was rejected under Section 184(4) as having been filed beyond the prescribed time. Such an order obviously being not an appealable order under Section 246(1)(j), it was held that no appeal lay against that order. In the present case, the order of rejection of the application of the assessee was not one under Section 184(4), but, as rightly held by the Tribunal, was one under Section 184(7) and this would amount to an order rejecting an application under Section 185. If the contention raised on behalf of the Department is to be accepted as correct and any formal defect in a declaration is treated by the Income-tax Officer as invalidating the declaration itself, then all such cases would come under Section 187 and perhaps no case could be covered under Section 185(3). That does not appear to be an acceptable and rational view. The defect in the filing of the declaration found by the Income-tax Officer under Sub-section (7) of Section 184 rendered the application "not in order", and even after the said defect was pointed out to the firm, as was done in the present case, the defect was not rectified. The order of the Income-tax Officer that the registration granted to the firm could not be relevant for the subsequent assessment year for all intents and purposes would be an order under Section 185(3), an order specifically appealable under Clause (j) of Section 246 as already indicated above.
8. The Tribunal, therefore, has taken a correct view of the law and the answer to the questions referred must be given in the affirmative and in favour of the assessee.
9. In the circumstances, I would, however, make no order as to costs.
R.C. Patnaik, J.
10. I agree.