A.S.S.S.S. Chandrasekaran and Brothers vs The Commissioner of Income Tax, Madras

Ramaswami, J.—The question that has been referred to us reads as follows :

Whether the Appellate Tribunal is right in law in holding that no appeal lies from the order of the Income Tax Officer rejecting the assessee''s

application for registration as time barred ?

The assessee is a partnership concern. For the assessment year 1964-65, it closed its accounts on February 12, 1964. An application for

registration of the firm was filed on June 5, 1964. By an order dated March 15, 1965, the Income Tax Officer rejected this application as time-

barred as no satisfactory explanation for the delay in filing the application had been offered. The assessee filed an appeal to the Appellate Assistant

Commissioner. The Appellate Assistant Commissioner rejected the appeal on the ground that the appeal was incompetent. This was on the basis

that, though the order of the Income Tax Officer was purported to have been passed u/s 185, it was really an order under the proviso to Section

184(4). The Tribunal also agreed with this view and rejected the appeal.

In this reference, the learned counsel for the assessee, submitted that the application for registration could be rejected by the Income Tax Officer

only u/s 185 and as such the appeal was maintainable. He also contended that the Income Tax Officer in fact purported to pass the order only u/s

185 and not u/s 184(4). He further contended that at best the order could be one u/s 185(2) and (3) and not u/s 184(4). We are unable to accept

this contention. Section 184(4) reads as follows :

(4) the application shall be made before the end of the previous year for the assessment year in respect of which registration is sought:.

Provided that the Income Tax Officer may entertain an application made after the end of the previous year, if he is satisfied that the firm was

prevented by sufficient cause from making the application before the end of the previous year.

It is seen from this provision that, in order to entertain an application for registration, it should have been presented before the end of the

previous year for the assessment year in respect of which registration was sought. If there was any delay in filing the application and the delay is

explained to the satisfaction of the Income Tax Officer, he could entertain the application even after the end of the previous year. Only after the

application is entertained as being in time and requires to be considered on merits, it can be dealt with u/s 185. Section 185 deals with disposal of

an application on entertainment of the same on merits while Section 184(4) has no concern with the merits of the application for registration. If the

application was not in time and the delay in filing the same has not been executed by the Income Tax Officer, there is no application in the eye of

law to be dealt with u/s 185. The learned counsel for the assessee relied on the heading given to the order of the Income Tax Officer as one made

u/s 185 of the, Income Tax Act and sought to argue that it was only an order u/s 185 and not one made u/s 184(4). Once we find that the Income

Tax Officer had jurisdiction to make such an order only u/s 184(4) and not u/s 185, mere quoting of a wrong provision of law will not either

invalidate the order or make it one passed under the wrong provision of the Act. It is not disputed that u/s 184(4) the Income Tax Officer could

refuse to entertain an application on the ground that it had not been filed before the end of the previous year. We are also of the view that the

proviso to Section 184(4) enabling the Income Tax Officer to entertain the application made after the end of the previous year if he is satisfied that

the firm was prevented by sufficient cause from making an application before the end of the previous year, implies also a power to refuse to

entertain the application when he is not so satisfied. We are, therefore, of opinion that the order of the Income Tax Officer must be deemed to

have been made u/s 184(4) and not u/s 185. If the order is one u/s 184(4), there could not be any dispute that no appeal would lie to the

Appellate Assistant Commissioner or to the Tribunal.

It was next contended by the learned counsel for the assessee that the order made would come u/s 185(2). That provision states that 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. If the defect is not rectified within the time, the Income Tax

Officer may reject the application. According to the learned counsel, the words "" on the ground that the application is not in order "" would cover all

cases of defects, including the one of delay in filing the application. We are unable to agree with this contention. The defects contemplated under

Sub-clauses (2) and (3) of Section 185 relate to formal defects when the application is filed in time and do not relate to the application being out of

time. That is specifically covered under the provision of Section 184(4). We may also state that, even if this rejection in this particular case is to be

treated as one u/s 185(2) at the relevant time, even an order u/s 185(2) was not an appealable order and, therefore, it is of no assistance to the

assessee.

For the foregoing reasons we answer the question in the affirmative and against the assessee with costs. Counsel''s fee Rs. 250.