Dwarka Prasad, J.
1. This reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as 'the Act'), has been made by the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, for the opinion to this court on the following question of law :
'Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the order passed by the ITO was really an order under Section 185(1)(b) of the I.T. Act, 1961, and, as such, the appeal was maintainable before the Appellate Assistant Commissioner ?'
2. The facts which have given rise to this reference briefly are : The assessee, M/s. Chaturbhuj Radhakishan Binote (hereinafter referred to as 'the assessee'), filed a return of its income in the status of a registered firm. The assessee also filed on October 23, 1967, an application for registration along with a partnership deed. The relevant accounting period of the assessee ended on May 11, 1967. As such the application for registration was submitted beyond the time prescribed under Section 184(4). The assessee was asked by the ITO, 'A' Ward, Chittorgarh, who was the assessing authority, to explain the delay. The reason given by the assessee, in his reply for the delay which took place in filing the application for registration, was that one of the partners of the assessee-firm, Shri Roop Narain, was reluctant to sign the partnership deed and as he signed the said deed very late, the delay was caused in filing the application for registration. The ITO, by his order dated December 13, 1971, held that the reason furnished by the assessee for the delay in filing the application for registration was not convincing and as such he refused to condone the said delay. The assessing authority also held that the firm was not genuinely constituted during the accounting period. He, therefore, refused to register the firm and rejected the application for registration and directed that the assessee be assessed to tax in the status of an unregistered firm.
3. The assessee filed an appeal before the AAC, Udaipur Range, Udaipur. The appellate authority, by its order dated August 30, 1972, held that the finding of the ITO that the firm was not genuinely constituted could not be sustained. He, however, held that the order passed by the ITO refusing to condone the delay in filing the application for registration was not appealable and, as such, the same would continue to operate against the assessee. The result was that the appeal was partly allowed.
4. The assessee, thereafter, filed further appeal which was heard by the Tribunal, Amritsar Bench, at its camp at Udaipur. The Tribunal was of the view that an order refusing to condone the delay and refusing to register the assessee-firm should be deemed to have been passed under Section 185(1)(b) of the Act and, as such, the order refusing registration of the assessee-firm was appealable. The Appellate Tribunal held that the AAC was in error in holding that the order refusing to condone the delay was one passed under the proviso to Sub-section (4) of Section 184, which merely provides the period of limitation during which an application for registration has to be filed. The Tribunal by its order dated December 21, 1973, set aside the order passed by the AAC and sent the case back to him for deciding the question whether the assessee-firm was prevented by sufficient cause from making the application for registration before the end of the previous year.
5. The Commissioner filed an application before the Tribunal, Jaipur Bench, Jaipur, with a prayer to draw up a statement of the case and to refer the aforesaid question of law arising out of the order of the Appellate Tribunal dated December 21, 1973, to this court for its opinion. The Tribunal, by its order dated September 24, 1974, held that in its opinion, a question of law did arise out of the order of the Appellate Tribunal dated December 21, 1973, and, as such, the aforesaid question was referred to this court for its opinion.
6. Thus, the only question which we are required to decide in the present case is as to whether an appeal was maintainable before the AAC against an order passed by the ITO refusing to condone the delay in filing an application for registration of the firm and on that ground refusing to register the firm. The provisions relating to the registration of a firm and the procedure to be adopted by the income-tax authorities on receiving an application for registration are contained in Sections 184 and 185 of the Act, which are as under ;
'184. (1) An application for registration of a firm for the purposes of this Act may be made to the Income-tax Officer on behalf of any firm, if-
(i) the partnership is evidenced by an instrument ; and (ii) the individual shares of the partners are specified in that instrument.
(2) Such application may, subject to the provisions of this section, be made either during the existence of the firm or after its dissolution.
(3) The application shall be made to the Income-tax Officer having jurisdiction to assess the firm, and shall be signed-
(a) by all the partners (not being minors) personally; or
(b) in the case of a dissolved firm, by all persons (not being minors) who were partners in the firm immediately before its dissolution and by the legal representative of any such partner who is deceased.
