Shanti Trading Co. v. Commr. Of Income-Tax, Mysore .

Govinda Bhat, J.:— In this reference under S. 256(1) of the Income Tax Act, 1961, made at the instance of the assessee, the following question of law has been referred by the income Tax Appellate Tribunal, Bangalore Beach, for the opinion of this Court:

“??? on the facts and in the circumstances of the case, the assesses is ??? to the ??? in S. 104(7) for the assessment year 1966-1967?”

2. The assesses is a firm consisting of four partners carrying on business in ??? in Bangalore City. It was assessed in the status or a registered ??? upto and ??? the assessment year ??? For the assessed year ???, the assessed ??? to ??? the return on ??? in response to the notice under S. 139(2) and assessment was made on the best of judgment basis on 27th March, 1967.

3. Notwithstanding the fact that the assessee had not filed the return of income for the assessment year 1966-1967, the firm submitted a ??? in from No. 12 on 30-9-1966, to the effect that there was no change in the constitution of the firm or the shares of the partners as ??? by the instrument of partnership on the basis of which registration had been granted.

4. The income-tax Officer made assessment on the assessee in the status of an unregistered firm on the ground that the assessee had not filed the return of income for the relevant assessment, year and therefore, the ??? granted has ceased to be operative. The Appellate Assistant Commissioner, on appeal preferred by the assessee ??? that the assessment ??? be made in the status of a registered firm. That order of the appellate Assistant Commissioner was reversed on appeal by the Department before the Income-tax Appellate Tribunal, in 11A. No. 2247 of 1968-1969. It is relevant to state that after the completion of the assessee on 27th March, 1967, the assessee had filed a return on 22-5-1967, and made an application for re-opening of the assessment under S. 146 but that application was rejected.

5. The view of the Tribunal was that in the face of the clear and unambiguous language of clause (ii) of the Proviso to sub-sec. (7) of S. 184 of the Act, registration granted to the assessee cannot have the effect for the assessment year, in question.

6. In Madivalappa & Sons v. Commr. of Income-tax, Mysore(1), we have held that the registration granted to a firm for an assessment year will not enure for the subsequent year if the firm does not furnish its return of income or the declaration as required by the proviso to sub-sec. (7) of S. 184 of the Income-tax Act, 1961. That decision is sought to be distinguished by Sri H.L Narasimha Sastry, the learned Counsel for the assessee. He urged that in Madivallappa's case the assessee had not only failed to file his return but also failed to file a declaration in the prescribed form, whereas in the instant case the assessee had furnished a declaration in the prescribed form. According to the learned Counsel, where registration is granted to a firm for any assessment year, it shall have effect for every subsequent year provided that there was no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration was granted and the firm furnishes a declaration to that effect in the prescribed form and verified in the prescribed manner. In other-words the submission was that the benefit of sub-sec. (7) of S. 184 of the Act is available to a firm even if it does not furnish a return but files a declaration to the effect that there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which the registration is granted.

7. In our judgment, this contention is clearly untenable having regard to the clear language of clause (ii) of the proviso to sub-sec. (7) of S. 184 of the Act. If the intention of the Legislature were that the benefit of the registration once granted to any firm for any assessment year should be available for every subsequent year even if the firm does not furnish its return of income then the clause along with its return of income for the assessment year concerned” was unnecessary and the clause (ii) would have read thus:

“the firm furnishes a declaration to that effect in the precsirbed form and verified in the prescribed manner.”

8. The learned Counsel was unable to explain any other object in incorporating the clause above referred to.

9. The assessee firm not having satisfied the two requirements of the proviso, the registration granted has ceased to have effect for the assessment year 1966-1967 and in that view the Tribunal was right in holding that the registration granted to the assessee firm does not enure for the assessment year 1966-1967. We accordingly answer the question referred in the negative and in favour of the department.

10. Answered accordingly. The assessee will pay the costs of the Department advocate's fee Rs. 100.