Mandatory notice before refusing firm registration under income-tax law made the rejection unsustainable.

The mandatory fourteen days' notice under section 186(2) was a precondition before refusing to continue a firm's registration. Because no such notice was served, and the assessee had already been granted registration in earlier years and filed the required declaration for the relevant year, the refusal could not stand. The absence of contumacious conduct reinforced that the statutory requirement had to be strictly followed. The assessee was therefore entitled to continuation of registration.

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Issues: Whether the Income-tax Officer was justified in refusing to continue the registration of the assessee-firm under section 186(2) of the Income-tax Act, 1961 without issuing fourteen days' notice.

Analysis: The firm had been granted registration in earlier years and had duly filed the requisite declaration for the relevant assessment year. The record showed that no notice under section 186(2) was served before refusal of registration. The finding was also that the assessee was not guilty of any contumacious conduct. In these circumstances, the precondition of notice was mandatory and the refusal to continue registration could not be sustained.

Conclusion: The Income-tax Officer was not justified in refusing to continue the registration, and the assessee was entitled to registration.

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