Explanation.--In the case of any partner who is absent from India or is a lunatic or an idiot, the application may be signed by any person duly authorised by him in this behalf, or, as the case may be, by a person entitled under law to represent him.
(4) The application shall be made before the end of the previous year for the assessment year in respect of which registration is sought :
Provided that the Income-tax Officer may entertain an application made after the end of the previous year, if he is satisfied that the firm was prevented by sufficient cause from making the application before the end of the previous year.
(5) The application shall be accompanied by the original instrument evidencing the partnership, together with a copy thereof :
Provided that if the Income-tax Officer is satisfied that for sufficient reason the original instrument cannot conveniently be produced, he may accept a copy of it certified in writing by all the partners (not being minors), or, where the application is made after the dissolution of the firm by all the persons referred to in Clause (b) of Sub-section (3), to be a correct copy or a certified copy of the instrument; and in such cases the application shall be accompanied by a duplicate copy of the original instrument.
(6) The application shall be made in the prescribed form and shall contain the prescribed particulars.
(7) Where registration is granted to any firm for any assessment year, it shall have effect for every subsequent assessment year I
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 the registration was granted; and
(ii) the firm furnishes, before the expiry of the time allowed under Sub-section (1) or Sub-section (2) of Section 139 (whether fixed originally or on extension) for furnishing the return of income for such subsequent assessment year, a declaration to that effect, in the prescribed form and verified in the prescribed manner, so, however, that where the Income-tax Officer is satisfied that the firm was prevented by sufficient cause from furnishing the declaration within the time so allowed, he may allow the firm to furnish the declaration at any time before the assessment is made,
(8) Where any such change has taken place in the previous year, the firm shall apply for fresh registration for the assessment year concerned in accordance with the provisions of this section.
185. (1) On receipt of an application for the registration of a firm, the Income-tax Officer shall inquire into the genuineness of the firm and its constitution as specified in the instrument of partnership, and-
(a) if he is satisfied that there is or was during the previous year in existence a genuine firm with the constitution so specified, he shall pass an order in writing registering the firm for the assessment year;
(b) if he is not so satisfied, he shall pass an order in writingrefusing to register the firm.
Explanation.--For the purposes of this section and Section 186, a firm shall not be regarded as a genuine firm if any partner of the firm was, in relation to the whole or any part of his share in the income or property of the firm, at any time during the previous year, a benamidar-
(a) of any other partner to whom the first-mentioned partner does not stand in the relationship of a spouse or minor child, or
(b) of any person, not being a partner of the firm, and any of the other partners knew or had reason to believe that the first-mentioned partner was such benamidar and such knowledge or belief had not been communicated by such other partner to the Income-tax Officer in the prescribed manner. '
7. The assessee-firm has to make an application to the ITO concerned for obtaining registration of the firm under Section 184. In case the partnership is evidenced by an instrument in writing and the individual shares of the partners are specified in the instrument, such application should be accompanied by a copy of the partnership deed. An application for registration is to be made to the ITO having jurisdiction to assess the firm and is to be signed by all the partners personally, or in the case of a dissolved firm, by all the persons who were partners of the firm immediately before its dissolution and by the legal representatives of any deceased partner. An application for registration of a firm is to be made before the end of the previous year of the assessment year in respect of which the registration is sought. But in case the application is made after the end of the previous year, the ITO has a discretion to condone the delay and entertain the application for registration of the firm, if he is satisfied that the delay was caused due to sufficient cause. However, in case the ITO refuses to condone the delay, the application for registration of the firm would be rejected on the ground that it was filed beyond the period prescribed by law.
8. The procedure which the ITO is required to follow on the receipt of an application for registration of a firm is provided in Section 185. The ITO is to enquire about two matters, namely :
(1) genuineness of the firm ; and
(2) its constitution as may be specified in the instrument evidencing the partnership.
