High Court Of Patna
CIT vs. Associated Engineering Co.
Sections 246, 187
Asst. Year 1973-74
Uday Sinha & B.N. Agrawal, JJ.
T.C. No. 31 of 1978
11th May, 1987
B.P. Rajgarhia, Senior Standing Counsel, & S.K. Sharan, for the Revenue : None appeared for the Assessee
BY THE COURT :
This is a reference under s. 256(1) of the IT Act, 1961. The assessment year is 1973-74. The two questions referred to us for our opinion are as follows :
” (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the order passed by the ITO under s. 184(7) of the IT Act was appealable before the AAC under s. 246 of the Act ?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the AAC was right in giving a direction to the ITO to consider the contention of the assessee and to pass a fresh order on the point of granting continuation of registration ? “
2.The answer to the first question is concluded by our decision in CIT vs. Jugsalai Electric Supply Company (1987) 165 ITR 740(Pat), where we held that the appeal by the assessee against the order rejecting the registration of the firm would be appealable. That question is, therefore, answered in the affirmative, in favour of the assessee and against the Revenue.
3.In regard to the second question, the position on facts is that the assessee was a partnership firm with two partners. One of them, namely, Satya Brata Bhattacharjee, retired from the partnership. A deed of dissolution was executed on January 9, 1973. Mr. Bhattacharjee received Rs. 40,000 ad hoc and gave up his interest in the firm. It will thus be seen that on and from January 9, 1973, there was no partnership. Only one of the partners remained. It is patent, therefore, that the constitution of the firm underwent a change on and from January 9, 1973. This clearly disentitles the firm to registration in terms of the proviso, cl. (i), to s. 138(7). Sec. 184(7) of the Act provides that the registration granted to any firm for any assessment year shall remain effective for every subsequent year unless there is a change in the constitution of the firm or the shares of the partners are altered. In the instant case, there was a change in the constitution of the firm. There could, therefore, be no question of grant of registration to the firm. In fact, there was no partnership firm between January 9, 1973, and March 31, 1973. It appears that this aspect of the matter was not considered either by the AAC or by the Tribunal. These facts emerged from the annexures to the statement of the case more specifically from para.4 of the order of the AAC, but since the question has been framed in very wide terms, the question embraces this aspect of the matter as well. In that view of the matter, we are of the view that the Tribunal was not correct in holding that the AAC was right in giving direction to the ITO to consider the contention of the assessee and to pass a fresh order on the point of granting continuation of registration. The AAC held that there were sufficient grounds for delay in filing the application for registration. That finding was affirmed by the Tribunal as well . This Court cannot look into the correctness of that finding. That is a finding of fact, but apart from the question of fact, there is a pure question of law also involved which question also is implicit in the second question referred to us. It is patent that the proviso, cl. (i), to s. 187 was a bar to continuation of registration. This is a case of continuation of registration and not of grant of registration. In that view of the matter, the answer to the second question obviously has to be that the Tribunal was not correct in holding that the AAC was right in giving direction to the ITO to consider the contention of the assessee and to pass a fresh order in regard to the granting of continuation of registration.
4.For the reasons stated above, the first question is answered in favour of the assessee and against the Revenue. The second question, however, is answered in favour of the Revenue and against the assessee. There shall, however, be no order as to costs.
[Citation : 169 ITR 372]