JUDGMENT
S. K. JHA J. – The petitioner in this application under arts. 226 and 227 of the Constitution of India is a partnership firm carrying on its business at Khagaria, in the district of Monghyr, and has filed this application through one of the partners, Kishori Lal. The main relief sought in this application is for the issuance of a writ of certiorari quashing that part of the ITOs order, dated the October 27, 1971, as contained in annexure 1, whereby the petitioner-firm has not been allowed registration for the assessment year 1967-68, with which we are concerned in the instant case, and, further, for a writ of mandamus directing the respondents to recognise the petitioner as a registered firm under the provision of s. 184(7) of the I.T. Act, 1961, and to give such incidential and consequential reliefs as a resut of such registration as the law may warrant.
The relevant facts for the disposal of this case are not in contro-versy. The petitioner had been, admitted, granted renewal of registration up to the assessment year 1965-66. For the assessment year 1966-67, however, although the petitioner-assessee had filed a declaration in Form No. 12, as envisaged by s. 184 of the Act, along with the return, the ITO reckoned the petitioners status as an unregistered firm and assessed an income to the tune of Rs. 2,256 for which there was no tax liability. The petitioner, therefore, did not file an appeal against that order. For the assessment year 1967-68, which is the subject-matter of the present petition, the petitioner filed along with its return of income a declaration in Form No. 12 asserting further that there had been no change in the constitution of the firm and that, therefore, the petitioner was entitled to an automatic renewal of the registration of the firm by virtue of the provisions of s. 184(7) of the Act. Although this point was not separately dealt with by the leaned ITO, Ward B, Begusarai (respondent No. 3), in the last paragraph of his assessment order under s. 143(3) of the Act, it was observed as follows :
“The assessee had filed aplication in Form No. 12 claiming con tinuation of registration of the firm, but since no registration was allowed in the proceeding year, question of renewal of registration does not arise.” The petitioner thereafter preferred an appeal which ultimately came to be heard by the learned AAC of Income-tax, B Range, Patna (respondent No. 2), who by his order dated the August 26, 1972, a copy whereof has been marked annexure 2 to the writ petition, allowed the petitioners appeal and directed the ITO to work out the quantum of relief to the assessee on the footing that the petitioners continuance of registration should be accepted as valid pursuant to the provisions of s. 184(7) of the Act, if there had been no change in the constitution of the firm. Against this order of the learned AAC, the revenue went up in appeal to the ITA Tribunal B Bench, Patna (respondent No. 5) and raised a technical objection that the order of the AAC was without jurisdiction as the refusal to grant registration was not an appealable order. This contention of the department found favour with the Appellate Tribunal which set aside the order of the AAC only on this technical ground that the order was not appealable. The petitioner has thereafter come up to this court.
When we last heard this application on the August 27, 1977, we had observed that it would have been more prudent for the petitioner to have moved the learned CIT under s. 264 of I.T. Act, 1961, and had adjourned the case for the purpose of enabing the petitioner in invoke the jurisdiction of the learned Commissioner (respondent No. 1). We are, however, informed at the Bar that no such application in revision under s. 264 was filed before the Commissioner as the Petitioner was not in such a financial situation as to incur any expenditure over such a procedure especially in view of the legal provision as contained in s. 264(4)(c) of the Act which excludes the jurisdiction of the Commissioner in all such matters in which order has been made subject of the appeal to the ITA Tribunal. We, accordingly, proceeded to hear learned counsel for the parties on the merits of the application.
Shambhu Saran, learned counsel for the department, did not controvert the submission as made in the petition on affidavit which was also contended for by Rajgarhia appearing for the assessee-petitioner that there had been no change in the constitution of the firm and that the petitioner-firm (the assessee) had admittedly been given the benefits of renewal of registration right up to the assessment year 1964-65. It is also not controverted that for the assessment year 1966-67 the assessee did not go up in appeal as there was no tax liability.
Before focussing our attention to the factual position obtaining in the instant case, it is necessary to recapitulate the relevant law on the subject which, to our mind, seems to be well settled. In the case of S. P. Pandey and Brothers v. CIT [1974] 96 ITR 515 (Pat), a Bench of this court, to which I was a party, held on a true construction of s. 184 of the Act that it provides that where the registration is granted to any firm for any assessment year, it shall have effect for every subsequent year, provided that, (i) there is no change in the constitution of the firm or the shares of the partners as evidenced by the instrument of partnership on the basis of which registration was grnated, and (ii) the firm furnishes along with its return of income for the assessment year concerned a declaration to that effect in the prescribed form. The matter again came up to be considered by another Bench of this court, to which also incidentally I was a party, in CIT v. Sitaram Bhagwandas [1976] 102 ITR 560 (Pat), wherein it was held that having regard to the spirit and substance of the provisions regarding registration of firms in s. 184(7) of the Act, it is clear that 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 he is then satisfied that the return had been duly filed and that there has been no change in the constitution of the firm and no change in the shares of the partners and the firm was registered during the previous years, then the necessary advantage of renewal conferred by sub-s. (7) of s. 184 must undoubtedly follow to the assessee-firm. No decision has been brought to our notice which can be said to have taken a view contrary to the aforesaid Bench decisions of this court.
That being the settled legal position and there being nothing in the order of the ITA Tribunal as contained in annexure 3 to show that there had been any change in the constitution of the firm or readjustment of the shares of the partners in the existing firm, merely because the firm was not allowed the benefits of continuance of registration during the immediately preceding year 1966-67, it was not a sufficient legal justification for the ITO to have refused to recognise the renewal of the registration of the firm which, on the materials available on record, had not undergone any change either in its constitution or in the allocation of shares. That being so, the advantage of continuance of registration under s. 184(7) of the Act was, undoubtedly, available to the petitioner-firm for the year in question, viz., the assessment year 1967-68. All orders consequent upon the refusal of such registration by the learned ITO must, therefore, inevitably be held to be illegal. The initial prayer made in the petition was also for quashing of the ITA Tribunals order as contained in annexure 3, but that prayer was rightly abondoned by Shri Rajgarhia appearing for the petitioner at the hearing of this case since the order of the Tribunal could not be held to be suffering from any error apparent on the face of the record. That notwithstanding, the order of the petitioner-firm must be held to be without jurisdiction and liable to be quashed.
At one stage, it was submitted rather half-heartedly by learned counsel appearing for the revenue that this application ought to be deemed to have abated in view of the provisions of s. 58(2) of the Forty-second Constitution Amendment Act, 1976. Realising, however, that the refusal to grant registration of a firm or non-recognition of the renewal thereof under the 1961 Act, undoubtedly, resulted in illegal assessment of particular income in the hands of the firm, thereby infringing upon the property rights of the partners as enshrined in Part III of the Constitution, learned counsel for the department gave this point up, in view of the express language of sub-cl. (a) of cl (1) of art. 226 of the Constitution as it stands after the Forty-second Constitution Amendment Act, 1976.
In the result, therefore, this application is allowed. The order of the ITO (respondent No. 3) as contained in his order dated the October 27, 1971 (annexure 1), refusing to recognise the renewal of the registration of the petitioner-firm, must be held to be wholly illegal and is hereby quashed. All necessary incidental and consequential reliefs flowing from the other legal provisions of the Act must be made available to the petitioner-firm and the entire proceedings in Certificate Case No. 20/71-72/19 and 84/73-74, pending before respondent No. 4, must as a necessary corollary be held to be illegal and quashed. There shall be no order as to costs.