Judgment :- N. V. BALASUBRAMANIAN, J. The question of status of the petitioner - whether is should be assessed in the status of a registered firm or an unregistered firm under the relevant provisions of the IT Act, 1961, arises in the writ petition. The petitioner is a firm engaged in the manufacture of C.R.G.O. sheets for distribution transformers on job work basis. The assessment year, with which we are concerned is the asst. yr. 1991-92, the relevant accounting year ended on 31st March, 1991. The writ petitioner (hereinafter referred to as "the assessee") filed its return of income for the asst. yr. 1991-92 belatedly on 26th September, 1994, when the due date for return of income for the said asst. yr. 1991-92 under s. 139(1) of the IT Act, 1961 (hereinafter referred to as "the Act"), was 31st August 1991. Though the assessee filed its return of income belatedly, the belated return of income was regularised by the ITO by the issue of a notice under s. 148 of the Act, and the assessee's returned income of Rs. 1, 45, 790 was accepted and the assessment was also completed on the basis of the returned income without making any further addition to the returned income. The assessee filed along with its belated return a declaration in No. 12 and claimed the benefit of continuation of registration of the firm. The assessee explained the delay in filing the return of income and the declaration stating that its chartered accountant, who was looking after the finalisation of its accounts, has left the practice abruptly and settled abroad. It was also stated that one of its partners, who was looking after the affairs of the firm, also retired during the financial year 1991-92 and the accountant in charge of the firm died due to sudden illness. The ITO carefully examined each one of the reasons given by the assessee and held that the reasons given by the assessee would not be regarded as sufficient cause for the delay in filing the declaration. He held that the demise of the accountant had nothing to do with the delay in filing the declaration and insofar as the retirements of the managing partner is concerned, he retired subsequent to the close of the accounting year on 10th February, 1992, and he was the managing partner upto 31st January, 1992. He held that the demise of the accountant had nothing to do with the delay in filing the declaration and insofar as the retirements of the managing partner is concerned, he retired subsequent to the close of the accounting year on 10th February, 1992, and he was the managing partner upto 31st January, 1992. He also held that the leaving of the practice by the chartered accountant would not constitute sufficient cause either for the delay in filing the return or in filing the requisite declaration for continuation of the registration of the firm. In effect, he refused to grant the benefit of continuation of registration of the firm and completed the assessment in the status of an unregistered firmThe assessee challenged the order of the ITO refusing to grant the registration by filing a revision against the order before the CIT under s. 264 of the Act. The assessee besides the reasons given before the ITO for the delay in filing the return, also relied upon a circular issued by the Central Board of Direct Taxes (CBDT) and submitted that according to the circular where the declaration was filed along with the delayed return and if the assessment made by the ITO was not one under s. 144 of the Act, the declaration filed along with the belated return should be accepted. The CIT however, held that the assessee has not adduced sufficient reasons for the delay in furnishing the declaration. He also held that the reliance on the Board's Circular was misplaced as the return filed was not a valid return and the circular would apply to the belated valid return. He, therefore, held that there was no justification to interfere with the order of the ITO. Against the order of the CIT the present writ petition has been filed. The petitioner in the affidavit filed in support of the writ petition has repeated the same reasons given before the authorities for the delay in filing the return and Form No. 12. It is also stated that the reasons given for the delayed filing of the return were rejected without application of mind by the CIT. It is also stated that the circular issued by the CBDT, dt. 26th June, 1965 [Board's F.No. 26/3/65-IT(AI) dt. 26th June, 1965-Ed.] is applicable. It is also stated that the reasons given for the delayed filing of the return were rejected without application of mind by the CIT. It is also stated that the circular issued by the CBDT, dt. 26th June, 1965 [Board's F.No. 26/3/65-IT(AI) dt. 26th June, 1965-Ed.] is applicable. Learned counsel for the petitioner submitted that the decision of the Madhya Pradesh High Court in the case of Mukunchand Baid vs. CIT, would apply wherein the Madhya Pradesh High Court applied the Circular of the CBDT, dt. 26th June, 1965, and held that where the filing of the return was delayed and when the ITO has not made ex parte assessment under s. 144 of the Act, the declaration filed in Form 12 along with the return would be taken as sufficient compliance with the provisions of s. 184(7) of the Act and the renewal of registration should be grantedMr. C. V. Rajan, learned junior standing counsel for the Income-tax (Department) submitted that under s. 184(7) of the Act, the assessee should have furnished the declaration within the time prescribed under s. 139(1) of the Act and if the AO was satisfied that the filing of Form No. 12 was delayed and if it was established that it was prevented by sufficient cause from the filing of the return within the time prescribed under s. 139(1) of the Act, it is open to him to furnish the declaration at any time before the assessment is made. Learned counsel for the respondents submitted that the