Appeal on assessed status in composite firm registration cases lies under section 246(1)(c) despite refusal to continue registration.

Where a composite assessment order also reflects refusal to continue a firm's registration, the assessee may challenge the status adopted in the assessment under section 246(1)(c) of the Income-tax Act. The Rajasthan HC applied a harmonious construction of sections 246, 143 and 185, noting that the statutory scheme distinguishes appeals against assessment orders and orders under section 185, but does not leave the assessee without a remedy where the real grievance is the assessed status. It also clarified that section 246(1)(j) covers cases where a declaration is filed but a defect is not cured, and does not exclude an appeal on the status issue in a composite assessment.

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Issues: Whether an appeal lay under section 246(1)(c) of the Income-tax Act, 1961, against an order refusing to condone delay in filing the declaration for continuation of registration under section 184(7), and whether the dispute could be raised as one relating to the status in which the firm was assessed.

Analysis: The statutory scheme distinguished between appeals against assessment orders and appeals against orders passed under section 185. The explanation to section 143 treated a firm as a registered firm or an unregistered firm for purposes of status, and the explanation to section 246(5) similarly recognised status as the category under which the assessee is assessed. The Court held that where the assessment order is composite and includes the consequence of refusing continuation of registration, the assessee can challenge the status adopted in the assessment under section 246(1)(c). The Court also held that section 246(1)(j) covers cases where a declaration has been filed and a defect is not cured, but it does not exclude an appeal where the real grievance is against the status reflected in the assessment order. A harmonious construction of the provisions was preferred so that the assessee is not left without a remedy in a composite assessment situation.

Conclusion: An appeal lay under section 246(1)(c), and the question was answered in the negative, in favour of the assessee and against the Revenue.

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