MUNAWAR- ELAHEE RANA, J.-This is an application made by the -Commissioner of Income-tax, Lahore Zone. Lahore under section 66(1) of the Income-tax Act (Act XI of 1922) referring the following question of law said to arise out of an order dated 25-10-1973 passed by the Income-tax .Appellate Tribunal, Lahore in Income-tax Appeal No. 87 M B of 1972-73 relating to the assessment year 1970-71 "Whether on the facts and in the circumstance of the case, the Appellate Tribunal was justified in holding that the order of refusal of registration under section 26-A of the Income-tax Act consequent upon the ex parte assessm ent under section 23(4) of the Act was not valid in law ?"
2. The brief facts relevant for the disposal of this reference are that the respondent was conducting business at Chichawatni, District Sahiwal. The income-tax Officer, Circle-A, Sabiwal issued notices under section 22(4) and 23(2) of the Income-tax Act in connection with the assessment proceedings for the assessm ent year 1970-71 for 7-5-1973, but in the order-sheet on the file there is nothing to show that any proceedings were in fact taken by the Income--tax Officer on 7-5-1973.
Nonetheless the Income-tax Officer completed ex parte assessm ent against the assessee under section 23(4) of the Act on 16-5-1973 and simultaneously on the same date also, although by a separate order, refused registration of the firm under section 26-A of the Act on the ground :that the assessm ent was being framed under section 23(4) of the Act.
3. The assessee went up in appeal (I. T. A. No. 87/M B of 1972-73) against the order before the Income-tax Appellate Tribunal, Multan Branch, Multan. In appeal the assessee raised an objection to the effect that the Income-tax Officer did not pass an order under section 26-A of the Act on -7- 5-1973 itself but on 16-5-1973 for which no notice was issued to the assessee. The Tribunal gave effect to this objection and, in accepting the ,.Appeal before it, set aside the order of the Income- tax Officer to be -made afresh.
4. In these circumstances the Commissioner of Income-tax has filed this application referring the above question of law said to arise out of the . Appellate order passed by the Tribunal to the High Court for its opinion. According to the Tribunal, in the circumstances of the case, the Income-tax - Officer was entitled to proceed ex parte and pass an order ex parte against the assessee under section 23(4) of the Act on 7-5-1973 only for which date the service was effected on him and not afterwards on 16-5-1973 for which ,date the assessee had no notice of hearing.
5. We have already dealt with a similar question in The Commissioner of Income-tax, Lahore v.
Messrs M. B. Qureshi & Co., Lahore (T R 203 of 1972) -decided today and observed that on the face of the record there was nothing to show if the case was in fact taken up by the Income-tax Officer for hearing on the date for which notices were issued and that in spite of service the assessee had failed to comply with them on the date specified in them and in such circumstances the Income- tax Officer could resort to action against -the acsessee on that day only and not on any subsequent day of which the assessee had no notice. The Tribunal was, therefore, justified in setting[ aside such ex parte assessm ent. In this case also the facts and circumstances A .Are identical. The Income-tax Officer had passed the order refusing registration on a date of which the assessee had no notice and the Tribunal was justified in vacating the order of the Income-tax Officer.
6. In this case it is evident that the Income-tax Officer while completing the ex parte assessm ent under section 23(4) of the Act also refused the registration of the firm on the same date. In fact it appears to us that both the orders were made almost simultaneously in one sitting so that the order refusing to register the firm was passed in continuation of the order made under section 23(4) of the Act and virtually formed part of that order. In Messrs Ahmad Din Abdul Razzaq v.
Commissioner of Income-tax, Lahore (T. R. No. 180 of 1971) it has been laid down that refusal to renew registration is permissible under section 23(4) of the Act as a consequence of default of compliance of notices under sections 22(4) and 23(2) of the Act.
7. But for our reasons stated in paragraph 5 above and on the facts and in the circumstances of this case we hold that the Tribunal was justified in setting aside the order of the Income-tax Officer.
8. We accordingly return our answer to the question referred to the High Court in the affirmative.
There shall be no order as to costs. s. Q.