9. If, upon an enquiry, the ITO is satisfied that during the previous year of the assessment year, a genuine firm was in existence with the constitution specified in the instrument of partnership, he will grant registration to the firm. But in case, he is not satisfied either about the genuineness of the firm or regarding its constitution, as alleged by the firm, the ITO shall pass an order refusing to grant registration. Under Section 185(2), the ITO is authorised to reject an application for registration on the ground that the application was defective, or was not in order, but he is required to indicate the defect to the assessee and also to provide him an opportunity to rectify such defect before proceeding to reject the application for registration. If even in spite of an opportunity being given to him, the assessee fails to rectify the defect notified to him, then only the ITO may reject the application for registration. The ITO is also authorised to refuse to register a firm for the assessment year, if there is any failure on the part of the assessee as specified in Section 184.
10. An appeal was provided in Clause (j) of Section 246 at the relevant time against an order refusing to register a firm passed under Clause (b) of Sub-section (1) or Sub-section (5) of Section 185. However, the provisions of Clause (j) of Section 246 have since been amended by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. On account of the aforesaid amendment, the orders passed by the ITO refusing to register a firm under Sub-section (2) or Sub-section (3) of Section 185 have also been made appealable under the said Clause (j) of Section 246 along with the orders passed under Clause (b) of Sub-section (1) or Sub-section (5) of Section 185. Thus, an appeal would be maintainable against an order refusing to register a firm on the ground of delay in filing the application for registration beyond the prescribed time, in case such an order may fall within the four corners of Clause (b) of Sub-section (1) of Section 185.
11. The contention which has been advanced on behalf of the Revenue before us is that the only scope of enquiry under Section 185(1) is to find out about the genuineness of the firm and that its constitution is as specified in the partnership deed and, if the ITO is satisfied about the genuineness of the firm and its constitution, he has to register the firm but failing which, he may refuse the registration of the firm. There is no doubt that the field of enquiry open to the ITO under Sub-section (I) of Section 185 is to find out whether the firm is genuine or not and whether its constitution is as specified in the instrument of partnership or not, but before proceeding to decide the application for registration on merits, the ITO must have an application before him which ought to have been filed within the prescribed time. It may be observed that looking to the true scope of the provisions of Section 185(1) and (2), the refusal of the ITO to register a firm under Section 185(1)(b) may be caused due to his non-satisfaction arising out of different situations. If there is a delay in the presentation of an application for registration or the assessee fails to file the original partnership deed or there is any other material defect in the application for registration, which the assessee fails to rectify, in spite of the ITO pointing out the defect and affording reasonable time to the assessee to make the rectification-these are some of the causes which may lead to the non-satisfaction of the ITO about the right of the firm to be registered and would lead to the rejection of the application for registration.
12. In our view, such a construction should be placed on the provisions of Clause (j) of Section 246 relating to appeals which would advance the remedy and not retard the same. We are of the view that the provisions of Section 185(1)(b) should be liberally construed in such a manner as to advance the cause of justice. Craies in his treatise on Statute Law (VII edition) has quoted the following observations of Lord Coke in Heydon's case [1584] 76 ER 637, which have been continuously cited with approval and acted upon and which has now attained the status of a classic (p. 96) :
' For the sure and true interpretation of all statutes in general (be they penal or beneficial, restrictive or enlarging of the common law), four things are to be discerned and considered : (1) what was the common law before the making of the Act; (2) what was the mischief and defect for which the common law did not provide ; (3) what remedy the Parliament hath resolved and appointed to cure the disease of the common law ; (4) the true reason of the remedy. And then the office of all the judges is always to make such construction as shall suppress the mischief and advance the remedy, and to suppress subtle inventions and evasions for the continuance of the mischief and pro privato commodo, and to add force and life to the cure and remedy according to the true intent of the makers of the Act pro bono publico. '
