M/S. Madhur Jalpan v. Commissioner Of Income-Tax

S.K Jha and A.K Sinha, J.:— Pursuant to a reference under Section 256(1) of the Income-tax Act, 1961 (hereinafter to be referred to as the ‘Act), the Income-tax Appellate Tribunal, ‘B’ Bench, Patna, has referred the following question for the opinion of this Court:—

“Whether in the facts and circumstances of the case, the right of appeal under Section 246(c) against the status taken in the assessment order will include the status taken as U.R.F (unregistered firm)?”

2. The facts are not much in dispute. As would appear from the statement of the case, as submitted by the Tribunal, the relevant facts are these. Up to the assessment year 1970-1971 the assessee was treated as a registered firm. For the assessment year 1971-1972 a declaration in form 12 as required under Section 184(7) of the Act was submitted on 31-7-71 along with the return. In course of the assessment proceedings, the Income-tax Officer observed that the assessee had not filed any application for extension of time for filing the return which was due an 30th June, 1971. Hence the Income-tax Officer took the status of the assessee as an unregistered firm. A copy of the order of the Income-tax Officer has been marked annexure A forming part of the statement of the case.

3. Aggrieved by the assessment order, the assessee preferred an appeal to the Appellate Assistant Commissioner disputing, amongst others, the status taken by the assessing officer as an unregistered firm on the ground that the Income-tax Officer was wrong in observing that no application in form 6 was filed for extension of time though it was filed and form 12 was duly filed within the time prayed for. The Appellate Assistant Commissioner by his order dated 3rd October, 1972 confirmed the assessment. With regard to the objection regarding the status taken as an unregistered firm, the first appellate court held that the registration was not a matter of status and, accordingly, he was not competent to hear the appeal on this point and the appeal against the order under Section 143(3) of the Act was not maintainable against that part of the order treating the assessee as an unregistered firm. A copy of the appellate order of the Appellate Assistant Commissioner has been annexed as annexure a to the statement of the case.

4. The petitioner being aggrieved by the appellate order preferred a further appeal to the Tribunal which by its order dated 25th April, 1974 accepted the book result of the assessee on merits but with regard to the status of the assessee as having been taken as an unregistered firm it agreed with the order of the Appellate Assistant Commissioner that the status was as given in Section 2(31) of the Act and the same could not be the subject-matter of an appeal under Section 246(c) of the Act and, therefore, the appeal in that regard was not maintainable. A copy of the Tribunal is order has been appended as annexure C to the statement of the Case.

5. On the above facts, the question of law, as extracted above, has been referred for the opinion of this Court. For all practical purposes, therefore, so far as this case is concerned, we have merely to consider the question as to whether an appeal with regard to the status of an assessee either as a registered firm or as an unregistered firm having been found by the assessing officer could be the subject-matter of appeal or not and as to whether, therefore, the appeal was maintainable in that regard.

6. The point is very short and simple. And for the reasons hereinafter to be recorded, the case has to be decided against the revenue and in favour of the assessee.

7. It is worthwhile to mention here that Section 2(31) of the Act defines merely a person as including (i) an individual, (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or body of Individuals whether incorporated or not, (vi) a local authority and (vii) every artificial judicial person not falling within any of the preceding sab-clauses. It would thus be found that the definition of the term ‘person’ is not exhaustive which is merely inclusive not all pervasive. In this contest, it may also be worth-while to point out that the very initial part of Section 2 of the Act begins with a clause in the following language:—

“In this Act, unless the context otherwise requires”.

8. Inevitably, therefore, the question as to whether the status of a person has to be determined only in accordance with the provisions of Section 2(31) or not will depend upon the context in which the term ‘status’ has been used in the Act elsewhere. There is no dispute between the learned counsel for the parties, nor can there be any in the eye of law, that in so far as Section 2(31) of the Act is concerned, a firm is said to have been included within the meaning of a person; but the firm may be a registered firm or an unregistered firm. That will be of no consequence in so far as this statutory provision is concerned. We are, therefore, to examine the question of status for the purpose of maintainability of an appeal keeping in view the only two other relevant provisions of the Act, namely, (1) the Explanation as appended to Section 246 of the Act dealing, inter alia, with the right of appeal and (ii) Explanation (2) to Section 143 of the Act which was inserted at a point of time which we shall hereinafter refers to and which shall be, in our opinion, a conclusive factor in this case.