CIT has held that the reasons given by the assessee are not sufficient to condone the delay in filing the declaration and the return was not filed within the time-limit prescribed under s. 139(4) of the Act, and the declaration filed along with an invalid return cannot be regarded as a valid declaration at all. Learned counsel also submitted that since the return was filed beyond the time-limit prescribed under s. 139(4) of the Act, the decision of the Madhya Pradesh High Court in Mukunchand Baid vs. CIT (supra) has no application to the facts of the case. I have carefully considered the submissions made by the learned counsel for both the parties. Learned counsel also submitted that since the return was filed beyond the time-limit prescribed under s. 139(4) of the Act, the decision of the Madhya Pradesh High Court in Mukunchand Baid vs. CIT (supra) has no application to the facts of the case. I have carefully considered the submissions made by the learned counsel for both the parties. Sec. 184 of the Act deals with the registration of the firms under the IT Act and the provisions of s. 184(7) of the Act, which are relevant for the purpose of the case, read as under, "Where registration is granted or is deemed to have been granted to any firm for any assessment year, it shall have effect for every subsequent assessment year. Provided that, (1) there is no change in the constitution of the firm or the shares of the partners as evidence 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-s. (1) of s. 139 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 AO 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." A close reading of the section shows that where the registration was granted to any firm for any assessment year, it shall have effect for every subsequent assessment year, provided there is no change in the constitution of the firm and the firm furnishes the requisite declaration within the time allowed under s. 139(1) of the Act. The AO empowered under s. 184(7) of the Act to accept the belated declaration filed subject to the condition that the declaration was filed before the assessment is made, if the AO is satisfied that there was sufficient cause which prevented the firm from furnishing the declaration within the time allowed under s. 139(1) of the Act. On the facts of the case, the assessment year is 1991-92 and the due date for filing return was 31st August 1991, but the return was filed on 26th September, 1994. On the facts of the case, the assessment year is 1991-92 and the due date for filing return was 31st August 1991, but the return was filed on 26th September, 1994. Undoubtedly there was a delay in filing return and the ITO issued a notice on 21st August 1995, under s. 148 of the Act and regularised the return. I am of the view that in the absence of the notice under s. 148 of the Act, the return would have been treated not as a valid return. However, then the belated return filed was regularised by the ITO by the issue of notice under s. 148 of the Act, I hold that the return is a valid return and it is only on the basis of that the return filed was a valid return, the assessment was completed. I hold that once the return filed is treated as a valid return, it should be treated as a valid return for all purposes of the Act. In this context, the circular of the CBDT, dt. 26th June, 1965, is relevant and the said circular reads as under, "Income-tax Act, 1961 - Renewal of registration, filing of declaration under s. 184(7). - A declaration under s. 184(7) of the IT Act for continuance of registration has to be furnished by a firm along with its return of total income. If the return of income is delayed and no ex parte assessment is made by the ITO under s. 144 of the IT Act, the declaration filed along with the belated return would constitute sufficient compliance with the provisions of s. 184(7). Sec 185(2) of the IT Act already provides that the ITO shall not reject an application for registration merely on the ground that the application is not in order but shall intimate the defect to the firm and give it an opportunity to rectify the defect within a period of one month from the date of such intimation. Although a specific provision to this effect has not been made in sub-s. (7) of s. 184 in regard to declaration filed for continuance of registration the Board are of the view that in consonance with the spirit of the provision in s. 185(2), a declaration under s. 184(7) should not be rejected merely on the ground that it is technically defective. The ITO, may, therefore, be instructed that the procedure under s. 185(2) should also be followed with regard to defective declarations under s. 184(7)." According to the circular, when there is a belated filing of return, the declaration made under s. 184(7) of the Act filed along with the return would constitute sufficient compliance with the provisions of the Act for the continuance of registration and the only condition mentioned in the circular to invoke the benefit of the circular is that the assessee should not suffer an ex parte assessment under s. 144 of the Act. Admittedly, in this case, there was no ex parte assessment and the declaration was also filed along with the return in question under s. 148 of the Act. I hold that once the return was accepted and the assessment was made on the basis of the return, the declaration for continuance of registration should have been taken to have been filed in compliance with the provisions of s. 184(7) of the Act. It is well settled that the circulars of the CBDT are binding on the officers of the Department. The circular relied upon is a benevolent circular intended to grant certain benefits to the assessee and in my view, the circular should be liberally construed, but the conditions mentioned therein should be strictly construed and fully complied with. A fair reading of the