13. Thus, the prior legislation and the judicial interpretation thereof must be taken into consideration while interpreting the provisions of an Act of Parliament. In the Indian I.T. Act, 1922, under Section 30, an appeal was provided against an order refusing to register a firm under S.26A, which provided the procedure for registration of a firm. The application for registration was to be made by the firm at such time and containing such particulars and in such form and verified in such manner as was prescribed and the ITO was required to deal with such an application in such manner as was prescribed. Rule 3 of the Indian I.T. Rules, 1922, prescribed the particulars which were to be furnished in the application for registration and the period within which the application was required to be made. A proviso similar to the one contained in Sub-section (4) of Section 184 also existed in Rule 2 of the Indian I.T. Rules, 1922, whereby the ITO was empowered to entertain an application made after the expiry of time specified in the Rules, if he was satisfied that the firm was prevented by sufficient cause from not making the application for registration within the specified time. Rule 4 of the aforesaid rules prescribed the procedure which the ITO had to follow on receipt of such an application for registration; As already observed above Section 30 of the 1922 Act provided an appeal against an order refusing to grant registration under Section 26A. Section 31 of the 1922 Act authorised the AAC, in an appeal against an order refusing to register a firm under Section 26A, either to confirm that order or to cancel it and direct the ITO to register the firm. There can be no doubt that under the 1922 Act, an appeal was competent against an order refusing to register the firm. It may also be observed that the procedure prescribed for making an application for the registration of a firm and for making an enquiry after the receipt of such an application as contained in the Indian I.T. Rules, 1922, was similar to that contained in Sections 184 and 185 of the 1961 Act. We, therefore, find no justifiable reason for making a departure from the scheme contained in the 1922 Act and to deprive the assessee of a right of appeal against the order passed by the ITO refusing registration of the firm, in such cases where registration has been refused on the ground of delay in filing the application for registration beyond the specified time or in cases of failure of the assessee to rectify any defect in the application for registration pointed out to him within the specified time. It may also be pointed out that as some doubt was cast that Parliament while enacting the I.T. Act, 1961, has departed from the scheme relating to registration of firms and the right of appeal in respect thereof contained in the 1922 Act, an amendment was made in the provisions of Section 185(2) and Clause (j) of Section 246 by the Taxation Laws (Amendment) Act, 1970, by specifying that orders passed under the provisions of Sub-section (2) and Sub-section (3) of Section 185 would also be appealable under Clause (j) of Section 246. We are, therefore, of the view that an order refusing to condone the delay and consequently refusing the registration of a firm fell under the four corners of Sub-section (1)(b) of Section 185 and an appeal in respect of such an order was competent under Clause (j) of Section 246.
14. In Mela Ram and Sons v. CIT : [1956]29ITR607(SC) a similar question as has been raised before us, was raised before their Lordships of the Supreme Court and it was argued that under Section 31(3)(a) of the 1922 Act, the AAC was conferred jurisdiction only to pass an order on the merits of the assessment and it was not open to him to entertain any question which did not directly relate to the merits of the case and he could not hear and decide any question of preliminary nature, such as limitation. Their Lordships of the Supreme Court held that such a construction of the provisions of Section 31(3)(a) was too literal and that there was abundant authority for the proposition that a right of appeal should be liberally construed so as to include not only orders passed on a consideration of the merits of the assessment but also orders which dispose of preliminary issues, such as limitation and the like. The question which was raised in Mela Ram's case : [1956]29ITR607(SC) was as to whether the appeal lay before the Tribunal against an order passed by the AAC dismissing the appeal before him on the ground that it was filed beyond the prescribed time and holding that there was no sufficient ground for condonation of delay. In this context, their Lordships of the Supreme Court observed as under in Mela Ram's case : [1956]29ITR607(SC)
' Taking the plea of limitation--which is what we are concerned with in this appeal--when there is a judgment or order against which the statute provides a right of appeal but none is preferred within the time prescribed therefor, the respondent acquires a valuable right of which he cannot be deprived by an order condoning delay and admitting the appeal behind his back. And when such an order is passed ex parte, he has a right to challenge its correctness at the hearing of the appeal. That is the position under the general law (vide Krishnasami Panikondar v. Ramasami Chettiar [1918] LR 45 IA 25) and there is nothing in the provisions of the I.T. Act which enacts a different principle. Therefore, if an appeal is admitted without the fact of delay in presentation having been noticed, clearly it must be open to the Department to raise the objection at the time of the hearing of the appeal. That would also appear to be the practice obtaining before the Income-tax Tribunal as appears from the decisions cited before us, and that, in our opinion, is right. Similar considerations would apply to other objections of a preliminary character, such as the one based on Section 30, Sub-section (3). We should be slow to adopt a construction which deprives parties of valuable rights. We are therefore of opinion that contentions relating to preliminary issues are open to consideration at the time of the hearing of the appeal, and that the jurisdiction of the Appellate Assistant Commissioner is not limited to the hearing of the appeal on the merits of the assessment only. In this view, the orders of the Appellate Assistant Commissioner holding that there were no sufficient reasons for excusing the delay and rejecting the appeals as time-barred, would be orders passed under Section 31 and would be open to appeal.......'