9. The learned Members of the Tribunal have held that the Explanation as appended to Section 246 of the Act dealing with the appeal and revision lays down, inter alia, in clause (c) that an assessee aggrieved may appeal to the Appellate Assistant Commissioner against such “an order against the assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed”. Clause (j) of Section 246 lays down that an assessee aggrieved by “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” shall also be entitled to appeal to the Appellate Assistant Commissioner against such an order. The only other relevant provision in Section 246 is that contained in the Explanation appended thereto, which reads thus:—

“‘Status’ means the category under which the assessee is assessed as ‘individual’, ‘Hindu undivided family’ and so on”.

10. It would thus be seen that the Explanation as appended to Section 246 of the Act is in no way exhaustive but merely illustrative, on the very plain language of it, for, after saying that the status may include an assessee as an individual or a Hindu undivided family and so on, it contemplates that there may be other categories under which the assessee is assessed, which may amount to a status bestowed by the Act upon such an assessee. It is only this Explanation which has weighed with the Tribunal. The Tribunal in its appellate order as contained in annexure C has laid great emphasis on this Explanation, and said that, since Section 2(31) does not make any distinction between a registered firm and an unregistered firm and the Explanation to Section 246 having not said a word about any such distinction with regard to status of a assessee, the matter with respect to status would inevitably be a matter covered by clause (j) of Section 246. To put it in more complete terms, the Tribunal seems to have taken the view that clause (j) of Section 246 is a special provision for an appeal in regard to orders which are made against an assessee either refusing to register a firm as a registered firm under the Act or refusing to renew its registration or refusing to condone the delay in filing the declaration in proper form beyond time either prescribed by law or as extended by the competent authority from time to time. It has, therefore, proceeded upon the footing that such an order could inevitably be covered within the sweep of clause (j) of Section 246 and no appeal against such an order could lie under Section 246(c) of the Act.

11. In our view, the Tribunal has clearly misdirected itself on a pore question of Jaw, and, presumably, so because it has not taken notice of Explanation (2) to Section 143 of the Act. We can only make a conjecture or surmise in this regard, although our reason is a very plausible one, that Explanation (2) to Section 143 came into existence for the first time on the Statute Book in the year 1971 having been made effective from the 1st of April, 1971. The present case relates to the year 1971-1972 which means that Explanation (2) to Section 143 was already in force on that date, although people in general may have been ignorant of that provision of law. Mr. K.N Jain, learned counsel for the assessee, however, contends that he had specifically brought it to the notice of the Tribunal since he had himself argued the case before that appellate authority and yet the Tribunal has not taken any note of it. There is no reason to disbelieve the statement at the Bar specially in view of any demurrer on the part of the learned Senior Standing Counsel for the revenue. Proceeding upon the assumption however, that such an argument was not advanced on the basis of the law as it stood with effect from 1-4-71, the Tribunal as in duty bound was obliged under the law to take notice of this amended provision and then to construe in this context the provision as contained in the Explanation appended to Section 246 of the Act. It is, therefore, in the fitness of things necessary for us to reproduce the language of the Legislature in engrafting Explanation (2) to Section 143 of the Act. It reads thus—

“‘Status’, in relation to an assessee, means the classification of the assessee as an individual, a Hindu undivided family, or in any other category of persons referred to in clause (31) of Section 2, and where the assessee is a firm, its classification as a registered firm or an unregistered firm” (underlining is ours for the sake of emphasis and highlighting the point in issue)”

12. On a plain reading of the provisions of Section 143, it appears that it deals with matters of assessment. Sub-section (1) empowers the Income-tax Officer, without requiring the presence of the assessee or the production by him of any evidence in support of the return filed by him under Section 39 of the Act, to make an assessment of the total income or loss of the assessee after making such adjustment as are mentioned in clause (a) of sub-section (1) of Section 143. Clause (b), of sub-section (1) speaks of factors to be taken into consideration in making an assessment of the total income or loss of the assessee under clause (a) and for that purpose, for making adjustment to the income or loss declared in the return, the Income-tax Officer has been empowered (i) to rectify any arithemetical errors in the return, accounts and documents referred to in clause (a)(i) to allow any deduction, allowance or relief which, on the basis of the information available in such return, accounts and documents, is prima facie admissible but is not claimed in the return, (iii) to disallow any deduction, allowance or relief claimed in the return which, on the basis of the information available in such return, accounts and documents, is prima facie inadmissible or (iv) to give due effect to the allowance referred to in sub-section (2) of Section 32, the deduction referred to in clause (ii) of sub-section (3) of Section 32A or clause (ii) of sub-section (2) of Section 33 or clause (ii) of sub-section (2) Section 33 A or clause (1) of sub-section (2) of Section 35 or sub-section (1) of Section 35A or sub-section (1) of Section 35D of sub-section (1) of Section 35E. etc. Sub-Section (2) of Section 143 provides that where a return has been made under Section 139 and assessment was made under sub-section (1). If the assessee makes, within a month from the date of service of demand issued in consequence of such assessment, an application to the Income-tax Officer objecting to the assessment or whether or not an assessment has been made under sub-section (1), the Income-tax Officer considers it necessary or expedient to verify the correctness or completeness of the return by requiring the presence of the assessee or the production of evidence in this behalf, the Income-tax Officer shall be obliged in law to serve on the assessee a notice requiring him on a date to be specified therein either to attend the Income-tax Officer's office or to produce or to cause to be produced there any evidence on which the assessee may rely in support of the return and so on, Sub-section (3) of Section 143 lays down that on the date specified in the notice issued under sub-section (2) or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Income-tax Officer may require an specified points and after taking into account all relevant material which he has gathered, in a case where no assessment has been made under sub-section (1), the Income-tax Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refundable to him on the basis of such assessment or in case where an assessment has been made under sub-section (1), if either such assessment has been objected to by the assessee by an application under clause (a) of sub-section (2) or the Income-tax Officer is of opinion that such assessment is incorrect, inadequate or incomplete in any material respect, he shall, by an order in writing, make a fresh assessment of the total income of loss of the assessee and determine the sum payable by the assessee or refundable to him on the basis of such assessment, Thereafter the Explanation has been appended. Explanation (1) says that for the purposes of this section, an assessment under sub-section (1) shall be deemed to be incorrect, Inadequate or incomplete in a material respect, if, inter alia,—

“(f) the status in which the assessee has been assessed under sub-section (1) is different from the status in which the assessee is properly assessable under this Act”.

13. Thereafter has been Inserted or added Explanation (2) which we have already reproduced earlier, specifically laying down that status in relation to an assessee means the classification of the assessee, inter alia where the assessee is a firm, its classification is a registered firm or an unregistered firm. On a plain reading of the statutory provision, therefore, as effective from 1st of April, 1971, for the purpose of assessment, rectification, etc. under Section 143, the question of status has been exhaustively dealt with and it is clearly laid down that in so far as a firm is concerned, the question with regard to the firm having been treated as a registered firm or an unregistered firm will come within the sweep of the term ‘status’ within the meaning of the Explanation.

14. In juxtaposition of the aforesaid amended law which was effective at the time in question, the Explanation appended to Section 246 stands fully explained and elaborated by the specific definition of ‘status’ given in Explanation (2) of Section 143 of the Act, because it cannot be denied that, without that Explanation having been inserted with effect from 1-4-71, there may have been, although not necessarily, some ambiguity about the Explanation, which already stood before the amendment of 1971, to Section 143. But even that cannot be visualised for the simple reason, as we have already pointed out and it bears repetition to say, that the Explanation as appended to Section 246 of the Act is merely illustrative and not exhaustive at all.

15. It can, therefore, be seen that neither Section 2(31) of the definition clause defining a ‘person’ nor the Explanation appended to Section 246 of the Act can throw any light upon ‘status’ of a firm being treated as a registered firm or an unregistered firm, for the simple reason that it has been admitted at all hands so that so far as Section 2(31) is concerned, the firm has been equated at a par be it unregistered firm or an unregistered firm. Section 2(31) may be said to be capable of some ambiguity, but the Explanation to Section 246 cannot be said to be ambiguous at all for the simple reason that the later statutory provision is merely illustrative. So also, in our opinion, the definition of the term ‘person’ as given out in Section 2(31) is not an exhaustive definition and is merely an inclusive one and not all pervasive one. To crown all, we have already noticed before that Section 2 begins with the parenthesis—

“In this Act, unless the context or otherwise requires,”

16. Keeping in view the parenthesis to Section 2 as extracted above, the non-exhaustive nature of the definition of the term ‘person’ in Section 2(31) of the Act and the same being the nature of the Explanation appended to Section 246 of the Act, nothing could be said for or against the view that the term ‘status’ included within its sweep a distinction between a registered firm and an unregistered firm. The Legislature, however, was not an idle spectator to the scene and the seemingly divergent judicial view with regard to the term ‘status’ in so far as the appellate provision was concerned. It chose intentionally to insert Explanation (2) to Section 143 of the Act to make it all pervasive and exhaustive in all respects and, if we may say so, that Explanation is an exhaustive one defining every class of assesses falling within one category or the other as affecting the question of ‘status’ of the assessee. That is why the language used in Explanation (2) to Section 143 In juxtaposition of the language used in Explanation to Section 246 of the Act is worth taking special notice of. The Explanation to Section 246 merely lays down that ‘status’ means the category under which an assessee is assessed, inter alia, as individual, Hindu undivided family, etc. But the language of Explanation (2) Section 143 admits of no ambiguity at all. Using the same language for all practical purposes, the Legislature says that in relation to an assessee ‘status’ means the classification of the assessee, inter alia, as in the case of its being a firm as its classification of a registered firm or an unregistered firm. The ultimate phrase in the Explanation to Section 246 “and so on” is, therefore, fully explained by the Legislature by inserting Explanation (2) to Section 143 and making it all pervasive and exhaustive, which were the ingredients lacking both in Section 2(31) defining a ‘person’ as well as the definition, if that may be so called, of the ‘status’ of an assessee as mentioned in the Explanation to Section 246.

17. That at once brings us to the question as to whether the Tribunal was right in its approach and in saying that since the question would be covered by clause (j) of Section 246, it will be beyond the scope of the appellate right conferred upon the assessee under clause (c) of Section 246. Let us then compare the language used in the Act in clause (c) and clause (j) of Section 246, Section 246(c) lays down that any assessee aggrieved shall have the right of appeal if he is aggrieved by “an order against the assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed”. Clause (j) of Section 246, however, reads as saying that any assessee aggrieved by any order of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against “an order under clause (b) of sub-section (1) or under sub-section (2) or sub-section (3) or sub-section (5) of Section 115”. The Tribunal has taken the view that since the question of status was not involved at all because no declaration in proper form was filed in time either prescribed by law or as extended at any time by the Income-tax Officer. It merely resulted in a failure on the part of the Income-tax Officer to have decided the matter of registration of the assessee as a firm within the meaning of Section 184 read with Section 185 of the Act. That being so, the Tribunal has further gone on to bold in its appellate order (annexure C), inferentially and for all practical purposes, that it was a matter which was specifically covered by the provisions of clause (j) of Section 246 of the Act and, therefore, could not fall within the appellate right conferred on the assessee by Section 246(c).

18. We are afraid that the Tribunal has completely misdirected itself on a pure question of law. As we have already pointed out earlier, the language of Section 246(c) is very clear and unequivocal conferring a right of appeal on an assessee being aggrieved by any order of the Income-tax Officer with regard to the “status under which he is assessed”. “Status” as defined in Section 246, we have already held above, is neither exhaustive nor, for that matter, all pervasive but merely a case of illustration. We have further held that the definition of the term ‘person’ under Section 2(31) of the Act, which has always been a matter of possession with the Tribunal in this connection, is also of no avail to the Tribunal in view of the two facts to which we have already adverted earlier, namely, that neither the provisions of Section 2(31) are exhaustive nor are they binding with regard to the categories mentioned therein if they are in conflict with the context in which they have been used in their proper perspective. For the purpose of the present case, the most relevant factor is Explanation (2) to Section 143 which came into force with effect from 1st April, 1971 and which is exhaustive, all embracing and specifically dealing with the question of status of a firm which has been left ambiguous in Section 2(31) and as laying down that in the case of an assessee being aggrieved by the question of its status having been determined, if the assessee were a firm, the term ‘status’ would also mean the firm being treated either as a registered or an unregistered firm There can, thus, be no escape from a construction of all the relevant provisions that as we have pointed out above, the term ‘status’ used in Section 246(c), for the purpose of appeal, shall include not only the illustrative example given by way of Explanation to that section but shall govern, with effect from 1st April, 1976 appeals. In the case of a firm the question in regard to its having been treated as a registered or an unregistered firm, the intention of the Legislature in the language used by it is not only plain but paramount too. It could have been argued if Explanation (2) to Section 143 of the Act were not there, there was some scope for ambiguity in relation to the question of status. In so far as the right of appeal is concerned as conferred by Section 246 of the Act in the case of a firm, as to whether it was a registered firm or an unregistered firm in view of the so called definition of a ‘person’ under Section 2(31) read with the Explanation appended to Section 246 of the Act. But, after the insertion of the clear and unequivocal language of Explanation (2) to Section 143 of the Act, the legislative mind has been made very plain and there is no scope for any further construction of the term ‘status’ having regard only to the language either of Section 2(31) or the Explanation to Section 246.

19. That, however, is not the end of the matter. Mr. B.P Rajgarhia, learned Senior Standing Counsel for the revenue, strenuously contended that any subject-matter falling with the compass of a refusal of registration of a firm or a refusal to renew it or the matter of condonation of delay in filing a declaration in proper form beyond the period of time prescribed by law or extended by the Income-tax Officer was a matter directly covered by Section 246(j) of the Act and, therefore, could not be brought within the ambit of Section 246(c). He relied mainly on plain juristic principle of generallia speciali-bus non-derogant or specialia generaliabus derogant. We are afraid the argument is fallacious. As we have repeatedly held above and extracted the relevant provisions of Section 246(c), an assessee has been conferred upon a substantive right of appeal against an order if he feels aggrieved by “the status under which he is assessed”. If the argument of Mr. Rajgarhia be accepted then we have to impute to the Legislature an intention of using a term in the statute deliberately which would be rendered otiose or redundant. It is a well-settled principle of construction of statutes that the Legislature cannot be dubbed as having used any redundant expression which would make it absolutely nugatory and for no purpose at all. What then was the purpose for which the Legislature intentionally used the expression “the status under which he is assessed” in Section 246(c)? The answer to our mind is clear. To give an Illustrative example about the nature of exclusiveness of Section 246(c) in a case which is purely governed by Section 246(j) of the Act, there may be a case in which the assessment has not been made and yet the Income tax Officer has either refused to register a firm or refused to renew its registration or refuse to condone the delay in filing the declaration in proper form. There having been no assessment, clause (j) clearly applies to such a case and even before the assessment order is made one way or the other, the assessee has been conferred upon the right of appeal under Section 246(j) against any such order passed. There may, however, be two cases in which a composite order is passed as in the instant case wherein, while refusing to renew registration or declining to register a firm, simultaneously an order of assessment is passed by the same order. To such a case, obviously, to our mind, very clearly the provisions of Section 246(c) will be applicable although the order may be composite one as in the case at hand. Where, therefore, a composite order is passed both rejecting the status of the assessee as a registered firm as well as an assessment order having been passed, the assessee would be at liberty to take both the grounds in the appeal, the right of which has been conferred upon it under Section 246(c). In a case, however, where no assessment order is passed for some reason or the other, but before that the application for registration is refused, the prayer for renewal is rejected and so on, that order has been made appealable under Section 246(j) of the Act There is, however, no discordant note to be struck in having two statutory provisions as contained in clauses (c) and (j) of Section 246. Mr. Rajgarhia time and again tried to persuade us to construe the Act, or for that matter, the provisions of Section 246 harmoniously so as not to impute the Legislature for creating any disharmony between the different provisions contained therein. As we have already given an illustrative example hereinbefore, there is no disharmony to be harmonised, there is no ambiguity to be resolved, we have merely to act in accordance with the mandate of the Legislature. And one fact which is very clear to us is that clause (c) gives a mandate to the Court to entertain an appeal of an assessee in the case of a complete order where in, while rejecting its claim as being registered firm it is simultaneously assessed as such, to go into the question as to whether the determination of the question of status has been rightly decided or not. Where is the ambiguity? What is there to be harmonised? On the contrary, it would bear repetition to say that the language of the two provisions as contained in clauses (c) and (j) of Section 246 are wholly harmonious by themselves there being no ambiguity about them and, specially in view of the fact that even it be assumed that there may be any ambiguity previously for the purpose of the question of determining the status of a farm being a registered or an unregistered one within the meaning of a ‘person’ as defined in Section 2(31) or the Explanation to Section 246 of the Act that question has already been resolved and harmonised by the Legislature by engrafting Explanation (2) to Section 143 itself. Deciding the question as a matter of first impression, we have no hesitation in coming to the conclusion that the Tribunal has clearly committed an error of law in holding that the case tell within the purview of Section 246(j) of the Act, inferentially or by referring to sub-section (7) of Section 184 of this Act. Even assuming, as the Tribunal has done, that the case fell within the par view of sub-section (7) of Section 184, it cannot have the overriding effect upon the express language of Section 246(c) of the Act at least in the last clause thereof read in the light of Explanation (2) to Section 143 of the Act.

20. We dwelt upon the question at length as a matter of first impression till now, since the question has come up before this Court for the first time and there is no case law on the point. Learned counsel for the parties, however, invited our attention to a couple of decisions, one being in the case of Nilamani Ghosh v. Commissioner of Income-tax . 1976 T.L.R 976. a judgment of the Orissa High Court. Before referring to any further detail with regard to that case, suffice it to say that the case related to the assessment year 1968-1969 at which point of time there was no Explanation (2) to Section 143 of the Act at all on the Statute Book. The learned Judges of the Orissa-High Court in the case of Nilamani Ghose (supra) have proceeded upon the reason that—

“There is no clear indication in the Explanation (Explanation to Section 246) that ‘registered firm’ is also a status for the purposes of clause (c) of Section 246. Special provision having been made in clauses (j) and (k) to meet the situation relating to dispute of status of registered firm, we do not think, reference to status in clause (c) can cover the same field”.

21. The learned Judges have further gone to observe that the several clauses in Section 246 must be harmoniously construed so that there may not be conflict or undue overlapping, and when a special provision has been made for the particular purpose, the general provision cannot be relied upon. This chain of reasoning suffers, with very great respect to the learned Judges, from a great fallacy. As we have already pointed out above, there is no disharmony between clauses (c) and (j) or for that matter clause (k) of Section 246. As we have already discussed above, there is nothing to be harmonised. There is no special provision as contained in clause (j) of Section 246. It is a special provision only where an assessment order has not been simultaneously passed along with the decision on the question of status. The second fallacy which stares us in our face is that the learned Judges have taken the Explanation to Section 246 as being exhaustive and not merely illustrative. We, therefore, do not think it meet and proper to detain ourselves upon this decision of the Orissa High Court.

