Law:

Section:

Section 185 of the Income-tax Act, 1961 (Corresponding to section 26A of the Indian Income-tax Act, 1922) - Firm - Position prior to 1-4-1973 - Assessment year 1961-62 - Whether merely on ground that ITO has proceeded to make best assessment, registration cannot be refused and ITO while refusing renewal of registration has to give reasons for his order - Held, yes - Whether passing of ex parte order under section 23(4) of 1922 Act alone could be no ground for refusal to renew registration - Held, yes - ITO refused renewal of registration on grounds, inter alia, that no books of account had been produced by assessee-firm and that he was not satisfied that profits had been distributed among partners according to share ratio mentioned in partnership deed - Though order of ITO was not well written, Tribunal had explained that in context of past bad history of assessee's assessment, ITO wanted to, satisfy himself regarding distribution of profit, and accordingly, upheld order of ITO - Whether since appellate authority, which ultimately maintained order of ITO, had in detail discussed how discretion was exercised and even order passed by ITO clearly gave a good reason indicating exercise of discretion, therefore, renewal of registration was validly and correctly refused by ITO - Held, yes FACTS The ITO refused to renew the registration of the firm observing that the partners of the assessee-firm had not applied for renewal of registration under section 26A of the 1922 Act, that no books of account had been produced, that he was not satisfied that the profits had been distributed among the partners according to the share ratio mentioned in the partnership deed and that the order had been passed ex parte under section 23(4) of 1922 Act. Before the AAC, the assessee produced a certificate from the ITO to the effect that a renewal application was duly received in the income-tax office on 11-5-1961. When the ITO took up the assessment he served upon the assessee a notice under section 23(2) of the 1922 Act. But nobody attended and a request for adjournment was made. It appeared that some more adjournments were granted to the assessee and on 8-11-1965, when the authorised…

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