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Appeal against denial of registration under s. 185(1)(b) for asst. yr. 1988-89 after assessment under s. 144. Analysis: The appeal was filed by the assessee against the denial of registration under s. 185(1)(b) for the assessment year 1988-89 following completion of assessment under s. 144. The AO refused registration under s. 185(5) due to the assessee's failure to comply with notice under s. 143(2). The CIT(A) upheld the AO's decision, citing s. 185(5) which allows refusal of registration if there is a failure as per s. 144. The appellant argued that the denial was unjust as all formalities were completed, citing various court decisions. The Departmental Representative supported the CIT(A)'s decision. The Tribunal examined the case law and found that the refusal under s. 185(5) was justified due to the failure to file required affidavits and confirmations, as per s. 144 provisions. The Tribunal noted that the AO's denial under s. 185(1)(b) was based on the non-production of books of account, while the CIT(A) upheld the denial under s. 185(5). The Tribunal emphasized the distinction between the two sections and the necessity for proper application of mind by the authorities. Referring to a previous case, the Tribunal highlighted that the AO's discretion under s. 185(5) should not be arbitrary and must be based on lawful considerations. The Tribunal found that the AO did not properly consider the material provided by the assessee and directed the matter to be reconsidered by the AO to allow the assessee an opportunity to establish their case for registration. Ultimately, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a proper examination of the case by the AO and affording the assessee a fair opportunity to present their claim for registration. The Tribunal stressed the importance of lawful exercise of discretion by the authorities in such matters and directed a fresh examination of the registration aspect of the firm by the AO.
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