Judgement V. BHARGAVA, J. : The assessee, Mannilal Sagarmal, during the course of the assessment for the year 1943-44, made an application for registration of the firm under S. 26-A of the Indian Income Tax Act. The Income Tax Officer issued a notice under S. 22(4) of the Act requiring the assessee to produce certain accounts and documents on the date fixed. The accounts and documents were not produced and, on the facts before him, the Income Tax Officer held that they had been deliberately suppressed. Thereupon, the Income Tax Officer held that the notice had not been complied with and the assessee was liable to assessment under S. 23(4) of the Act. Consequently, he refused registration and rejected the application under S. 26-A of the Act. The assessee appealed against this order but the Appellate Assistant Commissioner of Income Tax dismissed the appeal holding that no application had been made under S. 27 of the Act to the Income Tax Officer for cancellation of the Assessment and, therefore, would be presumed that the assessee had no reasonable cause for non-compliance with the notice under S. 22(4) of the Indian Income Tax Act. The assessee went up in appeal before the Income Tax Appellate Tribunal. This appeal was also dismissed on the view that, though the assessment had been made under S. 23(4) of the Act, no application under S. 27 had been made to the Income Tax Officer for cancellation of the assessment, presumably, because the assessee had realised that he had no reasonable cause for not complying with the notice under S. 22(4) of the Act. The Tribunal further proceeded to hold that under S. 23(4) the Income Tax Officer had power to refuse to register a firm and they did not see any reason to interfere with the discretion of the Income Tax Officer in this respect after taking into consideration all the facts of this case. In these circumstances, the assessee moved the Tribunal under S. 66(1) of the Indian Income Tax Act and the Tribunal has referred the following two questions for our opinion : "Q. 1. Whether, in the circumstances of the case as stated above, the Tribunal could in law refuse to interfere with the discretion of the Income-tax Officer exercised in refusing to register the firm under S. 26-A of the Income-tax Act? Whether, in the circumstances of the case as stated above, the Tribunal could in law refuse to interfere with the discretion of the Income-tax Officer exercised in refusing to register the firm under S. 26-A of the Income-tax Act? Q. 2, Whether, in the circumstances of the case as stated above, the refusal of registration under S. 26-A, I. T. Act was legally permissible" 2. The facts, disclosed by the statement of the case mentioned above, show that both the Income Tax Appellate Tribunal and the Appellate Assistant Commissioner of Income Tax, in deciding the appeal of the assesses against the refusal of the Income Tax Officer to register the firm, relied mainly on the circumstance that the assessee had no application under S. 27 of the Indian Income Tax Act for cancellation of the assessment. In proceeding in this manner, they failed to notice the distinction that the income Tax Act provides for between an appeal against a best judgment assessment made under S. 23(4) and an appeal against refusal to register under S. 23(4). In the case of a best judgment assessment under S. 23(4), provision has been made under S. 27 for an application for cancellation of the assessment on certain grounds including the ground that the assessee had been prevented by sufficient cause from making the return required by S. 22, or from complying with the requirements of a notice issued under S. 22(4) of the Act. An order rejecting such an application is separately appealable and, consequently, it has been held that, if an assessee does not take such objections by an application under S. 27 as are open to him under that provision of law, he cannot challenge the assessment itself on the same grounds when he files an appeal against the quantum of assessment made under S. 23(4). On the other hand there is no provision in the Act by which the assessee is given a right to make an application asking for cancellation of the order refusing to register the firm on any ground whatsoever. In the case of an order refusing to register a firm passed under S. 23(4), the only remedy provided is an appeal under S. 30(1). In the case of an order refusing to register a firm passed under S. 23(4), the only remedy provided is an appeal under S. 30(1). Consequently, if an assessee happens to be satisfied with the best judgment assessment made under S. 23(4), he is not required to make any application under S. 27 but there may be a case where he may be dissatisfied with the order refusing to register the firm and, in that case, he can challenge the order of the Income Tax Officer by an appeal against the refusal to register the firm. In that appeal, he can challenge the order on any ground whatsoever including grounds on which he could have asked cancellation of the assessment under S. 27. The mere fact that he did not file an application under S. 27 asking for cancellation of the assessment cannot stand in the way of his challenging the order of refusal to register the firm on the same grounds. Consequently, when an appeal is filed against an order passed under S. 23(4) refusing to register a firm and the assessee comes up in