15. In Hukumchand and Mannalal Co. v. CIT : [1966]60ITR99(SC) their Lordships of the Supreme Court held that the words ' refusal to register a firm' in Section 30 of the Indian I.T. Act, 1922, were wide enough to include orders made under Rules 6A and 6B of the 1922 Rules, refusing to renew the registration and also cancelling the certificate so renewed.
16. In Sant Lal Kashmiri Lal v. CIT : [1972]86ITR76(Delhi) the ITO failed to provide an opportunity to the assessee to rectify the defects in the application for registration and the application for registration was rejected. It was held by the Delhi High Court that the order passed by the ITO refusing to register a firm without giving an opportunity to the assessee to rectify the defect would fall under Clause (b) of Sub-section (1) of Section 185 and it is open to appeal under Clause (j) of Section 246.
17. The view which we have taken above was also taken by the Gujarat High Court in CIT v. Dineslichandra Industries : [1975]100ITR660(Guj) the Andhra Pradesh High Court in Addl. CIT v. Chekka Ayyanna [1911] 106 ITR 313 the Punjab and Haryana High Court in CIT v. Beri Chemical Industries and the Kerala High Court in CIT v. Tirur Medical Hall : [1980]126ITR395(Ker) and following the decision of their Lordships of the Supreme Court in Mela Ram's case : [1956]29ITR607(SC) and Hukamchand Mannalal's case : [1966]60ITR99(SC) it was held that an appeal lay against an order refusing to condone the delay under Section 184(b) and consequently refusing registration, as such an order would fall under Section 185(1)(b). The Andhra Pradesh High Court observed as under in Chekka. Ayyanna's case : [1977]106ITR313(AP)
'A reading of Section 185 of the Act would reveal that on receipt of an application for registration of a firm, either for the first time or for the subsequent assessment year as envisaged in Section 184(7), the object of inquiry under Section 185 is to find out ultimately whether the firm is genuine or not, and whether its constitution is as specified in the instrument or not, and it is only with this idea that the Income-tax Officer makes an inquiry into the application along with the documents filed therewith. If the Income-tax Officer is satisfied that there is or was during the previous year in existence a genuine firm with the constitution as specified in the partnership deed, he would register the firm for the assessment year. If the Income-tax Officer comes to the conclusion for one cause or another that the firm is not genuine and its constitution is not the same as specified in the instrument, then he will pass an order refusing to register the firm or if there is defect in the application or in the declaration filed by the assessee-firm, and in spite of giving it an opportunity to rectify the defect, the assessee-firm does not so rectify within the time allowed, the ITO would reject the application or would declare that the registration granted to the firm in any assessment year would have no effect for the relevant assessment year. Hence with the ultimate idea of registering or refusing to register a firm, an inquiry has to be made by the ITO under Section 185 of the Act. Therefore, any order passed by the ITO refusing to register the firm on any ground would be an appealable order under Section 246(j) of the Act. '
18. The Allahabad High Court also took the same view in ITO v. Vinod Krishna Sow Prakash [1979] 119 ITR 594 following the decision in Dinesh-chandra Industries' case : [1975]100ITR660(Guj) and Chekka Ayyanna's case : [1977]106ITR313(AP) . The Madhya Pradesh High Court has also taken the same view which have been expressed above, in Durgaprasad Rajaram Adatiya, v. CIT : [1982]134ITR601(MP) and in Dkanpat Pitambar lal Patni v. C1T : [1983]144ITR874(MP) and it was held that an order refusing registration on the ground that the application was filed beyond the period of limitation fell under Section 185(1)(b) and appeal lay against