Judgment:
1. As three reference applications relating to the assessment years 1967-68, 1968-69 and 1969-70 have been referred for disposal by this court in which identical questions of law arise, the office is directed to register the reference application for the assessment year 1967-68 as 14 of 1976, for the assessment year 1968-69 as 14(a) of 1976 and for the assessment year 1969-70 as 14(b) of 1976. All the three reference applications are disposed of by one single order.
2. The Income-tax Tribunal, Jaipur Bench, Jaipur, has referred the following question of law for the opinion of this court:
'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that no appeal lay against the order under Section 184(7) of the Income-tax Act, 1961 ?'
3. The brief facts of the case are that M/s Gudmal Matoliram (hereinafter referred to as the assessee) had claimed for itself the status of a firm, evidenced by a partnership deed dated April 1, 1965, drawn up on April 5, 1965. The first accounting year ended on March 31, 1966, corresponding to the assessment year 1966-67. The assessee filed an application for registration of the firm on April 5, 1965. The Income-tax Officer passed no order on this application for registration filed by the assessee as early as on April 5, 1965. The assessee thereafter filed a return for the assessment year 1966-67 on April 1, 1972. The Income-tax Officer took no action on the aforesaid return because it had been filed beyond the period of 4 years from the end of the assessment year 1966-67.
4. The assessee also filed returns for the assessment years 1967-68, 1968-69 and 1969-70 on April 1, 1972. As these returns were within time, the Income-tax Officer considered the said returns and passed assessment orders in respect thereto. The aforesaid returns were accompanied by an application for continuation of registration in accordance with Sub-section (7) of Section 184 of the Act. The Income-tax Officer did not accept the said applications for continuation of registration on the preliminary ground that registration of the firm had not been granted and that in respect of the aforesaid three assessment years in question, the assessee had not moved any fresh application for registration. The Income-tax Officer passed the assessment orders treating the assessee as an unregistered firm.
5. The assessee, aggrieved against the orders of the Income-tax Officer, filed appeals before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner took the view that the applications filed by the assessee under Section 184(7) were within time and as such the same should have been disposed of by the Income-tax Officer on merits. The Appellate Assistant Commissioner also realised that the same could not be disposed of on merits unless the Income-tax Officer had also considered the assessee's application for registration filed on April 5, 1965, for the assessment year 1966-67. The Appellate Assistant Commissioner as such gave the following direction :
'The Income-tax Officer is directed to dispose of these applications, after considering the claim for registration for the assessment year 1966-67 and the status of the assessee and the firm's liability to tax should be determined in the light of the order which the Income-tax Officer should pass for the assessment year 1966-67.'
6. The Department, aggrieved against the order of the Appellate Assistant Commissioner, filed an appeal before the Tribunal. The argument was raised before the Tribunal that no appeal lay against the order under Section 184(7) of the Act to the Appellate Assistant Commissioner and, therefore, the Appellate Assistant Commissioner committed an error in entertaining the appeal of the assessee. The Tribunal held that no appeal lay against the order of the Income-tax Officer to the Appellate Assistant Commissioner and the Appellate Assistant Commissioner's order was wholly without jurisdiction. The assessee then moved an application for making a reference to this court and the learned Tribunal has referred the aforesaid question for our opinion. Mr. Ranka, learned counsel for the assessee, submitted that the assessee had already submitted an application for registration on April 5, 1965, for the assessment year 1966-67, but the Income-tax Officer did not pass any order on the said application. It is submitted that in this circumstance, the assessee was right in submitting the applications under Section 184(7) of the Act for the subsequent assessment years 1967-68, 1968-69 and 1969-70. It is submitted that the Income-tax Officer committed a clear mistake in not deciding the application for registration and treating the status of the assessee as that of unregistered firm. It is submitted that the Appellate Assistant Commissioner, in these circumstances, was justified in entertaining the appeals and giving directions for considering the claim of the assessee for registration for the assessment year 1966-67 and thereafter to determine the firm's liability to tax in the light of the order which the Income-tax Officer should pass for the assessment year 1966-67. Mr. Ranka also placed reliance on a decision of a Division Bench of this court in Bishambar Dayal Sriniwas v. CIT (D.B. Reference Application No. 38 of 1976--decided on October 3, 1985). It was contended by Mr. Ranka that in the above case it was clearly held that where the case is of a composite nature and no separate order has been passed, the provisions of Clause (c) of Section 246 of the Act will be attracted. It has been further held in the above case that if there is a composite order and the appeal is preferred from the aforesaid order to the Appellate Authority on the ground of assessment and on the ground of status, then the appeal is maintainable under Clause (c) of Section 246 to the Appellate Assistant Commissioner.
