1984 (5) TMI 86 - AT - Income Tax

Tribunal grants appeal, directs registration for firm. Assessee entitled to challenge registration refusal.

The Tribunal allowed the appeal, reversing the decisions of the lower authorities and instructing the ITO to grant registration to the firm for the ... - Issues:1. Refusal of registration under section 185(1)(b) of the IT Act for the assessment year 1978-79.2. Validity of the order passed by the ITO refusing registration.3. Appeal before the AAC of IT against the order of the ITO.4. Second appeal before the Tribunal challenging the AAC's decision.5. Interpretation of the order under section 185(6) by the counsel for the assessee.6. Determination of the status of the firm for the assessment year under appeal.7. Compliance with the provisions of section 186(2) for cancellation of registration.Analysis:The appeal was filed by the assessee against the order of the ITO refusing registration under section 185(1)(b) of the IT Act for the assessment year 1978-79. The ITO based his decision on the grounds that the registration was not granted for the previous year, and the assessment was completed ex parte, preventing scrutiny of the genuineness of the firm. The AAC upheld the ITO's decision citing non-compliance with notice under section 143(2) and reliance on a High Court judgment. The AAC dismissed the appeal, leading the assessee to approach the Tribunal in a second appeal.During the second appeal, the counsel for the assessee argued that the order under section 185(6) was incorrectly titled, as there is no sub-section 6 under section 185. He contended that the refusal of registration was based on past rejections and ex parte assessment, emphasizing the continuity of registration benefits. The counsel disputed the ITO's reliance on the High Court judgment and highlighted the Tribunal's previous decision granting registration for the preceding year. The Departmental Representative, however, supported the ITO's decision, stating that the status determination had become final.The Tribunal analyzed the submissions and ruled in favor of the assessee. It held that once the assessment under section 143(1) was recalled, the entire order, including the status determination, was set aside. The Tribunal agreed with the counsel that the assessee was entitled to appeal against the refusal of registration and benefit from the continuation of registration. Additionally, the Tribunal noted the lack of compliance with the provisions of section 186(2) for cancellation of registration by the ITO. Consequently, the Tribunal directed the ITO to grant registration benefits to the firm for the assessment year under appeal.In conclusion, the Tribunal allowed the appeal, reversing the decisions of the authorities below and instructing the ITO to grant registration to the firm for the relevant assessment year.