SATISH CHANDRA, J. - (1.) THE question of law referred for our opinion is whether, on the facts and in the circumstances of the case, the assessee is entitled to the renewal of registration. The question relates to the asst. yrs. 1957-58 and 1958-59. On December, 1958, the ITO issued notices under S. 22 (4) of the IT Act, 1922, requiring the assessee o produce the account books which hand been signed by the Inspector of Survey Squad on 26th July, 1957. A similar notice was given for the asst. yr. 1958-59, as well. Inspite of service of these notices, the assessee did not produce the books of account. It put forward an explanation that the books had been lost in transit. The explanation was disbelieved. The ITO completed the assessment under S. 23 (4) to the best of his Judgment. At the end of the order, he stated. "Renewal of registration has been refused as the assessment has been completed under S. 23 (4)". For the year 1958-59, he made the following observation: "Total income of the assessee comes to Rs, 52,606/- on which assessment is made as per form IT. 30 in the status of 'unregistered firm".
(2.) THE appeal was dismissed on the ground that in so far as it related to refusal of renewal registration, it was barred by time. On further appeal, the Tribunal held to the contrary, namely, that the appeals were not barred by time. It remanded the matter back. After remand, the AAC dismissed the appeals again on the finding that the ITO had not passed an order under S. 26-A of the Act and so no appeal lay. The assessee again appealed. The Tribunal held that the order passed by the ITO in relation to refusal to renewal of registration was not under S. 23 (4) of the Act but was one under S. 26-A of the Act. The first appellate order was set aside and the case was sent back to him with a direction that he should dispose of the appeal on merits. After this remand, the AAC considered the facts and held: "The appellant had deliberately suppressed some of the most vital account books pertaining to the asst. yrs. 1957-58, 1958-59 and had prepared up a false story about their loss in transit in a railway train. It was thus not possible for the ITO to determine the correct income of the appellant, and also to be satisfied that income had been properly distributed amongst the various partners of the firm in the specified proportions. It is trite law that an assessee is not entitled to registration as a matter of right, and that the registration under the IT Act is a benefit to earn which an assessee has to come before the ITO with clean hands. The above narration of the facts makes it unmistakably clear that the appellant did not come with clean hands before the ITO. Under the circumstances, his claim for renewal of registration was rightly rejected". The appeal was dismissed.
(3.) THE assessee again went up in appeal to the Tribunal. The Tribunal repelled the contention on behalf of the Revenue that in point of fact and in law the order was really under S. 23 (4) and not under S. 26-A. It held the Department not having gone up in appeal or reference to the High Court against the previous remand order, the same had become final and could not be challenged at this stage. They went on to hold: "The facts that now emerge, therefore, are that the ITO has refused to renew registration on the ground that the assessment was made ex-parte. It is an established law that if an ITO passes an order under S. 26-A may be in the case of assessment which is completed ex-parte, he cannot refuse to register the firm merely on the ground that the assessment was completed ex-parte". The Tribunal then came to the following conclusion: "The other grounds, namely, that the assessee did not appear with clean hands or that the ITO could not be satisfied in the absence of books of account as to whether the profits were apportioned amongst the partners in the terms of the deed, was not considered by the ITO. This being so, we would hold that the ITO was not justified in refusing to renew registration to the assessee for the asst. yrs. 1957 and 1958-59". ;