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Civil Petition for Special Leave to Appeal No. 23 of 1973, decided on 3rd October 1973.

(On appeal from the judgment and order of the Lahore High Court, dated the 8th January, 1973 in P. T. R. No. 211 of 1972).

--‑‑ Ss. 22 ;4) & 23 (2).‑‑Income‑tax Officer not giving any reason for refusal to renew registration‑High Court on assessment of merits finding case to be one of single default, and holding exercise of discretion by Income‑tax Officer to be wrong‑High Court, held, did not exercise its discretion in arbitrary and capricious manner and perfectly justified in refusing to refer question for opinion.

Muhammad Afzal Lone, Advocate Supreme Court instructed by Ifiikharuddin Ahmad, Advocate‑on‑Record for Petitioner.

Nemo for Respondent.

Date of hearing: 3rd October 1973.

The respondent who deals in medicines, filed an application under section 26‑A of the Income‑tax Act for renewal of the firm's registration for the assessment year 1970‑71. In order to complete the respondent's assessment for the year 1970‑71, the Income tax Officer sent notices to the respondent under sections 22 (4) and 23(2) of the Income‑tax Act requiring him to produce accounts or evidence on which he relied in support of the income‑tax return. These notices were duly served on the respondent but he failed to comply with the same and did not appear before the Income‑tax Officer. As a result of this, the Income‑tax Officer, under section 23(4) of the Income‑tax Act, by order dated the 13th November, 1973, made the assessment in the best of his judgment. As regards the respondent's application for renewal of the registra tion firm, the Income‑tax Officer disposed of the same by the same order exercising the discretion vested in him under subsection (4) of section 23 of the Income‑tax Act and refused to grant renewal of the registration. The respondent challenged this order in appeal before the Income‑tax Tribunal and the Income‑tax Tribunal accepted the appeal and directed that the registration of the firm be renewed. The petitioner then moved an application under section 66 (1) of the Income‑tax Act before the Lahore High Court for the reference of the following question of law:

"Whether on facts and in the circumstances of the case, the Tribunal was legally justified in directing the income‑tax Officer to entertain the application for renewal of registration under section 26‑A when the same was refused by the Income‑tax Officer by exercising the discretion vested in him under section 23(4) of the Income‑tax Act in spite of the fact that the assessment made under section 23(4) was upheld by the Tribunal.

The High Court dismissed the application in limine on the 15th September 1972. The petitioner seeks permission to file an appeal against the said order.

Mr. Muhammad Afzal Lone, learned counsel for the petitioner, has contended that the Income‑tax Tribunal was not justified in interfering with the discretion of the Income‑tax Officer in refusing to renew the registration. He contended that the respondent had failed to appear in pursuance of the notices issued under sections 22(4) and 23(2) of the Income tax Act and, therefore, the Income‑tax Officer had the discretion to refuse the renewal of the registration of the firm. It was, however, brought to our notice that the learned income‑tax Officer has not given any reason for refusing to renew the registration. On the other hand, the High Court went into the merits of the case and came to the conclusion that as it was a case of single default, the discretion should not have been exercised by the Income‑tax Officer against the respondent.

After hearing the learned counsel for the petitioner, we are satisfied that the High Court has not exercised the discretion vested in it in arbitrary and capricious manners. No question of law arises in such circumstances, and the High Court was perfectly justified in refusing to refer the question to the High Court for opinion. The petition is dismissed.

Petition dismissed,

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