such an order. It was also emphasised by their Lordships of the Madhya Pradesh High Court in Durgaprasad Rajaram's case : [1982]134ITR601(MP) that in the matter of construction of a statute like the I.T. Act, which is of all-India application, it was necessary that there should be uniformity as far as possible amongst the different High Courts. It was also observed that the statutory provision conferring a right of appeal, in case of doubt, should be liberally construed. A discordant note was, however, struck by the Madras High Court in Chandrasekaran and Brothers v. CIT : [1974]96ITR711(Mad) and the Orissa High Court in New Orissa Traders v. CIT : [1977]107ITR553(Orissa) and a contrary view was taken in those cases. So far as the decision of the Orissa High Court in New Orissa Traders' case is concerned, only the decisions of the Madras High Court in Panna Lal Ramkumar's case : [1970]75ITR309(Mad) and Chandrasekaran's case : [1974]96ITR711(Mad) appear to have been brought to the notice of their Lordships of the Orissa High Court and the decisions of the Gujarat, Andhra Pradesh, Punjab and Haryana, Allahabad and Madhya Pradesh High Courts on the subject do not appear to have been brought to their Lordships' notice. With great respect to their Lordships, it may be observed that while deciding the aforesaid cases, their Lordships of the Madras High Court and the Orissa High Court have taken an extremely literal construction of the provisions of Section 185(1 )(b) and of Clause (j) of Section 246, although while interpreting the provision relating to the right of appeal, a liberal construction ought to have been applied. The decision of the Madras High Court in Chandrasekaran's case : [1974]96ITR711(Mad) has been dissented from by the Allahabad High Court in Vinod Krishna Som Prakash's case [1979] 119 ITR 594 and by the Madhya Pradesh High Court in Durga Prasad Rajaram's case : [1982]134ITR601(MP) . It was observed in Chandrasekarari's case that an order passed by the ITO refusing to entertain an application for registration on the ground of the same being filed beyond the specified period and refusing to condone the delay should be deemed to have been made under Section 184(4) and not under Section 185. Undoubtedly, the ITO has the power under Section 184(4) to condone the delay in filing an application for registration or to refuse to condone such delay. But it should not be lost sight of that the refusal to condone the delay would necessarily be followed by an order refusing to register the firm and rejecting the application for registration. Such an order would undoubtedly fall under Section 185(1)(b). As we have observed above, the application for registration may be rejected by the ITO under Section 185(1)(b) either on merits or even on a preliminary point of limitation or otherwise and as held, by their Lordships of the Supreme Court in Melaram's case : [1956]29ITR607(SC) such a rejection on a preliminary ground would still be a rejection to register the firm under Section 185(1)(b). Clause (j) of Section 246 speaks of an order passed under Section 185(1)(b), which would take within its sweep any order refusing to register the firm, irrespective of the fact that such refusal was based on a preliminary ground like bar oflimitation or otherwise or on merits.
19. Thus, on a proper interpretation of the provisions of Clause (j) of Section 246read with Sub-section (1)(b) of Section 185 in the light of the above discussion, weare of the view that the Appellate Tribunal was justified in holding thatthe order passed by the ITO refusing to condone the delay and refusingto register the firm and thereby rejecting the application for registrationwas one falling under Section 185(1)(b) of the I.T. Act, 1961, and an appeal wasmaintainable against such an order before the AAC under Clause (j) of Section 246.The question referred to us is, therefore, answered in the affirmative andin favour of the assessee.