circular shows that it intends to give certain benefits to the assessee. The view of the CIT that the circular would apply only in case where the return was filed under s. 139(4) of the Act is a narrow view to take on the construction of the circular. I agree with Mr. C. V. Rajan learned counsel for the Revenue that the circular should not be construed as a statute, but that does not mean that the Court should not examine the circular in its entirety and give a reasonable construction and provide a natural meaning to the words found in the circular. The circular does not say that it would only apply to a return filed under s. 139(4) of the Act, as the expression employed in the circular is that would "apply to a belated return". The circular does not say that it would only apply to a return filed under s. 139(4) of the Act, as the expression employed in the circular is that would "apply to a belated return". The cause for the delay may vary and the circular is not restricted to a return filed under s. 139(4) and the natural expression employed "belated return" is fairly wide enough to encompass the belated return filed in pursuance of a notice under s. 148 of the Act as well. Moreover, if the view of the Revenue that the circular would apply to a declaration filed before the time-limit prescribed for filing the return under s. 139(4) of the Act is accepted, then, there is no need for the issue of the circular as the said benefit is already available to the assessee under the provisions of s. 184(7) of the Act. That apart, the conditions prescribed that the return filed should be a belated return and there should not be an ex parte assessment under s. 144 of the Act clearly give a clue that the circular is meant to cover certain other situation and contingencies. No doubt, it is true that the Board cannot issue a circular against the provisions of the Act. But, it is equally well settled that it can relax the rigour of law or grant relief which is not filed in terms of statutes. The condition prescribed in the circular that there should not be an ex parte assessment under s. 144 of the Act gives an indication that if the assessee had filed the return, though belatedly, the declaration filed should be accepted for the continuation of registration and the said condition shows that it is permissible for the ITO to look into the order of assessment. The obvious intention of the circular is that because of the delay in filing the return, the benefit of continuance of registration need not be denied to the assessee, as the sudden interruption in the status and change over from the status of registered firm to the status of unregistered firm and the grant of fresh registration in a subsequent year, on satisfaction of conditions, would pose problem not only to the assessee, but also to the Department, in the matter of carry forward of losses, depreciation and other allowances, and hence, probably with a view to mitigate the hardship that may be faced due to sudden change of status, the Board had obviously issued the circular prescribing two conditions, viz, (1) the return is belated, and (ii) there was no ex parte assessment, meaning thereby that the assessee has not contravened other provisions of the Act before the completion of assessment and that is the reason for the reference to the condition regarding the absence of best judgment under s. 144 of the Act. Further, if a best judgment assessment is made, it will have certain other consequences with which we are not concerned. The circular, in my view, has not amended the provisions of s. 184(7) of the Act, but merely states that if the twin requirements mentioned in the circular are satisfied, the ITO would be well advised to treat the belated declaration as a valid declaration and not to reject the same on grounds of delay. I, therefore, hold that if the two conditions prescribed by the Board are satisfied, the assessee would be entitled to the benefit of the circular, irrespective of the nature of the return, whether it is a return filed under s. 139(4) or a return filed under s. 148 of the Act. I, therefore, hold that if the two conditions prescribed by the Board are satisfied, the assessee would be entitled to the benefit of the circular, irrespective of the nature of the return, whether it is a return filed under s. 139(4) or a return filed under s. 148 of the Act. I hold that the view of the CIT that the return is not a valid return is not acceptable, as the return filed was regularised by the issue of notice under s. 148 of the Act, and once it is taken to be a valid return, the return filed is a valid return not only for the purpose of assessment, but it would be valid for all purposes of the Act including for the purpose of continuation of registration under s. 184(7) of the ActI agree with the decision of the Madhya Pradesh High Court in Mukunchand Baid vs. CIT (supra) and hold that the circular of the CBDT, dt. 26th June, 1965, would apply since ex parte assessment was not made and the declaration was filed with the return and that would constitute sufficient cause within the meaning of the provisions of s. 184(7) of the Act and the refusal to renew the registration is not justified on the facts of the case. In the view I have taken, it is not necessary to examine the question and express any opinion, whether the CIT was justified in holding that the assessee has not shown any sufficient cause for the delay in filing the declaration. I, therefore, hold that the renewal of registration to the assessee-firm could be granted to the petitioner. Accordingly, the order of the CIT is set aside and I direct the second respondent to renew the registration to the petitioner and make proper adjustment in the order of assessment. The writ petition is allowed. Rule nisi is made absolute. No. costs. Consequently, no order is necessary in W.M.P. No. 24150 of 1997.