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TMI Blog1978 (6) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... rcumstances of the case, the cancellation of registration of the assessee-firm under s. 186(2) of the I.T. Act, 1961, for the assessment year 1969-70 is justified in law ? In I.T.R. No. 8 of 1976 the question referred is : "Whether, on the facts and circumstances of the case, the order of the Tribunal sustaining the order passed under s. 146 of the I.T. Act, 1961, for the assessment year 1969-70 is justified and valid in law ?" The facts and the circumstances leading to the assessment and cancellation of the registration have been set out by the Income-tax Appellate Tribunal in its order. We shall refer to the order in I.T.R. No. 7 of 1976. A notice under s. 139(2) of the Act was issued on June 2, 1969, calling upon the assessee to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was informed by a letter dated February 2, 1970, served on February 7, 1970. The issued a notice dated February 2, 1970, that as no return of income had been filed under s. 139(2) of the Act, he proposed to complete the assessment under s. 144 and also to cancel the registration. This was served on the assessee on February 10, 1970. By its reply dated February 20, 1970, the assessee requested the ITO to grant time till the middle of March, 1970, for submitting the return, the reason being again that the partner had gone abroad and had not yet returned. The officer completed the assessment under s. 144 on February 25, 1970, and, on the same day, he passed the order cancelling the registration under s. 186 of the Act. The assessee, thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dable to the assessee on the basis of such assessment." " 186(2). If, where a firm has been registered or its registration has effect under sub-section (7) of section 184 for any assessment year, there is, on the part of the firm, any such failure in respect of the assessment year as is mentioned in section 144, the Income-tax Officer may cancel the registration of the firm for the assessment year, after giving the firm not less than fourteen days' notice intimating his intention to cancel its registration and after giving it a reasonable opportunity of being heard. " Based on the change in the language of the section, counsel emphasised that while under s. 186(2), the cancellation of registration was only discretionary and need not nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of registration under the last part of s. 23(4). In other words, it would be wrong to assume that the defaults listed in s. 23(4) of the Act would lead to a two-fold penal consequence : (1) a best judgment assessment, and (2) in the case of firms, refusal to register or cancellation of the existing registration, if any. It is, therefore, incumbent upon the ITO to consider the question of registration on the materials available before him instead of refusing registration on the ground that a different conclusion would be illogical or not self-consistent. What consideration should weigh with the officer in the matter of his decision regarding registration cannot of course be laid down exhaustively or comprehensively. Suffice it to say that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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