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TMI Blog1986 (7) TMI 188X X X X Extracts X X X X X X X X Extracts X X X X ..... 984 passed under s. 185(5) of the Act. The said order read as under: "As a sequel to the best judgment assessment made on the assessee for its failure to comply with the terms of notices under ss. 143(2) and 142(1) for the year 1982-83, after giving notice under s. 186(2) of the Act which was duly served on the partner on 9th July, 1984 and as there was no response from the assessee to this noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. 3. We have considered the rival submissions. In our view even if the best judgment assessment is made refusal of registration is not automatic. The ITO will have to consider the question of registration on merits. In s. 185(5) the word "may refuse" has been used but not "shall refuse". Thus only a discretionary power is vested in the ITO. Such a discretion has to be exercised fairly and reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration cannot be refused and the ITO if he refuses renewal of registration has to give reasons for his order. In J.M. Seth vs. CIT, Madras (1965) 56 ITR 293 (Mad) the Madras High Court held that the concluding portion of s. 23(4) of the Indian IT Act, 1922 does not mean that if a best judgment assessment under that clause is made on a firm for non-production of books, the ITO is bound to cancel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stent with judicial standards on the basis of the materials and circumstances present in the given case. 4. The ratio laid down in the above cases would squarely apply to the instant case, as the ITO in the instant case has refused registration only on the ground that the best judgment assessment has been made. In our view such an order cannot be sustained. It is incumbent on the ITO to consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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