INCOME TAX OFFICER v. DEOKI NANDAN OM PRAKASH
[Citation -1985-LL-0427]

Citation 1985-LL-0427
Appellant Name INCOME TAX OFFICER
Respondent Name DEOKI NANDAN OM PRAKASH
Court ITAT
Relevant Act Income-tax
Date of Order 27/04/1985
Assessment Year 1974-75
Judgment View Judgment
Keyword Tags cancellation of registration • opportunity of being heard • reasonable opportunity
Bot Summary: Reversing the ITO s order passed under s. 186(1) of the IT Act, 1961 in respect of asst. ITO in the respondent s case passed an order under s. 185(1) of he Act rejecting the assessee s claim of registration in respect of 1974-75 on the ground that the respondent firm had not filed information about the formation of partnership to its principal and further that information was given to the State Bank of India as late as on 25th May., 1975, though the instrument was executed on 26th Dec., 1973 incorporating certain changes. In the first appeal against the said order of 185(1) the concerned AAC o n 18th Aug., 1978 reversed the ITO s order and directed registration by observing that the grounds on which the ITO s order was based was simply irrelevant to the question whether a genuine firm had come into existence and further all the formalities having been completed, the appellant was entitled to registration. To complete the picture, we like to reproduce para 5 fo the AAC s order, because for the Revenue it was sought to be argued that the AAC while reversing the ITO s order under s. 185 did not touch upon the genuineness aspect: In my opinion, the grounds on which the registration has been refused are simply irrelevant to the question whether a genuine firm came into existence in the year under consideration. As far as the year under consideration is concerned, the assessee s short contention that after the order of the AAC reversing the ITO s order under s. 185(i) of the Act. s. 186(1) of the Act simply could not be invoked impressed the first Appellate Authority who by relying on the case of Rameshwar Goenka vs. ITO 77 ITR 421 at 429 accepted the appeal in the said case, it has been held that once registration is directed Appellate Authority after refusal by the ITO, the order fo cancellation of registration by the ITO must be set aside as an inferior authority cannot set at naught an appellate order. We have informed ourselves that the judgment in Rameshwar Goenka s case was brought to the notice of the ITO also in s. 186(1) proceedings.


S. GROVER, J. M.: This Revenue appeal is directed against order dt. 27th May, 1983 passed by AAC of IT, Moradabad in Appeal No. 25/82-83/Chd. reversing ITO s order passed under s. 186(1) of IT Act, 1961 in respect of asst. yr. 1974-75. ITO in respondent s case passed order under s. 185(1) (b) of he Act rejecting assessee s claim of registration in respect of 1974-75 on ground that respondent firm had not filed information about formation of partnership to its principal and further that information was given to State Bank of India as late as on 25th May., 1975, though instrument was executed on 26th Dec., 1973 incorporating certain changes. In first appeal against said order of 185(1) (b) concerned AAC o n 18th Aug., 1978 reversed ITO s order and directed registration by observing that grounds on which ITO s order was based was simply irrelevant to question whether genuine firm had come into existence and further all formalities having been completed, appellant was entitled to registration. To complete picture, we like to reproduce para 5 fo AAC s order, because for Revenue it was sought to be argued that AAC while reversing ITO s order under s. 185 (1) (b) did not touch upon genuineness aspect: "In my opinion, grounds on which registration has been refused are simply irrelevant to question whether genuine firm came into existence in year under consideration. There is valid deed of partnership which was filed in time and which has been duly acted upon deed incorporate as shares of profits and loss of partners. All conditions required for registration under Income Tax Act are, therefore, fully met in this case and there is no ground at all for refusal to registration to appellant. Registration is accordingly, granted to appellant." AAC s order of 18th Aug., 1978 has been accepted by Revenue. Later on it seems that ITO initiated proceedings under s. 186(1) of Act in respect of asst. yrs. 1974-75 to 1978-79 and vide order dt. 30th March, 1982 cancelled registration for all these years. As far as year under consideration is concerned, assessee s short contention that after order of AAC reversing ITO s order under s. 185(i) (b) of Act. s. 186(1) of Act simply could not be invoked impressed first Appellate Authority who by relying on case of Rameshwar Goenka vs. ITO (1970) 77 ITR 421 at 429 (Assam) accepted appeal in said case, it has been held that once registration is directed Appellate Authority after refusal by ITO, order fo cancellation of registration by ITO must be set aside as inferior authority cannot set at naught appellate order. We have informed ourselves that judgment in Rameshwar Goenka s case (supra) was brought to notice of ITO also in s. 186(1) proceedings. ITO, however, by-passed judgment by merely stating that he was outside jurisdictional area of Assam High Court, not very correct approach. After hearing parties we endorse and confirm view taken by AAC in order appealed against ITO mis-directed himself in cancelling registration in as far as asst. yr. 1974-75 is concerned, because ITO was not competent in embarking upon further enquiry regarding genuineness of firm. While dismissing this revenue appeal we reject Mrs. Kapil s argument that provision of s. 186(1) is completely independent of s. 185(1) (b) and once ITO takes upon himself to process case under former provision he can completely ignore all orders passed in relation to said related provision, whatever may be authority passing such order. As fact we enquired of her, assuming that question of genuineness of firm travels up to Tribunal and even goes further to High Court or Supreme Court whether under such circumstances also it could be open to ITO to proceed under s. 186(1) to withdraw registration benefit. Her answer was that it certainly would be within powers of ITO. Mrs. Kapila alternatively submitted that in any case powers under s. 186(1) were exercised by ITO after taking approval form IAC and since his status is same as that of AAC, it could not be said that inferior authority processed and set at naught earlier order of AAC. This argument also we have rejected on simple ground that ITO can derive mandate form s. 186(1) of Act only in respect of orders passed under s. 185(1) (a) of Act by him or officer of coordinate jurisdiction. According to us, once provision of s. 185(1) (b) are invoked, s. 186(1) simply cannot be brought to play any role. This is clear from bare reading of following provision of s. 186(1), which is relevant for present appeal: " 186(1) If, where firm has been registered, or its registration has effect under sub-s. (7) of s. 184 for assessment year, ITO is of opinion that there was during previous year no genuine firm in existence as registered, he may, after giving firm reasonable opportunity of being heard and with previous approval of IAC, cancel registration of firm for that assessment year: Provided that no such cancellation shall be made after expiry of eight years from end of assessment year in respect of which registration has been granted or has effect." While dismissing this revenue appeal we should not be taken to have expressed any opinion in respect of other years, for which ITO has passed order under s. 186(1). Appeal dismissed. *** INCOME TAX OFFICER v. DEOKI NANDAN OM PRAKASH
Report Error