1986 (7) TMI 188

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....e ITO refused to grant continuation of registration as per his order dt. 24th July, 1984 passed under s. 185(5) of the Act. The said order read as under: "As a sequel to the best judgment assessment made on the assessee for its failure to comply with the terms of notices under ss. 143(2) and 142(1) for the year 1982-83, after giving notice under s. 186(2) of the Act which was duly served on the....

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....ration to the firm under s. 185(5) and that power has been exercised fairly and reasonably. 3. We have considered the rival submissions. In our view even if the best judgment assessment is made refusal of registration is not automatic. The ITO will have to consider the question of registration on merits. In s. 185(5) the word "may refuse" has been used but not "shall refuse". Thus only a discre....

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.... IT Act, 1922 on a firm on account of non production of books of accounts renewal of registration cannot be refused and the ITO if he refuses renewal of registration has to give reasons for his order. In J.M. Seth vs. CIT, Madras (1965) 56 ITR 293 (Mad) the Madras High Court held that the concluding portion of s. 23(4) of the Indian IT Act, 1922 does not mean that if a best judgment assessment und....

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....retion must be exercised not arbitrarily or capriciously but in a lawful manner and consistent with judicial standards on the basis of the materials and circumstances present in the given case. 4. The ratio laid down in the above cases would squarely apply to the instant case, as the ITO in the instant case has refused registration only on the ground that the best judgment assessment has been m....