Law:

Section:

Section 186, read with section 144 of the Income-tax Act, 1961 – Firm – Position prior to 1-4-1993 – Assessment year 1969-70 – In response to notice under section 139(2) assessee sought extension of time on ground that one of partners had gone abroad and that consultation with him was necessary – In response to another notice under section 142(1), assessee failed to produce account and again sought extension of time to file return – ITO rejected assessee's application and having made best judgment assessment, cancelled registration of firm – Tribunal sustained ITO's orders – Whether on facts, cancellation of registration of firm followed exercise of judicial mind of ITO and was not vitiated by being arbitrary or capricious – Held, yes – Whether, besides, Tribunal's order sustaining best judgment assessment made by ITO under section 144, was also justified and valid - Held, yes FACTS For the relevant assessment year in response to notice under section 139(2) for filing return, the assessee sought time on the ground that the accounts were not finalised. Time was granted upto 30-11-1969. Another application seeking extension of time was then filed on the ground that one of the partners had gone abroad and that consultation with him was necessary. The ITO however, issued a notice under section 142(1) for production of accounts. The assessee again applied for further time, which was rejected. The ITO, thereupon, after due notice, completed the assessment under section 144 and also cancelled the registration of the firm under section 186. The Tribunal upheld the ITO's orders. On reference: HELD Cancellation of registration should not be automatic, but is one to be ordered after the exercise of judicial discretion. On the facts found by the Tribunal, cancellation of registration in the instant case followed the exercising of judicial mind of the ITO and was not vitiated by being arbitrary or capricious. Strictly, no referable question of law arose out of the Tribunal's order. Even assuming that the conclusion on the facts was to be regarded as a question of law, the Tribunal's view in regard to the said question was correct and called for no interference. Hence, the…

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