JUDGMENT
1. By these references under Section 256(1) of the Income-tax Act, the question referred to this court is as stated below :
“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in upholding the orders of the Appellate Assistant Commissioner and in holding that the orders of assessment could not be annulled merely because the Income-tax Officer had not passed any orders on the application for registration of the assessee-firm before making the assessment?”
2. The relevant facts are stated hereinafter. The assessee is a partnership firm of contractors. The firm applied for registration for the assessment years 1964-65, 1965-66, 1966-67 and 1967-68. The Income-tax Officer, while passing the orders of assessment for the assessment year 1964-65 stated that the claim of the assessee for registration was being rejected and separate order would be passed. The assessment orders for the four assessment years were passed by the Income-tax Officer but no separate order refusing registration, as he had observed earlier, was passed. It may be stated that the Income-tax Officer passed the order for assessment of the assessee as unregistered firm.
3. The assessee thereafter filed an appeal before the Appellate Assistant Commissioner. The assessee disputed the correctness of the orders passed by the Income-tax Officer in treating it as an unregistered firm. It also objected to certain additions made in the assessment orders. The Appellate Assistant Commissioner finding that no order refusing registration had been passed by the Income-tax Officer for all the four assessment years, held that the assessment orders were illegal. He, therefore, directed the Income-tax Officer to examine the claim for registration and then decide
the issue on merits. The assessee being aggrieved by the order of the Appellate Assistant Commissioner in remanding the matter to the Income-tax Officer for examining the claim of registration and then to decide the issue on merits, filed an appeal before the Appellate Tribunal. According to the assessee, the Appellate Assistant Commissioner should have annulled the entire assessment rather than remand the matter to the Income-tax Officer. The contention of the assessee did not find favour with the Appellate Tribunal and, therefore, the appeal failed.
4. The assessee thereafter moved the Tribunal for referring the question, as set forth above, to this court. Learned counsel for the assessee agitated the same question before us as was his contention before the Appellate Tribunal. Mr. Rameshwar Prasad, learned counsel for the assessee, has submitted that the Income-tax Officer before assessing the assessee is obliged to consider whether the application of the partnership for registration be allowed or not. Section 185 lays down that after receiving an application for registration of a firm, the Income-tax Officer shall inquire into the genuineness of the firm and its constitution as stated in the instrument of partnership. Sub-section l(b) of the above-said section lays down that if the assessing officer is not satisfied about the genuineness, he shall pass an order in writing refusing to register the firm. After the assessing officer has passed the order in terms of Section 185(1)(b) of the Act, he may proceed to act in terms of Section 182 or 183. In the instant case, the assessing officer has assessed the assessee as an unregistered firm. His submission is that the assessing officer should not have assessed the assessee as an unregistered firm without disposing of the application for registration and since no order disposing of the claim of the partnership to be assessed as a registered firm has been passed by the assessing officer, he had no jurisdiction to assess. This position is unexceptional. In fact, on that very basis, the Appellate Assistant Commissioner had set aside the assessment order. This position in law had been accepted by the Appellate Tribunal as well. There can be no controversy about the position that assessment order can be passed only after the application for assessment as a registered firm has been disposed of. Without disposing of the application for registration, there is no power or justification to pass an order of assessment.
5. The crux of the matter is, as Mr. Rameshwar Prasad has contended, that having set aside the order of assessment, the Appellate Assistant Commissioner and the Appellate Tribunal were obliged to annul the assessment and had no jurisdiction to direct the Income-tax Officer to proceed further and pass an assessment order after passing the appropriate order on the application of the assessee for being treated as a registered firm. This
submission on behalf of the assessee is absolutely untenable. It cannot be disputed that the Income-tax Officer had jurisdiction to assess the assessee. There being no initial lack of jurisdiction in the Income-tax Officer, he slipped when he failed to pass an order on the application for being assessed as a registered firm. He did observe in the assessment order that he will pass an order separately disallowing the claim to be assessed as a registered firm. But somehow he did not pass the order. The error, therefore, arose on the date he passed the assessment order without passing the order in terms of Section 185(1)(b). It is well established that where there is no want of jurisdiction in respect of a proceeding, the entire proceeding will not be one without jurisdiction. In that view of the matter, passing of the assessment order was without jurisdiction but, in any view, the assessment proceeding was not void.
6. The contention urged on behalf of the assessee before us is that the assessment having been set aside, there was no jurisdiction to remand the matter to the Income-tax Officer for reassessment. Reliance was placed by Mr. Rameshwar Prasad upon Kapurchand Shrimal v. CIT [1981] 131 ITR 451, where the Supreme Court observed that (headnote at p. 451):
“When a claim of partition in the Hindu undivided family is made in time and the assessment is made on the Hindu undivided family without holding an inquiry as contemplated by Section 25A(1), the assessment is liable to be set aside in appeal as it is in clear violation of the procedure prescribed for that purpose.”
7. The reliance placed by Mr. Rameshwar Prasad is entirely misplaced. He has failed to take note of the very next sentence in the same decision where the Supreme Court observed as follows (headnote):
“When the Tribunal holds that such an assessment is liable to be set aside, the duty of the Tribunal does not end with making a declaration that the assessment is illegal. The proper order to be passed in such a case would be to set aside the assessment and to direct the Income-tax Officer to make a fresh assessment in accordance with the procedure prescribed by law. ”
8. The decision relied upon by Mr. Rameshwar Prasad is really against his contention and is in favour of the Department. The law laid down by Venkataramiah J., quoted above, settles the matter completely. The same view was taken by a Division Bench of this court in Mahalliam Ramniranjan Das v. CIT [1985] 156 ITR 885 (Pat). In our view, there is no merit in the submission urged on behalf of the assessee.
9. For the reasons stated above, the question referred to this court must be answered in the affirmative, in favour of the Department and against the assessee.