R.N Misra, J.:— The Cuttack Bench of the Income-tax Appellate Tribunal has stated this case at the instance of the Revenue and the following question has been referred for opinion of the Court:—
“Whether on the facts and in the circumstances of the case, a declaration filed beyond the time prescribed under section 184(7)(ii) of the Income-tax Act, 1961, could be considered to be not in order within the meaning of section 185(2) of the Act and consequently the order of the Income-tax Officer rejecting such a declaration amounts to an order passed under section 185(3) of the Act ?”
2. The short facts relevant for the disposal of this reference are these : Assessee is a firm which had been granted registration earlier to the assessment year 1971-72. For the relevant assessment year i.e 1971-72, assessee filed a declaration under section 184(7) of the Act on 15-10-1971, though under the law the declaration was required to be filed along with a return which became due on 30th of June, 1971. No extension for filing of the return having been obtained from the Income-tax Officer, the declaration was admittedly filed beyond time. The delay was not condoned and the Income-tax Officer refused to continue the registration. An appeal was carried to the Appellate Assistant Commissioner, but he refused to entertain the same on the ground that an order under section 184(7) of the Act was not open to appeal under section 246 of the Act.
3. On assessee's further appeal to the Tribunal, it was contended that the Appellate Assistant Commissioner had overlooked the amendment to section 246(j) which had specifically provided for an appeal against the order of the Income-tax Officer under section 185(3) of the Act. It was further submitted that section 184 did not provide the procedure for disposing of the various matters for which provision was made therein and section 185 laid down the procedure. ‘Refusal to allow the benefit of registration virtually came under section 185(3) of the Act and as section 246(j) provides an appeal against such an order, the Appellate Assistant Commissioner was wrong in refusing to exercise jurisdiction. On behalf of the Revenue, it was contended that section 185(3) opplied to a case where the defect was otherwise than pertaining to delay and as such section 185(3) of the Act had no application.
4. The Tribunal found chat there was no provision for rectification relating to the declaration filed under section 184(7) of the Act prior to the amendment which came into force with effect from 1-4-1971 and the phrase, not in order need not be limited to the defects in the application other than being out of time. Accordingly, the Tribunal came to hold that the first appeal lay and after restoring the appeal directed the Appellate Assistant Commissioner to dispose of the appeal on merit. The Revenue assails the finding of the Tribunal that an appeal lay against the impugned order.
5. There is a Bench decision of this Court on the point being the case of New Orissa Traders v. Commissioner of Income, tax Orissa . 1977 107 I.T.R 553.. After referring to two Madras decisions in the case of Pannalal Ramkumar & Go. v. Income-tax Officer . 1970 75 I.T.R 309. and A.S.S.S.S Chandrasekhar an v. Commissioner of Income-tax . 1974 96 I.T.R 711., this Court stated:—
“……The position, therefore, would be that when an application is rejected as being out of time, the order is one under section 184(4) and not under section 185 of the Act. The consequence of this position is that the appeal of the assessee before the Appellate Assistant Commissioner was not maintainable.”
6. Learned Standing Counsel places reliance on this decision and maintains that what was said in regard to a case of first registration coming within the ambit of section 184(4) of the Act equally applies to an application under section 184(7) after amendment. He further argues that the Tribunal while disposing of the appeal did not have the advantage of this Court's view as by then the judgment had not been reported. It is contended that the Tribunal's decision is contrary to the Court's opinion and, therefore, the reference should be answered in favour of the Revenue.
7. Mr. Mohanty for the assessee while not seriously challenging the correctness of the decision of this Court seeks to place reliance on decisions of different High Courts and submits that there could be another view taken in the matter particularly after the amendment of sections 184, 185 and 246 with effect from 1-4-1971 and the earlier decision could be distinguished on the ground that it was a decision under the pre-amended law.
8. We proceed to indicate the provisions of sections 184, 185 and 246 of the Act as far as relevant prior to 1-4.1971 and as from that date for convenient reference:—
Pre-amendment
Post-amendment
184. (7) Where registra-tion is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year:
(7) Where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year:
Provided that-
Provided that-
(i) 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 was granted: and
(i) 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 was granted: and
(ii) the firm furnishes, along with its return of income for the assessment year concerned, a declaration to that effect, in the prescribed form and verified in the prescribed manner.
(ii) the firm furnishes, before the expiry of the time allowed under sub-section (1) or sub-section (2) of section 139 (whether fixed originally or on extension) for furnishing the return of income for such subse quent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that where the Income-tax Officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made.
