S.C. Agrawal, J.
1. In this reference made under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as 'the Tribunal'), has referred the following question for the opinion of this court:
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that no appeal lay to the Appellate Assistant Commissioner against an order under Section 184(7) of the Income-tax Act, 1961 ?'
2. M/s. Beharilal Ishwardass (hereinafter referred to as 'the assessee') is a partnership firm. It was registered for the purpose of the Act for the assessment year 1969-70 and was assessed as a registered firm. For the assessment year 19 70-71, the assessee filed a return on October 19, 1970, but along with the said return, the assessee did not submit the required declaration for continuation of registration of the firm in Form No. 12. The assessee filed a revised return and along with that return, the necessary declaration in Form No. 12 was filed. The Income-tax Officer, A-Ward, Churu (hereinafter referred to as 'the Income-tax Officer'), did not continue the registration of the assessee for the assessment year 1970-71 on the ground that the requisite declaration in Form No. 12 was not filed along with the original return. The Income-tax Officer assessed the assessee as an unregistered firm. On appeal, the Appellate Assistant Commissioner, B-Range, Jaipur, allowed the assessee's claim for continuation of the registration of the assessee for the assessment year 1970-71. On further appeal, the Tribunal set aside the order of the Appellate Assistant Commissioner and restored the order of the Income-tax Officer on the view that no appeal lay against the order of the Income-tax Officer refusing to continue the registration of the firm for the assessment year 1970-71. Thereupon, the assessee moved an application for referring the question of law arising out of the order of the Tribunal for the opinion of this courtand the question mentioned above has been referred by the Tribunal forthe opinion of this court.
3. In order to answer the question referred, it is necessary to considerwhether an appeal lay to the Appellate Assistant Commissioner against the order passed by the Income-tax Officer refusing to continue the registration of the assessee for the assessment year 1970-71. The provision with regard to appeal is contained in Section 246 of the Act. Shri Mehta, learned counsel for the assessee, has placed reliance on Clauses (c) and (j) of Section 246 in support of his submission that the appeal filed by the petitioner against the order of the Income-tax Officer before the Appellate Assistant Commissioner was maintainable. Clauses (c) and (j) of Section 246, as they stood at the relevant time, provided as under :
'246. Appealable orders.--Any assessee aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order--...
(c) an order against the assessee where the assessee denies his liability to be assessed under this Act or any order of assessment under Sub-section (3) of Section 143 or Section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed;......
(j) an order refusing to register a firm under Clause (b) of Sub-section (1) or under Sub-section (5) of Section 185 ;' Clause (j) of Section 246 was amended by the Taxation Laws (Amendment) Act, 1970 (hereinafter referred to as 'the 1970 Act'), with effect from April 1, 1971, and the amended Clause (j) reads as under :
(j) an order under Clause (b) of Sub-section (1) or under Sub-section (2) or Sub-section (3) or Sub-section (5) of Section 185.'
4. Shri Mehta has submitted that the present case is covered by Clause (c) of Section 246 because in the present case, the assessee denied his liability to be assessed under the Act. Shri Mehta has also submitted that since there was dispute with regard to the status of the assessee as to whether it was a registered firm or an unregistered firm, an appeal lay also under the latter part of Clause (c) of Section 246. As regards Clause (j) of Section 246, the submission of Shri Mehta was that even under the unamended provision, an appeal lay to the Appellate Assistant Commissioner because an order refusing to continue the registration is in substance an order refusing registration of the firm under Section 185(1)(b) of the Act and an appeal lay against the said order under Clause (j) of Section 246. The further submission of Shri Mehta was that the position has now been put beyond doubt by the amendment introduced in Clause (j) of Section 246 bythe 1970 Act and that in the present case, the order passed by the Income-tax Officer was appealable. In this connection, Shri Mehta has urged that although the amendment introduced in Clause (j) of Section 246 came into force on April 1, 1971, and the present case relates to the assessment year 1970-71, the amended provisions of Clause (j) of Section 246 are applicable to the appeal filed by the assessee in view of Circular No. 229 dated August 9, [1978] 111 ITR 9, issued by the Central Board of Direct Taxes whereby it was provided that the amended provisions of Clause (j) of Section 246 would be applicable to an appeal filed against an order passed after April 1, 1971.
