ORDER
F.C. Rustagi, Judicial Member
1. The only dispute raised in this departmental appeal pertains to continuance of registration allowed by the AAC which was not allowed by the ITO as per his order under Section 184(7) of the Income-tax Act, 1961 (‘the Act’).
2. The issues raised are interesting and if facts briefly in the background are narrated, the same shall be of immense assistance for adjudication of the issue under consideration. The assessment year involved is 1981-82. The assessee is a registered partnership firm constituted of two partners S/Shri Gurcharan Singh and Labh Singh with 50 per cent share each. All through in the past till 1981-82 and subsequently also the assessee’s claim of registration has been accepted. When the return was filed for the year under consideration, Form No. 12 was not filed along with the same, for reasons best known to the assessee. The ITO was more than good to the assessee who vide his three letters dated 19-11-1983, 19-1-1984 and 14-2-1984 enquired of him whether requisite Form No. 12 was filed and in case it was so, the proof be adduced. None of these letters was cared for by the assessee. Ultimately, the assessment was framed under Section 143(1) of the Act on 25-2-1984 accepting the total income returned by the assessee but the status assigned was that of unregistered firm which was served on the assessee on 5-3-1984. Subsequently, the assessee sought rectification in respect of its claim of registration contending that Form No. 12 was filed which too was rejected by the ITO. Again on another count, i.e., the assessee’s claim for depreciation, the assessee contested the assessment framed under Section 143(1). The said request having been accepted, the assessment was framed de novo under Section 143(3) after notices under Sections 142(1) and 143(2) had been duly served. Meanwhile the assessee filed Form No. 12 on 24-3-1984. They contended that originally Form No. 12 was handed over to their accountant and due to some confusion it was not filed, now since the same was filed before under Section 143(3) assessment, its claim for continuation of registration be allowed. The ITO rejected the same probably looking to the callous behaviour of the assessee and as per detailed observations given in his order.
3. When the matter came before the AAC, he accepted the assessee’s claim for continuation of registration for reasons given by him.
4. The learned departmental representative while disputing the said action of the AAC vehemently argued that continuation of registration is not a matter of right. If the assessee is careless and callous, registration should not have been allowed. He went on to say that once Section 143(1) assessment was framed wherein the status of unregistered firm was granted to the assessee, after three opportunities given by the ITO to the assessee and especially when request for rectification by the assessee regarding registration was rejected, the assessee should have not got the benefit of registration in Section 143(3) proceedings but he was fair enough to say that Form No. 12 was filed in the office on 24-3-1984 and Section 143(3) assessment was framed on 31-3-1984.
5. The learned counsel for the assessee, on the other hand, submitted that 143(1) assessment once quashed may be because of the assessee’s application for depreciation claim, etc., did not exist as such and assessment which is to be taken into account is Section 143(3) which was framed on 31-3-1984 and as Form No. 12 was filed on 24-3-1984, registration was rightly allowed. He submitted that there was an affidavit filed by the assessee regarding handing over of Form No. 12 to the assessee’s accountant by the assessee and also subsequently there was affidavit of the said accountant also. He submitted that filing of Form No. 12 was not mandatory but directory. For that he relied on Purusottam Lal Kishorilal v. CIT [1978] 115 ITR 377 (Pat.).
6. In the rejoinder, the learned departmental representative submitted that there was no case of delay and the AAC could not condone the same.
7. After taking into consideration the rival submissions and going thoroughly through the facts available on record including the two affidavits that of the assessee and the accountant we are unable to interfere in the finding of the AAC. At the most in the instant case, what could be damaging to the assessee’s claim was its callous attitude in ignoring three consecutive letters of the ITO written to him regarding Form No. 12 but for that the assessee suffered loss of registration in Section 143(1) proceedings. After the same was reopened and assessment was framed de novo under Section 143(3) on 31-3-1984 and Form No. 12 having been filed on 24-3-1984, it was very much there before the assessment. Instant is a case of condonation of delay for filing of Form No. 12. When we find the uncontroverted facts that these very two partners who constituted the firm during the year under consideration having been running the firm in the past and also subsequently and they have been accorded registration and subsequently renewal all through and it is also trite law that jurisdiction of the first appellate authority, i.e., the AAC is coterminous. On the strength of affidavits that of one of the partners and the accountant which were not disproved, according to us, he was justified in condoning the delay. For the proposition that up to the assessment, Form No. 12 could be filed, the term ‘along with its return’ came to be incorporated by their Lordships of the Patna High Court in the case of Purhsottam Lal Kishorilal {supra). Observations from the head-notes of the said case are as under :
… The term ‘along with its return’, as it stood before April 1, 1971, is merely directory and not mandatory. All that the Legislature intended was that the return should be duly filed and the declaration should be duly made and both the documents should be before the assessing authority at the time when he is applying his mind to the assessment of any particular firm. If these conditions are satisfied, the advantage of renewal of registration under Section 184(7) must follow to the assessee-firm. (p. 377)
Since it is a same firm with the same partners based on the very same partnership deed and registration is accorded in the past and in subsequent years, in the light of affidavits from Gurcharan Singh and Suraj Parkash, Accountant, it was not too much to grant credence to the same and in the instant case there is nothing more than delay in filing Form No. 12 which if done by the AAC after considering the evidence available is in order according to us.
8. The argument of the learned departmental representative that earlier after Section 143(1) proceedings, the assessee’s request for renewal of registration in rectification proceedings were knocked down could not take revenue’s case any further because firstly the 143(1) assessment became non est once it was reopened due to whatever reasons and secondly, because the ITO in Section 143(3) proceedings passed a very speaking order on Section 184(7) when he refused continuation of registration which is the impugned order.
9. In the light of our above discussion and for the reasons given by the AAC in his order, his action is hereby confirm.
10. In the result, the revenue’s appeal is dismissed.