Firm registration under income tax law upheld where non-production of books was satisfactorily explained and section 144 basis fell away.

The assessee-firm's non-production of account books did not justify refusal of registration where the appellate authority accepted the explanation that the books were not in its custody at the relevant time. On that factual finding, the basis for assessment under section 144 of the Income-tax Act, 1961 fell away, and there was no ground to deny registration under section 185(1)(b) or section 185(5). The Andhra Pradesh HC noted that the appellate authority and Tribunal had recorded concurrent findings of adequate justification for non-production, and upheld the direction to grant registration for the assessment year 1977-78.

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Issues: Whether the firm was entitled to registration for the assessment year 1977-78 despite non-production of account books and completion of assessment under section 144 of the Income-tax Act, 1961.

Analysis: The appellate authority accepted the assessee's explanation that the account books were not in its custody at the relevant time. On that factual finding, the non-production of account books could not justify refusal of registration. Once that explanation was accepted, the basis for assessment under section 144 disappeared, and there was likewise no ground to deny registration under section 185(1)(b) or section 185(5) of the Income-tax Act, 1961. The concurrent findings of the appellate authority and the Tribunal proceeded on adequate justification for non-production.

Conclusion: The answer was in the affirmative. The Tribunal was justified in confirming the direction to grant registration, and the issue was decided in favour of the assessee and against the Revenue.

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