7. Mr. Surolia, learned counsel for the Revenue, on the other hand, submitted that the above case is distinguishable on the ground that in that case an application for registration had been allowed in the earlier assessment years and, subsequently, the assessee had submitted an application under Section 184(7) of the Act. In this circumstance, when a composite order was passed by the assessing authority, then an appeal would lie under Clause (c) of Section 246 of the Act. Mr. Surolia submitted that in the present case, the application filed by the assessee on April 5, 1965, for registration of the firm for the assessment year 1966-67 had not been decided at all and in view of these circumstances, no question of filing any application under Section 184(7) of the Act arises in the present case.
8. We have given our careful consideration to the argument advanced by learned counsel for both the parties. In the present case, an anomalous situation has arisen on account of the non-action of the Income-tax Officer on the application tiled by the assessee on April 5, 1965. So far as the assessee is concerned, he was not at fault inasmuch as he had submitted an application as early as on April 5, 1965, for granting registration to the firm. The Income-tax Officer passed no order on such application for registration and the same remained pending till returns were filed by the assessee for the assessment year 1966-67 as well as the assessment years 1967-68, 1968-69 and 1969-70. The Income-tax Officer took no action on the return filed by the assessee with regard to the assessment year 1966-67. As regards the application submitted by the assessee for the years 1967-68, 1968-69 and 1969-70, he took the view that as no application for registration had been filed for these years and no order for registration had been granted in favour of the assessee for the assessment year 1966-67, as such, the status of the firm would be taken as unregistered firm. In our view, the entire mistake in this case lies on the part of the Income-tax Officer and the assessee cannot be considered at fault when his application for registration filed on April 5, 1965, well within the time, has not been disposed of by the Income-tax Officer.
9. Be that as it may, when the application for registration filed on April 5, 1965, had not been disposed of, the assessee was not at fault in filing the application under Section 184(7) of the Act. The Appellate Assistant Commissioner in this circumstance had taken a correct view in giving a direction to the Income-tax Officer to dispose of the application after considering the claim for registration for the assessment year 1966-67. As a matter of fact, in such a matter where a mistake had been committed by the Income-tax Officer himself, there was no occasion for the Department to have gone in appeal before the Income-tax Appellate Tribunal against the order of the Appellate Assistant Commissioner. The Appellate Assistant Commissioner had passed a just and proper order in the circumstances of the case and the Department has unnecessarily dragged the assessee into litigation which serves no purpose.
10. As the order passed by the Income-tax Officer in the present case is a composite order and according to the view already taken by the Division Bench of this court in Bishambhar Dayal's case , with which we are perfectly in agreement, an appeal was entertainable by the Appellate Assistant Commissioner. We do not want to express any opinion on the question whether where an order is passed by the Income-tax Officer simpliciter under Section 184(7) of the Act, an appeal can lie or not to the Appellate Assistant Commissioner under Section 246(c) of the Act. However, in the facts and circumstances of the present case, we are clearly of the view that the order passed by the Income-tax Officer was a composite order and an appeal against such order was clearly maintainable to the Appellate Assistant Commissioner.
11. In the result, the answer to the above question is that, on the facts and circumstances of this case, the Tribunal was not right in holding that no appeal lay against the order of the Income-tax Officer to the Appellate Assistant Commissioner. The reference is answered accordingly. There will be no order as to costs.