appeal, the appellate authorities have to examine the finding given by the Income Tax Officer that the assessee had committed one of the defaults mentioned in S. 23(4) irrespective of the fact whether any application under S. 27 had or had not been made for cancellation of the assessment. no presumption could be taken against the assessee from the circumstance that he had made no application under S. 27 for the cancellation of the assessment as he may have failed to make that application for reasons other than that he had no reasonable explanation for his default : In the particular case before us, our attention has been directed to the fact that the best judgment assessment under S. 23(4) was actually challenged by the assessee, on the ground that he had not failed to comply with the notice issued under S. 22(4), by an appeal against the assessment order instead of by an application under S. 27. It is true that he was wrongly advised in seeking his remedy by an appeal on such a ground against the assessment instead of moving the Income Tax Officer under S. 27. It is true that he was wrongly advised in seeking his remedy by an appeal on such a ground against the assessment instead of moving the Income Tax Officer under S. 27. The facts, however, show that the assessee did want to satisfy the Income-tax authorities that he had sufficient cause for not complying with the notice under S. 22(4) and the presumption, which was made by both the Appellate Assistant Commissioner of Income Tax and the Income Tax Appellate Tribunal that the assessee had realised that he had no reasonable cause for not complying with the notice, cannot possibly arise in these circumstances. It appears that the Appellate Assistant Commissioner of Income Tax and the Income Tax Appellate Tribunal were unduly obscessed by the fact that the assessee had made no application under S. 27 for the cancellation of the assessment. That circumstance should have been ignored and, in the appeals against refusal to register the firm they should have independently gone into the question which had been raised by the assessee viz. that he had sufficient cause for not complying with the notice given by the Income Tax Officer. In falling to do so, the Income Tax Appellate Tribunal clearly committed an error and their decision based on this view is incorrect in law. Our answer to the first question, therefore, is that the Income Tax Appellate Tribunal were not justified in refusing to interfere with the order of the Income Tax Officer refusing to register the firm under S. 26-A of the Indian Income Tax Act on the ground on which they based their order and the Income Tax Appellate Tribunal should have gone into the question on merits and dealt with the grounds taken before them by the assessee to challenge the order of the Income Tax Officer. 3. The Income Tax Appellate Tribunal, in their order, added that they did not see any reason to interfere with the power of the Income Tax Officer in refusing to register the firm after taking into consideration all the facts of the case. The statement of the case would indicate that neither the Income Tax Officer nor the Income Tax Appellate Tribunal gave any reasons arising out of the circumstances of the case which could justify refusal to register the firm. The statement of the case would indicate that neither the Income Tax Officer nor the Income Tax Appellate Tribunal gave any reasons arising out of the circumstances of the case which could justify refusal to register the firm. Learned counsel for the Department read out to us a portion of the order passed by the Income Tax Officer under S. 26-A of the Indian Income Tax Act refusing to register the firm but the facts given in that part of the order of the Income Tax Officer have not been made a part of the statement of the case and even the Income Tax Appellate Tribunal, in their order, have not expressed any opinion indicating that they agreed with those reasons given by the income Tax Officer and that consequently, they held the exercise of his discretion to be proper. In fact, the Tribunal do not appear to have gone into the question of the proper or improper exercise of the discretion by the income Tax Officer in refusing to register the firm because of their view that no application had been made under S. 27 to challenge the best judgment assessment and consequently, it could be presumed that the assessee had no reasonable cause for not complying with the notice under S. 22(4). We have indicated in our answer to the first question that the Tribunal should re-examine the point whether the Income Tax Officer was at all justified in proceeding under S. 23(4) of the Indian Income Tax Act so as to refuse registration of the firm. In doing so, the Tribunal would naturally have to examine not only the question whether the assessee had or had not shown reasonable cause for non-compliance with the notice under S. 22(4) but would also have to examine whether the Income Tax Officer had exercised his discretion properly or improperly. In view of this circumstance, we do not think that any opinion should be expressed by this Court on the second question at this stage. 4. Let the reference be returned to the Income Tax Appellate Tribunal with these observations. The assessee will be entitled to the costs of this reference from the Department which we fix at Rs. 200/-. Order accordingly.