5. Shri Arora, learned counsel for the Revenue, has supported the order of the Tribunal and has urged that the case of the assessee is not covered by Clause (c) of Section 246 of the Act and is also not covered by Clause (j) of Section 246. In support of his aforesaid submission, Shri Arora has placed reliance on the decision of the Allahabad High Court in Ashwani Kumar Maksudan Lal v. Addl. CIT : [1972]83ITR854(All) and the decision of the Calcutta High Court in Sandersons & Morgans v. ITO : [1973]87ITR270(Cal) on which reliance has been placed by the Tribunal. In addition to the aforesaid decisions, Shri Arora has also placed reliance on the decisions in A.S.S.S.S. Chandrasekaran & Brothers v. CIT : [1974]96ITR711(Mad) , New Orissa Traders v. CIT : [1977]107ITR553(Orissa) and CIT v. Pushpaka Travels : [1985]152ITR717(Ker) .
6. We will first deal with the question as to whether the appeal of the assessee was maintainable under Clause (j) of Section 246 as it stood prior to the amendment introduced by the 1970 Act in that clause.
7. At the outset, we may observe that it is the settled principle of law that the right of appeal should be liberally construed. In this connection, reference may be made to the decision of the Supreme Court in Mela Ram & Sons v. CIT : [1956]29ITR607(SC) and the decision of this court in Asst. CIT v. Chaturbhuj Radhakishan 0065/1984 .
8. Under Clause (j) of Section 246 as it stood prior to the amendment introduced by the 1970 Act, an appeal lay against an order passed under Clause (b) of Sub-section (1) of Section 185. Clause (b) of Sub-section (1) of Section 185 relates to an order passed by the Income-tax Officer refusing to register the firm. In Sir Hukumchand and Mannalal Co. v. CIT : [1966]60ITR99(SC) , the Supreme Court has construed the provisions contained in Section 30 of the Indian Income-tax Act, 1922, which provided for appeals. Under the said section, an appeal lay against an order of refusal to register a firm. In that case, the assessee-firm was registered in the assessment year 1950-51 and the registration was renewed for the assessment years 1951-52 and 1952-53. For the assessment year 1953-54, theIncome-tax Officer had renewed the registration of the firm but subsequently he cancelled the said registration on the ground that the firm was not a genuine one and an appeal was filed against the said order. The question was whether the said appeal was maintainable. The Supreme Court held that the said appeal was maintainable under Section 30 of the Act and in that context have observed as under (at pages 101 and 102):
'Under those rules, the Income-tax Officer is authorised to make three kinds of orders, viz., (i) he can refuse to renew the registration of the firm; (ii) he can register the firm ; and (iii) he can cancel the renewal of registration if he is satisfied that the renewal has been obtained without there being a genuine firm in existence. The crucial point to be noticed is that the said three kinds of orders, having regard to the circumstances of each case, will be made only in the application for renewal registration. The rules do not provide for independent proceedings for the cancellation of the renewal certificate. In effect, the Income-tax Officer, after setting aside his earlier wrong order made under a misapprehension, refuses renewal of the certificate of registration. If so, it follows that the order cancelling registration is nothing more than refusing to renew the certificate of registration. If that be the construction of an order made cancelling the certificate renewed, such an order directly attracts the appellate jurisdiction conferred on the Appellate Assistant Commissioner under Section 30 of the Act.'
9. In the said case, it was further observed as under (at p. 103):
'If so, it follows that the words 'refusal to register a firm' in Section 30 of the Act are wide enough to take in the orders made under Rules 6A and 6B refusing to renew the registration and also cancelling the certificate so renewed.'
10. The aforesaid decision of the Supreme Court shows that the words 'refusal to register a firm' include within their ambit an order refusing to renew the registration of a firm.
11. On the basis of the aforesaid decision of the Supreme Court in Sir Hukumchand & Mannalal Co.'s case : [1966]60ITR99(SC) , various High Courts have held that an order refusing to continue the registration of a firm has to be treated as an order refusing to register the firm under Section 185(1)(b) of the Act and an appeal lies against the said order under Section 246(j) of the Act. In this connection, reference may be made to the decision of the Delhi High Court in Sant Lal Kashmiri Lal v. CIT : [1972]86ITR76(Delhi) . In that case, the assessee-firm was registered for the assessment year 1961-62 and had applied for continuation of registration for the assessment year 1962-63, but the said registration was not continued by the Income-tax Officer and the question was whether the said order wasappealable. The Delhi High Court has held that the order was appealable under Section 246(j) of the Act and in that context, after placing reliance on the decision of the Supreme Court in Sir Hukumchand & Mannalal Cot's case : [1966]60ITR99(SC) , the learned judges have observed as under (at page 87):
'The order of continuation of registration under Sub-section (7) of Section 184 has not been expressly provided in that sub-section. It has to be gathered by implication for it has been said in the substantive portion of the section that where registration is granted to a firm for any assessment year it shall have effect for every subsequent assessment year. It is, however, the procedure that is outlined in Section 185 that deals with the registration of the firm and in principle there is no distinction between a fresh registration as well as continuation of registration. In either event, the certificate that the Income-tax Officer has to append to the instrument of partnership or on the certified copy submitted in lieu of the original instrument, has to be in the same terms.'
