Madhya Pradesh H.C : Whether on the material on record, the finding of the Tribunal holding that the firm was not entitled to registration under s. 185 was legally correct ?

High Court Of Madhya Pradesh

Ayodhya Prasad Parmeshwaridas vs. CIT

Sections 184(7), 185

Asst. Year 1975-76

N.D. Ojha, C.J. & K.K. Adhikari, J.

Misc. Civil Case No. 122 of 1981

13th October, 1987

Counsel Appeared

B.L. Nema, for the Assessee : B.K. Rawat, for the Revenue

N.D. OJHA, C.J.:

The Tribunal, Jabalpur Bench, Jabalpur, has referred the following four questions to this Court for its opinion under s. 256(1) of the IT Act, 1961 (hereinafter referred to as the Act): ” (i) Whether on the material on record, the finding of the Tribunal holding that the firm was not entitled to registration under s. 185 was legally correct ? (ii) Whether, in view of the fact that by the death of the partner, Gopiram, on October 2, 1974, the firm was dissolved and the order refusing to grant continuation of registration under s. 184(7) till October 2, 1974, and holding that there was a change in the constitution of the firm is legally correct ? (iii) Whether, in view of the unsettled position of law in regard to a change in the constitution or succession of the firm, the finding that the applicant should have made an application in Form No. 11A before the end of the accounting year and that the delay could not be condoned was legally correct ? (iv) Whether, on the facts and in the circumstances of the case, the Tribunal committed an error of law in holding that only one assessment has to be made for the entire previous year ? “

The facts in brief necessary for answering the aforesaid questions are that the assessee was a registered firm since the asst. yr. 1951-52. There were changes in its constitution several times thereafter. One such change took place on November 9, 1972, when a partnership deed was executed according to which there were six partners in the firm, one of whom being Gopiram. The relevant assessment year for purposes of this case is 1975-76, the previous year of which ended on November 13, 1974. Gopiram died on October 2, 1974 it was mentioned specifically in the partnership deed dated November 9, 1972, that in the case of the death of any of the partners, the firm shall not be dissolved but shall continue with the remaining partners and with such of the legal representatives of the deceased partner as was desired by the remaining partners.

Consequent on the death of Gopiram on October 2, 1974, a new partnership deed was executed on November 6, 1974. The erstwhile five partners continued with the same shares, while Ramkumar was taken in as a partner in place of the deceased, Gopiram. The assessee filed a return for the asst. yr. 1975-76 in respect of the entire previous year on August 20, 1975. Earlier, on July 26, 1975, it had made a declaration under s. 184(7) of the Act in Form No. 12 as prescribed under the Rules. Subsequently, however, the assessee filed two separate returns on January 31, 1978, one of which was for the period ending October 2, 1974, when Gopiram died, and the other for the period from October 3, 1974, to the end of the previous year, namely, November 13, 1974. Along with these returns filed on January 31, 1978, the assessee also made an application in Form No. 11A for registration of the firm. Since the application in this behalf had become barred by time by then, an application for condonation of delay was also filed. On the facts of the instant case, it was held that the assessee was not entitled to continuation of registration under s. 184(7) of the Act and, consequently, it was incumbent on it to have applied for registration of the firm. As regards the application for condonation of delay in making the application for registration, it may be pointed out that the case of the assessee was that the requisite application had been handed over by one of the partners of the assesseefirm to the counsel of the firm, but the said application was misplaced and it was on account of this that the delay occurred in making the said application. So far as this explanation is concerned, it has been held that in view of the various discrepancies in the statements of the concerned partner of the firm and of the counsel of the firm, the explanation submitted by the assessee was not worthy of belief. Indeed, the finding of the Tribunal is that the said explanation was not true and correct and consequently could not be accepted as sufficient cause for condonation of delay.

After the matter was finally disposed of by the Tribunal in the second appeal, on an application made by the assessee, the four questions mentioned above were referred by the Tribunal to this Court for its opinion.

The matter came up before us on an earlier occasion and it was brought to our notice that there was an apparent conflict between the decisions of the two Division Benches of this Court on the question as to whether a firm was entitled to continuation of registration even in a case where it did not stand dissolved or continuation of registration was possible only after the firm stood dissolved. On the view that there did appear to be a conflict as pointed out by learned counsel, the aforesaid question was referred for opinion to a Full Bench. The Full Bench has answered the said question in Ayodhya Prasad Parameshwaridas vs. CIT (1987) 168 ITR 605 (MP) by saying that s. 184(7) of the Act r/w Form No. 12 contemplates continuance of registration for part of a year only when the firm stands dissolved and there is no question of continuation of registration for part of the year when the firm continues after a change in its constitution which is not evidenced by an instrument of partnership. In such a case, an application for registration has to be made in accordance with the new instrument of partnership. This Misc. Civil Case has now been listed before us for answering the aforesaid four questions.

Learned counsel for the parties have candidly made a statement that in view of the opinion of the Full Bench referred to above, questions Nos. 1 and 2 have to be answered in the affirmative. They are further agreed that in view of the decision of another Full Bench of this Court in Girdharilal Nannelal vs. CIT (1984) 147 ITR 529, question No. 4 has to be answered in the negative.

In regard to question No. 3, however, it was urged by learned counsel for the assessee that in view of the conflict of decisions on the point covered by questions Nos. 1 and 2, the cause shown for the delay in making the application for registration should have been held to be sufficient. Suffice it to say that so far as this submission is concerned, this was not the cause shown for the delay but, as pointed out above, the cause shown for the delay was that the application for registration had been handed over by the assessee to counsel in time, but on account of the fact that the said application was misplaced in the office of counsel, the same could not be filed within time. This essentially was a question of fact on which, as seen above, the finding of the Tribunal in the second appellate order, is that in view of the various discrepancies in the statements of the concerned partner of the firm and learned counsel to whom the application is said to have been handed over in time for being filed, the explanation of the assessee was not worthy of belief and that indeed the said explanation was not true and correct and could not be accepted as sufficient cause for condonation of delay. This finding is essentially a finding of fact and in view of this finding, question No. 3 has to be answered in the affirmative.

In view of the foregoing discussion, our opinion is as under: (i) In regard to question No. 1, our opinion is that on the material on record, the finding of the Tribunal holding that the firm was not entitled to registration under s. 185 of the Act was legally correct. (ii) In regard to question No. 2, our opinion is that the finding that in view of the fact of death of the partner, Gopiram, on October 2, 1974, the firm was dissolved and the order refusing to grant continuation of registration under s. 184(7) of the Act till October 2, 1974, and holding that there was a change in the constitution of the firm is legally correct. (iii) In regard to question No. 3, our opinion is that, on the facts and in the circumstances of the case as pointed out above and the ground on which condonation of delay in making the application in Form No. 11A was sought, the finding of the Tribunal that the delay could not be condoned was legally correct. (iv) In regard to question No. 4, our opinion is that on the facts and in the circumstances of the case, the Tribunal committed no error of law in holding that only one assessment had to be made for the entire previous year.

9. In the circumstances of the case, there shall be no order as to costs.

[Citation : 171 ITR 525]

Scroll to Top
Malcare WordPress Security