Factual discretion in refusal of registration under income-tax law was upheld where books were not produced and no question of law arose.

Non-production of books of account and non-compliance with the section 142(1) notice made the refusal of registration a matter of factual discretion, not a question of law on the referred facts. The High Court held that the Tribunal was right in treating the issue as essentially factual, including the assessee's explanation that the books were lost in transit, and found no legal error in the Income-tax Officer's exercise of power. The argument that proceedings under sections 142(1) and 144 had to be dealt with separately was rejected because the record showed that both were considered separately. The reference was answered in the negative and the refusal to grant registration was upheld.

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Issues: Whether the Tribunal erred in upholding the Income-tax Officer's refusal to grant registration to the assessee-firm for non-production of books of account and in treating the matter as one not giving rise to a question of law.

Analysis: The dispute turned on the Income-tax Officer's exercise of discretion on the facts, particularly the assessee's non-compliance with the notice under section 142(1) of the Income-tax Act, 1961 and the plea of loss of books in transit. The Court held that the issue was essentially factual and concerned the proper exercise of administrative discretion, which did not raise a question of law on the referred facts. The argument that proceedings under section 142(1) and section 144 of the Income-tax Act, 1961 had to be dealt with separately was rejected, as the record showed that both matters had in fact been considered separately and there was no legal error in simultaneous exercise of the powers.

Conclusion: The reference was answered in the negative, and the refusal to grant registration was upheld in favour of the Revenue.

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