TRIVANDRUM TOBACCO COMBINES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) This is a reference by the Income Tax Appellate Tribunal, Madras Bench, under S.66(1) of the Indian Income Tax Act, 1922. The assessment year with which we are concerned is 1959-60. The question referred is:

(2.) S.23 of the Indian Income Tax Act, 1922, deals with the assessment of the total income and the determination of the tax payable. Sub-s.(4) of that section provides that in the circumstances specified in that sub-section, "the Income Tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment and, in the case of a firm, may refuse to register it or may cancel its registration if it is already registered: Provided that the registration of a firm shall not be cancelled until fourteen days have elapsed from the issue of a notice by the Income Tax Officer to the firm intimating his intention to cancel its registration."

(3.) There is no doubt that what is vested in the Income Tax Officer by the provision is a discretion to refuse registration or to cancel the same. This is implicit in the expressions "may refuse" and "may cancel" as opposed to "shall make" in the earlier part of the sub-section. In J. M. Sheth v. Commissioner of Income Tax ( 1965 (56) ITR 293 ), the Madras High Court said: