MADIVALAPPA AND SONS Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF KARNATAKA
MADIVALAPPA AND SONS
COMMISSIONER OF INCOME-TAX, MYSORE
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Govinda Bhat, J. -
(1.)THIS is a reference under section 256(1) of the Income-tax Act, 1961, hereinafter called "the Act." The question of law referred to this court reads :
"Whether, on the facts and in the circumstances of the case, was the assessee-firm correctly assessed to tax for the assessment year 1963-64 in the status of an unregistered firm ?"
(2.)IN our opinion, the question of law that arises out of the order of the Tribunal is :
"Whether the registration of the firm granted to the assessee for the assessment year 1962-63 shall have effect for the assessment year 1963-64 under sub-section (7) of section 184 of the Act ?"
We have recast the question of law accordingly, as mentioned above.
The matter arises in this way. The assessee is a partnership firm which was granted registration for the assessment year 1962-63. For the assessment year 1963-64, the Income-tax officer called upon the assessee by a notice under section 139(2) served on June 13, 1963, to file a return of its income for the assessment year 1963-64, within a period of thirty days. The assessee did not file the return in accordance with the said notice nor did it ask for extension of time for filing the return. Therefore, on February, 29, 1964, the Income-tax Officer made an order of assessment under section 144. That order was served on the assessee on March, 12, 1964. On the said date, viz., March, 12, 1964 the assessee filed a return of its income for the assessment year 1963-64. It is relevant to state that the Income-tax Officer while making the best judgment assessment under section 144 of the Act assessed the firm in the status of an unregistered firm. Against the order of the Income-tax Officer, the assessee-firm preferred an appeal to the Appellate Assistant Commissioner of Income-tax who allowed the appeal and ordered that the assessment be made in the status of a registered firm. Against the said order, the Income-tax Officer preferred an appeal to the Income-tax Appellate Tribunal. The Appellate Tribunal allowed the appeal holding that the assessee is not entitled to the benefit of registration of the assessment year 1963-64 since it had not filed its return of income with a declaration that there is no change in the constitution of the firm as required under the proviso to sub-section (7) of section 184 of the Act. At the instance of the assessee, the Tribunal has stated the question of law to this court which we have set out earlier. We have recast the question since the question of law that arises out of the order of the Tribunal is whether the registration granted to the firm for the assessment year 1962-63, on the facts and in the circumstances of the case.
(3.)THE Act of 1961 has made a change in regard to the registration of firms for subsequent years. Under the proviso to sub-section (7) of section 184, the registration granted to a firm for any assessment year enures for subsequent years provided the firm furnishes along with its return of income for the assessment year concerned a declaration in the prescribed form and verified in the prescribed manner to the effect 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. THE undisputed facts are that the assessee-firm did not file its return of income within the time allowed by the Income-tax Officer. THEre is no discretion vested in the Income-tax Officer to grant the benefit of registration to the firm when the assessee firm does not satisfy the two conditions laid down by the proviso to sub section (7) of section 184 of the Act. In our opinion, the Tribunal was right in holding that the registration granted to the firm for the assessment year 1962-63 does not enure for the subsequent assessment year since the assessee-firm has not filed its return of income.
Accordingly, we answer the question that the registration granted to the assessee-firm for the assessment year 1962-63 shall not have effect for the assessment year 1963-64. The assessee shall pay to the department the costs of this reference. Advocate's fee Rs. 250.
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