185. (2) The Income-tax Officer shall not reject an application for registration merely on the ground that the application is not in order but shall intimate the defect to the firm and give it an opportunity to rectify the defect in the application within a period of one month from the date of such intimation;
185. (2) Where the Income-tax Officer considers that the appli-cation for registration is not in order, he shall intimate the, defect to the firm and give it an opportunity to rectify the defect in the application within and a period of one month from the if the defect is not rectified date of such intimation within that period, the Income-tax Officer shall, by order in writing, reject the application.
(3) If the defect is not rectified within such time, the Income-tax Officer may reject the application.
(3) Where the Income-tax Officer considers that the declaration furnished by a firm in pursuance of sub-section (7) of section 184 is not in order, he shall intimate the defect to the firm and give it an opportunity to rectify the defect in the declaration within a period of one month from the date of such intimation; and if the defect is not rectified within that period, the Income-tax Officer shall, by order in writing, declare that the registration granted to the firm shall not have effect for the relevant assessment year.
246. (j) an order refusing to register a firm under clause (b) of sub-section (1) or under sub-section section (5) of section 185.
(j) an order under clause (b) of sub-section (1) or under sub-sub-section (2) or (3) or sub-section (5) of section 185.”
9. It is cleat that under section 184(7) prior to amendment, there was no provision for condonation of delay in the matter of submission of the declaration and by amendment, discretion has been vested in the Income-tax Officer to condone the delay on proof of existence of sufficient cause in the matter of filing of the declaration. Sub-section (3) in section 185 after amendment is a new provison relating to declaration connected with renewal. Prior to the amendment, there was no such provision in section 185.
10. We may now refer to the decisions relied upon by Mr. Mohanty in support of his present stand. In the case of Additional Commissioner of Income-tax, A.P v. Vhekka Ayyanna . 1977 106 I.T.R 313., a Bench of the Andhra Pradesh High Court stated:—
“Sub-section 17) of section 184 which is relevant for purposes of this case deals with the effect with regard to registration in respect of a firm to which registration has already been granted for any assessment year, and it provides that such a registration granted to a firm for any assessment year should have effect for every subsequent assessment year. Two provisos are added to this sub-section. Proviso (i) is to the effect that there should be 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 for any assessment year. Proviso (ii) gives discretion to the Income-tax Officer and it provides that where under sub-section (1) or subsection (Z) of section 139 time is allowed for furnishing the return of income for such subsequent assessment year, the firm has to file a declaration to that effect in the prescribed form and verified in the prescribed manner, and if the Income-tax Officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time allowed, he may allow the firm to furnish the declaration at anytime before the assessment is made.
Sub-section (8) of section 184 provides for an eventuality where there is any change in the constitution of the firm or the shares of the partners in the previous year when the firm would have to apply for fresh registration for the assessment year concerned.
It would thus be seen that the entire section 184 of the Act deals with the procedure for the filing of applications
Section 185 of the Act provides the procedure to be followed by the Income-tax Officer on receipt of such an application for registration of the firm. Subsection (1) provides that the Income-tax Officer, on receipt of such an application for registration of the firm, should inquire into the genuiness of the firm and its constitution as specified in the instrument of partnership If in such an inquiry, the Income-tax Officer is satisfied that there is or was during the previous year in existence a genuine firm with the constitution as specified in the instrument of partnership, he should pass an order in writing registering the firm for the assessment year. Sub-section (2) provides that if he is of the opinion that there is or was no genuine firm in existence with the constitution as specified in the instrument of partnership, he should pass an order in writing refusing to register the firm.
Sub-section (2) of section 185 provides that, where the Income-tax Officer considers such an application for registration to be not in order, he should intimate the defect to the firm and give it an opportunity to rectify the defect within a period of one month from the date of such information, and if the defect is not rectified within that period, he is empowered to reject the application. This sub-section deals with the case of registration of the firm for the first time.
Likewise, sub-section (3) of section 185 also provides for the case of a partnership which has already been given registration for the assessment year as envisaged in section 184(7) of the Act. If the declaration filed by the firm is defective, the Income-tax Officer would inform the firm of the defect and call upon the firm to rectify the defect within a period of one month from the date of such intimation, and if the defect is not rectified within that period, the Income-tax Officer would, by an order in writing, declare that the registration granted to the firm in any assessment year would have no effect for the relevant assessment year.
