TaxTMI 
TaxTMI 
1997 (12) TMI 152
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....; This is an appeal by assessee against the order of CIT(A) refusing registration under s. 185(1)(b) relating to asst. yr. 1988-89. In this case the assessment was completed under s. 144 and the registration was denied under s. 185(1)(b). The reassessment proceedings were initiated after reopening the assessment under s. 143(2)(b) of the IT Act as the original assessment was completed under s. 143(1) in the status of Regd. Firm (R.F.). The assessee was required to file certain details and produce the books of account. The assessee furnished some of the details but could not appear on last hearing of the case. Therefore, the AO completed the as....
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....aya Engg. Co. vs. CIT (1965) 57 ITR 762 (Pat) and Virendra Kumar Avinash Kumar vs. CIT (1988) 69 CTR (All) 83 : (1988) 171 ITR 263 (All). It was further argued that the firm was not held as ingenuine. The first appeal of the assessee was made before the CIT(A) in quantum matter wherein the CIT(A) reduced the quantum of the assessed income. Therefore, the registration cannot be denied where all other formalities are completed. Further reliance was placed on various decisions of various High Courts of the country. 3. On the other hand, the learned Departmental Representative, relied upon the order of the CIT(A) and he further submitted that the CIT(A) can change the section and he rightly changed the section for denial of registration i.e.....
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....ticularly when he had already made assessment in the cases of the two partners assessed by him taking share from the appellant firm as registered firm. the Tribunal did not allow this ground to be raised and the Hon'ble Rajasthan High Court upheld the finding of the Tribunal in this case. Here, we, after perusing the decision of the Hon'ble Rajasthan High Court and other material, find that the facts of the case before the Hon'ble Rajasthan Court are distinguishable as in that case the additional evidence was rejected by the Tribunal. The distinguishable feature in case which we noted is that the affidavits were to be filed by the partners to explain the source. Here, in this case the preliminary details were filed and further some details ....
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....d the registration under s. 185(5) is rejected as the assessment was completed under s. 144 because the assessee failed to furnish the reply in response to notice under s. 143(2). 5. In case of CIT vs. Faiz Mohd., Hasim Ali, Taj Mohd. Noor Mohd. (1986) 58 CTR (Raj) 221 : (1986) 160 ITR 396 (Raj) wherein in the Hon'ble Rajasthan High Court has held "that the refusal to register the firm was not warranted as the ITO had not applied his mind judiciously while passing the order under s. 185(5). The Tribunal was right in maintaining the order of the AAC directing the ITO to consider the application on merits and to decide the matter afresh in accordance with law." In that case the registration was refused to the assessee-firm on the ground th....
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.... to refuse registration to a firm if he forms an opinion that the application for registration has not been made in accordance with the provisions of law or that the applicant firm is not a genuine firm. However, refusal under s. 185(5) follows only when there is one or some of the defaults specified in s. 144. It is not necessary for the ITO while taking action under s. 185(5) of the Act to record a finding on the application for registration of the firm that it is genuine. If the conditions, namely, that there has been a default on the part of the assessee as contemplated by s. 144 of the Act and that the default was of such a nature so as to merit the penalty of denial of registration, are satisfied then the ITO can refuse registratio....
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....ons are distinct and independent. The Hon'ble Jurisdictional High Court has held that these two sections are separate and distinct. Therefore, every section needs application of mind. In the present case we do not find any application of mind either by the AO or by the CIT(A). Therefore, in our view that registration was denied without affording a proper opportunity. The AO should have gone through that assessee has allocated the share profit as per the clause of partnership deed or not. This fact was not brought on record by the AO or by the CIT(A). We further notice that CIT(A) in quantum matter reduced the quantum by allowing deduction on account of cost of material supplied by the Department by holding that this material does not have a....