- (1.) "Whether in the facts and circumstances of the case, the Tribunal was justified in affirming order passed by CIT(A) setting aside the order passed by the AO under s. 185(5) refusing to grant registration to the respondent firm and treating the assessee firm as URF -
(2.) THE necessary facts are, that the AO passed the order Annex. 1, under s. 185(5) of the IT Act, 1961 refusing to grant registration to the firm for the asst. yr. 1991 -92, and has ordered the status of the assessee to be taken as URF (unregistered firm). Against this order, appeal was filed by the assessee, which was allowed, and the AO was directed to allow the claim of registration to the appellant firm. Against this order, appeal was filed by the Revenue, which was allowed, and order of the AO, refusing registration was restored. conclusively prove, that the firm was prevented by sufficient cause to comply with the notice under ss. 142(1) and 143 (2). In this order, assessee was not represented thus, the order was passed ex parte.
(3.) IT appears, that thereafter the assessee filed the miscellaneous application, which was allowed vide order dt. 21st Revenue, being Appeal No. 2773; which related to the order of CIT(A) cancelling the order of the AO passed under s. 185(5) of the Act. Since the present appeal related to this controversy only, we need not to go into the aspect covered by the other Appeal No. 1962, decided by the learned Tribunal. Thus, the learned Tribunal upheld setting aside of cancellation of registration, against which, the Revenue is aggrieved. The learned Tribunal perused the record and found, that the AO, in the assessment order, passed under s. 144, has found, that the assessee had not fully complied with the notice, sent to it, by the ITO, and it has been found, that there is a difference between non -compliance, and not proper compliance. It has been found, that if the assessee had complied with, and the ITO was not satisfied with the compliance, it cannot be said that there was non -compliance of the notice, then it has been noticed, that in para 2 of the assessment order, the ITO has observed, that the notice was not fully complied with, however, the partners of the assessee, along with the Authorised Representative appeared on the subsequent dates, and that the assessee had filed the partnership deed and other relevant documents along with the return. In such circumstances, it was found, that it appears, that ITO had not applied judicial mind, while passing order under s. 185(5), because the order is very cursory and devoid of any reasons, which may give an impression, that the ITO had applied judicial mind, before arriving at a particular decision, for not granting the registration to the firm. In view of the learned Tribunal, it is the AO, who did not allow registration with a view to penalize it. It has also been found, that in reply to notice, assessee clearly gave out, that in absence of books of accounts, no reply can be filed. This was found to be no reasonable reason for coming to the conclusion, that the assessee had not complied with the direction of the ITO. Reliance has been placed upon the judgment of this Court, in CIT vs. Faiz Mohd., Hasim Ali, Taj Mohd., Noor Mohd. (1986) 53 CTR (Raj) 221 : (1986) 160 ITR 396 (Raj), and after relying on other judgments, including that of Andhra Pradesh High Court, it was held, that the AO has exercised discretion without applying judicial mind, and hence the cancellation of the registration by the AO was upheld.;