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C.I.T. v. M/S S. Hotel - INCOME TAX REFERENCE No. 125 of 1991  RD-AH 258 (27 January 2005)
I.T.R. No.125 of 1991
Commissioner of Income Tax, Lucknow v. M/s. Sharma Hotel, Lucknow.
Hon'ble R.K.Agrawal, J.
Hon'ble Prakash Krishna, J.
The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under Section 256(1) of the Income Tax Act, 1961, hereinafter referred to as the Act, for opinion to this Court.
"I.T.A. no. 78(Alld)/89 Revenue's appeal:
1. Whether on the facts and in the circumstances of the case the Tribunal was, in law, justified in holding that registration of the assessee-firm was wrongly refused in the A.Y. 1978-79?
I.T.A.No. 467(Alld)/1987-1980-81: Assessee's Appeal:
2. Whether on the facts and in the circumstances of the case the Tribunal was, in law, justified in holding that as a consequential effect orf the order for A.YH. 1978-79, assessee was entitled for registration in a.Y. 1980-81 in spite of the fact that the Tribunal's order relied upon has not been accepted and a Reference Application u/s 256(1) has been filed?"
The Reference relates to the Assessment years 1978-79 and 1980-81.
Briefly stated the facts giving rise to the present Reference are as follows:
The respondent-assessee is a firm. The assessment was originally completed on 19th March, 1979 under Section 143(1) of the Act on tatal income of Rs. 36,360/- on the basis of form No. 12 filed by the respondent. The respondent-assessee objected the assessment framed under Section 143(1) of the Act on the ground that the assessment for this year i.e. 1978-79 should be completed after granting registration as the firm has been reconstituted and applied for fresh registration. Keeping in view the assessment was reopened under Section 143(2)(2)(b) of the Act. During the course of reassessment proceedings, it was found that the partnership deed was claimed to have been executed on 4th February, 1978 but the stamp papers were actually purchased on 4th September, 1978. The stamp paper date was deliberately changed to show that the partnership deed had been executed before the end of accounting year being 31st March, 1978. An order under Sect5ion 185(1) of the Act refusing to grant registration to the firm was passed which was confirmed in appeal by the Deputy Commissioner of Income Tax (Appeals). Feeling aggrieved the respondent-assessee preferred an appeal before the Tribunal. The Tribunal vide order dated 10th July, 1985 has set aside the order declining to grant registration with the direction that proper opportunity of being heard should be afforded to the respondent-assessee. Pursuant thereof a notice under Section 186 dated 19th October, 1987 was issued which was served upon the respondent on 29th October, 1987. After affording a fresh opportunity, an order under Section 186(1) of the Act was passed on 15th march, 1988 whereby the registration of the firm was cancelled under Section 186(1) of the Act with the approval of the Inspecting Assistant Commissioner, Lucknow. The respondent preferred an appeal before the Deputy Commissioner (Appeals) Lucknow who has allowed the appeal placing reliance of a judgment of this Court in the case of Shiv Nath Prasad Motilal vs. Income Tax Officer, D-Ward, Varanasi [(1963) 47 ITR 493] wherein it has been held that even if partnership deed did not exist and the Income Tax Officer finally committed a mistake or rather blunder in allowing registration the resort could not be had to Section 186(1) of the Act. Feeling aggrieved, the Revenue preferred an appeal before the Tribunal. The Tribunal has dismissed the appeal on the ground that the Income Tax Officer himself has recorded in his order that the application for registration in form No. 11-A was filed by the respondent-assessee on 14th March, 1978 which was accompanied with the deed of the partnership executed on 4th February, 1978.
We have heard Sri A.N.Mahajan, learned standing counsel for the Revenue and find that the Income Tax Officer himself recorded a finding while passing the order under Section 186(1) of the Act that the respondent-assessee had filed an application for registration in Form No. 11-A on 14th March, 1978 which was accompanied with the deed of partnership executed on 4th February, 1978. When the deed was executed on the stamp paper on the application filed on 14th March, 1978 there is no question of stamp paper having been purchased subsequently i.e. on 4th September, 1978. This view taken by the Tribunal is correct and does not suffer from any legal infirmity.
In view of the foregoing discussions, we answer the question referred to us in the affirmative i.e. in favour of the assessee and against the Revenue. However, there shall be no order as to costs.
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