1978 (4) TMI 19

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..... -bazari business. The ITO got information that the assessee had taken a teh-bazari contract in Patti Sultanpur, eight miles from Kashipur. The contract was taken in the name of Shiv Raj Saran, who was the real sister's husband of one partner and the son-in-law of the other partner, of the assessee-firm. The ITO issued notice under s. 142 of the I.T. Act. requiring the assessee to produce the accounts of this contract business. The assessee replied by a letter that it had never taken any contract of teh-bazari of Patti Sultanpur. The ITO, however, was not satisfied. He passed an assessment order to the best of his judgment under s. 144. In it he included an amount of Rs. 81,750 as the net income from the teh-bazari contract. He also passed a .....

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..... the Commissioner, the Tribunal has referred for our opinion the following question of law : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the Income-tax Officer's order under section 186(2) even though there was on the part of the assessee-firm such failure in respect of the assessment year 1971-72 which called for an assessment under section 144 of the Income-tax Act, 1961 ? " The ITO having been informed that the assessee had carried on teh-bazari contract business at Patti Sultanpur, issued a notice under s. 142 requiring the assessee to produce the account books relating to that contract. In a written reply, the assessee stated that it had not taken any such contract. After t .....

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..... since there was a conscious failure to comply with the notice under s. 142, a case for cancellation of registration under s. 186(2) was in fact and in law made out. It could not hence be said that the ITO exercised the discretion vested in him capriciously or arbitrarily. In the present case, no one has appeared on behalf of the assessee. We would hence refrain from making a concluded opinion on the view expressed by the Tribunal that the discretion under s. 186(2) for cancelling the registration of a firm can be used only by way of punishment where there has been a conscious disregard of statutory obligation or defiance of law, on the basis that the proceedings for cancellation are quasi-criminal in nature. We will leave the point open, .....

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