Sub-section (4) of section 185 provides that where a firm is registered for any assessment year as envisaged in section 184(7) of the Act, and if the declaration is in order, the Income-tax Officer should record a certificate on the instrument of partnership or on the certified copy submitted in lieu of the original instrument, as the case may be, to the effect that the firm has been registered under the Act for that assessment year.
Section 246 of the Act deals with appeals to the Appellate Assistant Commissioner against order of the Income-tax Officer. A perusal of this section would show that the orders against which appeals could be filed before the Appellate Assistant Commissioner are given in section-wise manner, and clause (j) is relevant for purposes of this case. It provides that any assessee aggrieved by the order of an Income-tax Officer under clause (b) of sub-section (1) or sub-section (2) or subsection (3) or sub-section (5) of section 185, may appeal to the Appellate Assistant Commissioner. Therefore, if under section 185(1)(b) of the Act, the Income-tax Officer refuses to register a firm, then that order is an appealable order. Similarly, where an Income-tax Officer rejects an application which is defective and which has not been rectified by the assessee when it was given an opportunity to do so, such an order also would be appealable. Again, where a declaration under section 184(7) of the Act is found to be defective by the Income-tax Officer, and the assessee firm does not rectify the defect within the time allowed, the Income-tax Officer would pass an order declaring that the registration granted to the firm would have no effect for the relevant assessment year, such an order is also appealable.”
11. Reliance has been placed on the ratio of the Gujarat High Court decision in the case of C.I.T v. Dineshchandra Industries . 1975 100 I.T.R 660..
12. The Allahabad High Court in the case of Income-Tax Officer v. Vinod Krishna Som Prakash . 1979 117 I.T.R 594., has also taken the same view and has approved the principle in the two decisions-one of the Gujarat High Court in C.I.T v. Dineshchandra Industries, and the other of the Andhra Pradesh High Court in Additional Commissioner of Income-tax, A.P v. Chekkca Ayyanna. The Gujarat view has been also followed by a Bench of the Punjab & Harayana High Court in the case of Commissioner Of Income-Tax, Patiala-Ii v. Beri Chemical Industries. . 1480 121 I.T.R 87..
13. Apart from contending that in four later cases different High Courts have said relying on the amended provisions of the Act that refusal to condone the delay in furnishing of the declaration tantamounts to an order made under section 185(3) and an appeal lies under section 246(j) of the Act, Mr. Mohanty has also contended that it is appropriate that there should be unanimity in interpreting the provisions of the Central Act in force in different States so that there is a clear picture of the law and confusion is not pumped into the interpretation of the same provision differently by different High Courts. Reliance has been placed on observations of different High Courts in support of such a proposition.
14. It is clear that prior to the amendment of 1971, there was no scope for condoning delay in respect of furnishing of a declaration contemplated under section 184 of the Act and for the first time discretion has been vested in the Income-tax Officer for accepting delayed filing of returns on proof of existence of sufficient cause. But in regard to first registration covered by section 184(4), the Act of 1961 had vested discretion in the Income-tax Officer. The two decisions of the Madras High Court and the reported decision of this Court in New Orissa Traders' case, dealt with cases of rejection of first registration on ground of delay. Whatever has been stated in New Orissa Traders' case, would thus have full application also to a matter covered under section 184(7) of the Act even after amendment. Limitation is, in fact, not a defect. When an appeal or application is presented beyond time before the prescribed authority unless there is scope for condoning the delay and the authority is asked to exercise his jurisdiction to condone delay and as a fact condones delay, he has no jurisdiction to deal with the matter. Defects dealt with under section 183 are, therefore, defects in an otherwise maintainable appeal and it becomes difficult to take within the ambit of “defect” delay which affects jurisdiction of the authority.
15. Where there is an ambiguity, it may be resolved in favour of assessee, but where the law seems to be clear and well-marked distinction has been maintained, we do not think for the sake of maintaining unanimity in judicial opinion, we should take a different view from the reported decision of this Court. We might reiterate that Mr. Mohanty was fair enough to indicate that the reported decision of this Court in New Orissa Traders' case, cannot be said to be wrong. Our answer to the question referred, therefore, is:—
On the facts and in the circumstances of the case, delay in filing of the declaration under section 184(7)(ii) of the Act could not be taken as a defect within the meaning of section 185(2) of the Act and consequently the order of the income-tax Officer rejecting the declaration could not amount to an order under section 185(3) of the Act.
16. Patties ate directed to beat their own costs of this reference.
K.B Panda, J.:— I agree.
17. Ordered accordingly.