TMI Blog1963 (8) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... en placed before us for disposal Learned counsel on both sides, the department as well as the assessees, have addressed arguments in the light of the subsequent statement of the Tribunal The facts leading up to the reference have been fully set out in our prior order and need not be repeated The question raised is whether the Tribunal acted rightly in conformity with law in refusing registration to the assessee-firm The Income-tax Officer refused registration because the assessees were in default in complying with the terms of the notice u/s 22(4) calling for documents and account books relating to the assessee s business Taking the view that the assessees failed to comply with the statutory notice u/s 22(4), the Income-tax Officer pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e terms of the notice u/s 22(4) But now the question is whether the Tribunal was right in upholding the order of the Income-tax Officer refusing registration Learned counsel for the department contends that it is not open to the assessees to submit at this stage before us that there has been no default on their part in complying with section 22(4) notice, as that question must be deemed to have been set at rest by the very act of the assessees in allowing the Tribunal s order regarding the quantum of assessment to stand The argument is that there cannot be two conflicting views on the same facts : (1) that the assessees were in default and that therefore were assessed properly on the best judgment basis; and (2) that the assessees were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised return under sub-section (3) of the same section or fails to comply with all the terms of a notice issued under sub-section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of this section, the Income-tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered It is clear that failure to make a return or a revised return, or failure to comply with all the terms of the notice u/s 22(4) would necessarily attract the Income-tax Officer s jurisdiction to make an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Income-tax Officer to consider the question of 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 the matter is purely one of discretion to be exercised by the officer and, therefore, he should exercise it not arbitrarily or capriciously but in a manner consistent with judicial standards This, in our opinion, is the true scope of section 23(4) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessees who were called upon to produce the stock book purchased a spurious stock book withholding the correct stock book which the assessees must be presumed to have been maintaining This inference is arrived at by a comparison of the stock book produced and the admitted sales books of the assessees It is true that there is a lot of discrepancy between the stock position as disclosed in the assessee s stock book and the sales accounts now produced by them It may be that even the assessee s explanation for the discrepancies pointed out was not quite convincing But the real question is whether it can be said that the assessee must have been maintaining another set of account books and that they committed default in not producing them i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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