2004 (1) TMI 70

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....as unregistered firm (URF) by the Income-tax Officer vide order dated February 21, 1985. The ex parte assessment was made against the respondent-assessee unregistered firm and the order came to be passed as a result of persistent non-compliance with the notices issued by the Income-tax Officer from time to time under sections 143(2) and 142(1) of the Act. It appears from the record of the case that on some of the dates fixed for hearing, adjournment applications were moved on behalf of the assessee whereas on some other dates there was no compliance at all. As a result thereof, the Income-tax Officer fixed the hearing of the case on February 18, 1985. In the letter dated February 8, 1985, it has been clearly indicated that in case of non-compliance, the firm would be treated as unregistered firm. Notwithstanding the receipt of the aforesaid notice, the assessee failed to attend which has resulted in an ex parte assessment under section 144 of the Act as also refusal of registration. The Commissioner of Income-tax (Appeals) dismissed the appeal preferred by the assessee. The Commissioner of Income-tax (Appeals) recorded an order refusing registration as an order under section 186(....

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.... of the appellant." It is this finding and resultant order which has given rise to the instant reference at the instance of the Revenue. We have heard Mr. Manish R. Bhatt, learned standing counsel for the Revenue. Though the respondent-assessee is not served, we thought it fit not to wait till the service is effected on the respondent-assessee, as the questions referred in this reference are required to be answered in favour of the assessee and against the Revenue. The only contention which is raised by Mr. Bhatt, learned standing counsel for the Revenue, is that the Tribunal has misdirected itself in invoking the provisions of section 186 of the Act which contemplates cancellation of registration. Learned counsel contended that since the assessee-firm was treated as unregistered firm by the Income-tax Officer vide order dated February 21, 1985, the Income-tax Officer and the Commissioner of Income-tax (Appeals) were right in invoking the provisions of section 185 of the Act which provide for the procedure for registration of a firm on receipt of an application and by the said order what was done by the Income-tax Officer was refusal to grant registration and not cancellation....

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....ds as under: "186. (2) If, where a firm has been registered or its registration has effect under sub-section (7) of section 184 for any assessment year, there is, on the part of the firm, any such failure in respect of the assessment year as is mentioned in section 144, the Income-tax Officer may cancel the registration of the firm for the assessment year, after giving the firm not less than fourteen days' notice intimating his intention to cancel its registration and after giving it a reasonable opportunity of being heard." Since both section 185(5) and section 186(2) refer to failure mentioned in section 144, the said section is also reproduced: "144. If any person- (a) fails to make the return required by any notice given under sub-section (2) of section 139 and has not made a return or a revised return under sub-section (4) or sub-section (5) of that section, or (b) fails to comply with all the terms of a notice issued under subsection (1) of section 142 or fails to comply with a direction issued under sub-section (2A) of that section, or (c) having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 143, the Income-....

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....id factual condition precedent. Nothing is shown from the record that this factual assumption made by the Tribunal is incorrect Of course, Mr. M. R. Bhatt, learned counsel for the Revenue, has submitted that in view of the absence of any categorical statement in the statement of case about the assessee-firm having been registered for any previous assessment year, the matter may be kept open. Although we would not have acceded to such request, as the dispute is about registration for the assessment year 1983-84 and the Tribunal had also decided the matter in the year 1990, since the Tribunal itself has restored the matter before the Income-tax Officer for verification of compliance by the assessee with all the necessary formalities entitling it to registration, we direct that if the Income-tax Officer has so far not decided the matter after the order of remand by the Tribunal, the Income-tax Officer shall also ascertain whether the assessee-firm was registered for any previous assessment year. However, if the Income-tax Officer has already decided the matter on the basis of the order passed by the Tribunal, we do not intend to reopen the matter and would proceed on the basis tha....