INCOME TAX OFFICER Vs. K C LUKA
INCOME TAX APPELLATE TRIBUNAL
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Kum. M. Fatima Beebi, Judicial Member -
(1.) THESE two appeals by the revenue relate to the assessment year 1976-77. The assessee is a firm deriving income from business in copra. The assessee follows the mercantile system of accounting. The previous year relevant for the assessment year 1976-77 ended on 31-3-1976. The return for the assessment year had to be filed on 31-3-1976. The firm was registered for the purpose of the Income-tax Act, 1961 ('the Act'), for the assessment year 1975-76. The assessee filed the declaration in Form No. 12 for the continuation of the registration for the assessment year 1976-77 along with the return under Section 139(1) of the Act on 16-8-1976. The delay of 16 days in filing the declaration was explained in an application for condoning the delay. The ITO considered the explanation as not satisfactory and rejected the petition. In completing the assessment the firm was treated as unregistered. The ITO also noticed a peak credit of Rs, 29,800 as on 31-7-1975 in the books of account. The assessee stated that these credits represented credit purchases from farmers and dealers and that the dealers, being unregistered under the Sales Tax Act, had given bogus addresses. The books as on 31-7-1975 were credited with amounts in the names of 19 persons whose identities, according to the ITO, were not verifiable. The total credit in the names of these persons amounted to Rs. 22,300. This amount was added to the income as unexplained credits.
(2.) The assessee filed separate appeals before the AAC against the order of assessment making such addition and against the order made in the status of an unregistered firm, on refusal to allow continuation of registration. The AAC accepted the assessee's contention that the ITO erred in coming to the conclusion that out of the 22 persons in whose names the credits appeared 19 persons were bogus. In this view, the ITO should have issued summons to all the 22 parties before drawing such a conclusion. He considered the assessment as one having been made not on proper grounds. He, therefore, set aside the assessment and directed the ITO to summon the persons to whom summons had not been issued and make necessary enquiries before coming to any conclusion regarding the nature of the credits. The order dated 19-7-1979 thus setting aside the assessment is under attack by the revenue in IT Appeal No. 357 (Coch.) of 1979.
It Appeal No. 358 (Coch.) of 1979 is directed against the order of even date allowing the assessee's appeal against the order treating the assessee as an unregistered firm. The assessee contended before the AAC that the delay in filing the application was negligible and properly explained and that the refusal to allow continuation of registration was not justified. Accepting this contention, the AAC condoned the delay and directed the ItO to grant registration to the firm.
(3.) WE shall first deal with the status of the assessee, before going to the quantum appeal. The assessee had been assessed as a registered firm in the assessment year 1975-76. There was no change in the constitution of the firm in the previous year relevant to the assessment year 1976-77. The declaration filed on 16-8-1976 was, however, delayed by 16 days and the application for condoning the delay was rejected by the ITO and the assessee was refused continuation of registration. According to the revenue, the order of the ITO, thus, rejecting the application for condonation of the delay, is one based under the proviso to Section 187(7) of the Act and it is not an appealable order ; the appeal before the AAC was, therefore, incompetent and the order of the AAC directing to grant registration to the firm was, thus, one without jurisdiction. It was pointed out that Section 246(y') of the Act which enumerates the orders from which appeals lie does not provide for an appeal from an order rejecting an application for condonation of delay. According to the departmental representative, there is no order under Section 185(1)(6) or 185(2) or 185(3) of the Act which can attract Clause (./) of Section 246 and the AAC was, therefore, wrong in having entertained the assessee's appeal. It was also stated that the ITO in rejecting the application, had only exercised his discretion, as the explanation of the assessee was not satisfactory ; and the AAC was, therefore, not justified in having interfered with the discretionary order passed by the ITO.;
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