In this application under sub-section (2) of section 256 of the Income-tax Act, 1961, the revenue has prayed for a direction to the Income-tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') to refer the following two questions :
'Whether, on the facts and in the circumstances of the case, the Income-tax Officer was justified in refusing to register the firm under section 185(1)(a) while exercising his discretion vested in him under section 185(5) of the Income-tax Act, 1961 ?
Whether, on the facts and in the circumstances of the case, there was material before the Tribunal to hold that the Income-tax Officer did not exercise his discretion under section 85(5) judiciously, in view of the fact that the assessee had withdrawn his appeal against the Income-tax Officers order under section 146 refusing to reopen the assessment made under section 144 ?'
Sub-section (5) of section 185 of the Act confers discretion on the Income-tax Officer to refuse to register a firm for any assessment year if there is failure on the part of the firm, as is mentioned under section 144 of the Act. On account of such failure the Income-tax Officer had refused to register the firm for the assessment year 1968-69. Ultimately, in the appeal preferred by the assessee, the Tribunal has held that, in the circumstances of the case, such failure on the part of the assessee did not warrant refusal to register the firm. In that view, the Tribunal revised this part of the order of the Income-tax Officer.
It is well settled that an appellate court or authority has the same power as the court or authority of the first instance. Though the Income-tax Officer had exercised his discretion in a particular way, it was open to the Tribunal to substitute its discretion for that of the Income-tax Officer. Hence, the question whether the Income-tax Officer had exercised his discretion properly, does not arise out of the order of the Tribunal. The first of the above questions cannot be said to arise out of the appellate order of the tribunal.
The answer to the second question is self-evidence because the Tribunal has referred to the circumstances that the notice under section 143(2) was issued for February 19, 1969, and the other notice under section 142(1) for February 19, 1969, that the assessment was completed on February 24, 1969, and that all the proceedings were completed within a period of less than one month. Hence, it cannot be said that the Tribunal had no material to exercise its discretion in the way it has done.
In the result this application is dismissed. But, in the circumstances of the case, we direct the parties to bear their own costs.