22. Mr. K.N Jain, learned counsel for the assessee, however, placed great reliance upon the decision of the Allahabad High Court in the case of Income-Tax Officer v. Vinod Krishna Som Prakash Prakash,2. In our view, learned counsel has rightly pressed that decision into service. The facts of that case and the principle involved in the instant case are on all fours with the ratio of the decision of the Allahabad High Court. That was a case relating to the year 1971-1972. For the assessment year 1970-1972, the firm was granted registration under the Act. For the year in question, namely 1971-1972, it filed a declaration in form 12 for renewal of registration on 7th August, 1971. The previous order having already ended on 10th June, 1971, the assessee filed an application for condonation of delay of one month and six days on the ground that it was under the bona fide impression that the declaration could be filed along with the return. The Income-tax Officer held that the ignorance was no excuse and refused to condone the delay, but he treated the assessee as an unregistered firm and assessed it in that status and in that appeal against the assessment order both the question of quantum of tax as well as the question of status were agitated under Section 246(c) of the Act. The Allahabad High Court took special notice of Explanation (2) to Section 143 of the Act, and held that it squarely fell within the appellate provision of Section 246(c). The case with which we are dealing stands on a higher footing. There was not even an application for condonation of delay which was rejected. The declaration in form 12 although having been filed later, the matter was neither asked to be rectified by the Income-tax Officer under sub-section (3) of Section 185 nor, for that matter, was an application for condonation of delay filed which was rejected under sub-section (2) of Section 185. It may also be worthwhile to point out here that the declaration in form 12 was filed along with the return, all the same there was no application for condonation of delay which at any stage was rejected by the Income-tax Officer. On the contrary, the objection with regard to the assessment year 1971-1972 was against the taking of the status of the assessee as unregistered firm. The Income-tax Officer observed that the assessee filed a declaration under Section 184(7) along with the return on 31st July, 1971, which was due on 30th June, 1971 and that the assessee did not file any application for extension of time for filing of return. This fact would be borne out by the appellate order of the Tribunal (vide paragraph 8 of annexure C). Although Mr. Jain, learned counsel for the assessee, asserted that an application for extension of time for filing the return was already filed before the Income-tax Officer, learned counsel for the revenue has pointed out that this does not appear from the statement of the case. We are afraid learned counsel for the revenue is not quite accurate in making the submission. Whether it be a fact or not, paragraph 5 of the order of the Appellate Assistant Commissioner (annexure B to the statement of the case) does bear it out that an application in form 6 had been made though no order granting extension was received and he, therefore, did not think that this dispute related to the status as claiming of the registration was not a matter of status but of an additional privilege (vide paragraph 5 at page 3 of the printed brief). Be that as it may, that would be a question of fact which evidently will have to be gone into in detail by the appellate authority if the appeal is held to be entertainable as we have already held it to be so. We, therefore, do not propose to say anything either way as to whether any application in form 6 for extension of time was filed by the assessee or not. That would be borne out by the records of the case before the appellate authority, once the appeal is entertainable. We, thus, find that the case at hand stands at a higher footing in favour of the assessee and against the revenue in so far as the question Involved in this case is concerned. We respectfully agree with, and endorse, all that has been said by the Allahabad High Court in the case of Vinod Krishna Som Prakash (supra). We, therefore, feel re-inforced in what we have already held on the question as a matter of first impression by the aforesaid decision of the Allahabad High Court which has taken due note of Explanation (2) to Section 143 of the Act which came into force with effect from 1-4-1971.

23. No question was raised that in the case of a composite order where the question of status has been decided, the order of assessment has also been simultaneously made and rightly so, Mr. Rajgarhia, learned counsel for the revenue, very fairly accepted the legal position that. If it were an appealable order there should be no technical difficulty in dealing with both the questions at the same time and there should be no question of insistence for filing of a separate appeal for that purpose. We have said rightly so only because taking any view different from ours will be piling unreason upon technicality, to borrow a phrase from a decision of the Judicial Committee of the Privy Council. We, accordingly, hold and answer the question referred to this Court in the affirmative in favour of the assessee and against the revenue. Thus, it would be held that on the facts and in the circumstances of the case the right of appeal under Section 246(c) of the Act against the status taken in the assessment order will include the status as unregistered firm. The matter should now go back to the Tribunal for passing appropriate orders for disposal of the appeal by the Appellate Assistant Commissioner on merits even with regard to the status of the assessee. On the special facts and in the circumstances of the case, we shall make no order as to cost.