12. Similarly, in Addl. CIT v. Chekka Ayyanna : [1977]106ITR313(AP) , the High Court of Andhra Pradesh has held that an order passed by the Income-tax Officer under Section 184(7) of the Act refusing to allow continuation of registration to a firm is appealable to the Appellate Assistant Commissioner under Section 246(j) of the Act, since it amounts to refusal to grant registration. In CIT v. Mothooram Premchand , the High Court of Punjab & Haryana has also taken the same view and has held that an appeal was maintainable before the Appellate Assistant Commissioner against the order of the Income-tax Officer refusing to renew registration to the firm under Section 184(7) of the Act. It may be mentioned that the decision of the Allahabad High Court in Ashwani Kumar Maksudan Lal's case : [1972]83ITR854(All) and the decision of the Calcutta High Court in Sandersons & Morgan's case : [1973]87ITR270(Cal) , on which reliance has been placed by the Tribunal as well as by Shri Arora, have been noticed by the Andhra Pradesh High Court in Chekka Ayyanna's case : [1977]106ITR313(AP) and by the High Court of Punjab & Haryana in Mothooram Premchand's case and the said decisions have been dissented from on the ground that the decision of the Supreme Court in Sir Hukumchand & Mannalal Co.'s case : [1966]60ITR99(SC) was not brought to the notice of the learned judges who decided those cases.
13. Having given our careful consideration to the decisions referred to above, we are inclined to agree with the view of the High Courts of Delhi, Andhra Pradesh and Punjab & Haryana in the cases referred to above, which is in consonance with the decision of the Supreme Court in Sir Hukumchand & Mannalal Co.'s case : [1966]60ITR99(SC) and we are unable toagree with the view of the Allahabad High Court in Ashwani Kumar Maksudan Lal's case : [1972]83ITR854(All) and the Calcutta High Court in Sandersons & Morgan's case : [1973]87ITR270(Cal) and, therefore, we are of the opinion that the appeal filed by the assessee before the Appellate Assistant Commissioner against the order passed by the Income-tax Officer refusing to continue the registration of the assessee-firm for the assessment year 1970-71 was maintainable.
14. As regards the decisions in Chandrasekaran & Brothers' case : [1974]96ITR711(Mad) , New Orissa Traders' case : [1977]107ITR553(Orissa) and Pushpaka Travels' case : [1985]152ITR717(Ker) , on which reliance has been placed by Shri Arora, it may be stated that the said decisions relate to an original application for registration which was rejected on the ground of delay and the question was whether an appeal lay against such an order. It may be mentioned that this question has been examined by this court in Chaturbhuj Radhakishan's case 0065/1984 , wherein it has been held that an appeal would lie under Clause (j) of Section 246 of the Act against an order passed by the Income-tax Officer rejecting the application for registration either on merits or even on a preliminary point of limitation or otherwise and this court has not agreed with the view of the Madras High Court in Chandrasekaran & Brothers' case : [1974]96ITR711(Mad) and the Orissa High Court in New Orissa Traders' case : [1977]107ITR553(Orissa) . In view of the aforesaid decision of this court, we are unable to agree with the view of the High Courts of Madras, Orissa and Kerala in the cases on which, reliance has been placed by Shri Arora.
15. Since we are of the opinion that the appeal filed by the assessee was maintainable under Clause (j) of Section 246, as it stood prior to the amendment introduced by the 1970 Act, we do not consider it necessary to deal with the other submission of Shri Mehta that the appeal was maintainable under Clause (j) of Section 246 as amended by the 1970 Act and under Clause (c) of Section 246 of the Act.
16. In the result, we are of the opinion that the Tribunal was not justified in holding that no appeal lay to the Appellate Assistant Commissioner against the order dated June 30, 1972, passed by the Income-tax Officer refusing to continue the registration of the assessee. The question referred is, therefore, answered in the negative, i.e., in favour of the assessee and against the Revenue. No order as to costs.