Law:

Section:

Section 184 of the Income-tax Act, 1961 – Firm – Position prior to 1-4-1993 – Assessment year 1967-68 – Whether where there was no change in constitution of firm or readjustment of shares of partners in existing firm, merely because firm was not allowed benefits of continuance of registration during immediately preceding year, it was not sufficient legal justification for ITO to have refused to recognize renewal of registration of firm - Held, yes FACTS The petitioner had been, admittedly, granted renewal of registration up to the assessment year 1965-66. For the assessment year 1966-67, however, although the petitioner-assessee had filed a declaration in Form No. 12, as envisaged by section 184, along with the return, the ITO reckoned the petitioner's status as unregistered firm and assessed an income for which there was no tax liability. The petitioner, therefore, did not file an appeal against that order. For the assessment year 1967-68, the petitioner filed along with its return of income a declaration in Form No. 12 asserting further that there had been no change in the constitution of the firm and that, therefore, the petitioner was entitled to an automatic renewal of the registration of the firm. The ITO refused renewal of registration on ground that no registration was allowed in preceeding year. The AAC allowed the assessee's appeal but the Tribunal set aside the order of the AAC on the technical ground that order refusing registration was not appealable. On writ : HELD All that the legislature intended was that the return should be duly filed and the declaration should be duly made and both the documents should be before the assessing authority at the time when he is applying his mind to the assessment of any particular firm. If he is then satisfied that the return had been duly filed and that there has been no change in the constitution of the firm and no change in the shares of the partners and the firm was registered during the previous years, then the necessary advantage of renewal conferred by sub-section (7) of section 184 must undoubtedly follow to the assessee-firm. That being the settled legal position and there being nothing in the order of…

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