This is appeal filed by G. Gopala Reddy Cloth Centre, Hyderabad against order of AAC for asst. yr. 1979-80. assessee is firm dealing in cloth. assessee filed its return of income after filing Form No. 11 dt. 6th March, 1978 seeking registration for asst. yr. 1978-79 addressed to ITO. subsequent letter dt. 12th Jan., 1982 sought to correct said assessment year to asst. yr. 1979-80 which is first year of assessment. ITO declined registration in assessment order by referring to fact that application was addressed to wrong ITO and that he is entitled to reject claim for registration acting under s. 185(5) of IT Act, 1961 ( Act ) as assessment itself is being made under s. 144 of Act. He also mentioned in passing that in absence of account books it is not possible for him to verify claim that there was firm according to deed. As for alleged non-production of books, it is assessee s case that only cash book could not be produced and that was because it had been misplaced and that all other books were available and produced and detailed copies of accounts including partners accounts and other schedules, with reference to accounts were filed. However, ITO went on basis that none of books were produced. ITO estimated assessee s income at Rs. 25,000 as against declared loss of Rs. 2,633. It was treated as unregistered firm and tax levied accordingly. There was no formal separate order of refusal of registration. assessee went in appeal questioning refusal of registration as well as quantum of assessment. It appears that application under s. 146 of Act was filed, but it was rejected. appeal against same was unsuccessful and there was no further appeal against that order. first appellate authority in appeal against assessment order confirmed assessment both on question of registration and estimate. For registration, he was of view that sec. 185(5) justified refusal of registration. assessee is in second appeal on both questions of jurisdiction and estimate. learned Departmental representative claimed that there is only single appeal and that since registration and quantum assessment should be subject to two different appeals, assessee should choose only one issue for adjudication before us. learned representative for assessee claimed that Patna High Court in Madhur Jalpan vs. CIT (1983) 143 ITR 351 has pointed o u t that it is open to taxpayer to file one single appeal where both decisions are in single assessment order. It is pointed out that appellate order is also single one. Without prejudice to this contention, it was stated that assessee would choose issue of registration if it were compelled to choose only one issue. On question of registration, learned representative for assessee claimed that ex parte assessment itself was not justified on merits. At any rate there was no material or even suggestion of any evidence to throw even doubt about genuineness of firm. Copies of accounts on record indicate division of profits. firm came into existence consequent practically to change in constitution of its predecessor Uma Medical Hall due to induction of partners of another discontinued firm Surya Medical Hall. In fact, self-same firm was found to be genuine by ITO himself, for asst. yr. 1981-82 and registration was granted for year. Copy of order under s. 185(7) registering firm for asst. yr. 1981-82 was filed. He claimed that refusal of registration is not automatic in every case even as held by Allahabad High Court in CIT vs. Raj Narain Tewari (1979) CTR (All) 6: (1978) 113 ITR 163. He also relied upon decision of this Tribunal to this effect in Fourth ITO vs. Raja Textiles (1982) 13 TTJ 29 (Mad) to which one of us was party. On question of quantum, learned representative for assessee claimed that there was large loss on near-equal turnover and such loss was accepted for next succeeding year. So is position for asst. yr. 1981- 82. It was contended that there is no reason why smaller loss for this year should have been disbelieved. learned Departmental representative justified refusal of registration on ground that assessment was made under s. 144. He was of view that such refusal was justified as held in Askaran Kissenlal vs. CIT (1969) 73 ITR 522 (Cal). Non-production of books also, he claimed, justified grave doubts as to genuineness of firm. If registrations were to be authorised in such circumstances, he claimed that s. 185(5) would be dead letter. He argued that fact that firm was found to be genuine in later year does not, ipso facto, justify interference of genuineness for all years. As for quantum of Rs. 25,000 estimated, he justified same with reference to turnover which was about Rs. 10 lakhs inasmuch as net profit works out only to 2.5 per cent. We have carefully considered facts as well as arguments. On question of registration, s. 185(5), in our view, lays down that in assessment under s. 144 ITO may refuse to register firm for assessment year . (Emphasis supplied) There are number of decisions with reference to this provision under IT Act and Indian IT Act, 1922 ( Act ) listed in note 2 of page 858 of Kanga & Palkhivala s Law and Practice of Income-tax, Seventh edn., vol. 1, on page 166 of supplement thereto. uniform view in all these cases has been that it is matter of discretion on his part. Even in decision of Calcutta High Court in Askaran Kissenlal s case (supra), decision was rendered in context of finding that assessee deliberately withheld books of avoid investigation. very fact that there is specific right of appeal under s. 246(j) of Act against order of refusal of registration under s. 185(5) makes it clear that registration is not routine consequence of ex parte order. Let us examine facts of this case. There was registration application filed in time though there was mistake in respect of assessment year which was, however, corrected by letter filed prior to completion of assessment. Much was made of fact that assessee s representative must have known that is was addressed to wrong ITO though all that assessee did was to have addressed it to ITO having jurisdiction over predecessor firm, Uma Medical Hall, further it did reach right ITO well before assessment. He also referred to it in his assessment order. ITO was definitely in error in his view that he is entitled to ignore application on record merely because it was addressed to wrong jurisdiction. In context of this view, his statement that he was unable to verify existence of firm as constituted by deed lacks credibility. There is explanation on record explaining sources of capital of partners to effect that such capital was from drawing from Uma Medical Hall/Surya Medical Hall, both assessees and on record for earlier years. copy of order sheet filed by learned Departmental representative does not indicate that, at any stage genuineness of firm was subject-matter of enquiry so as to link question of genuineness of firm with non-production of books for which ex parte order was made. accounts of partners show debit of respective share of loss as per P & L Account. Even ex parte order assigns status as firm though unregistered. Hence, we do not see how existence of firm was treated as not proved when assessment has been made on such firm. We may ignore subsequent registration of same firm as fact not on record at relevant time, but there is no justification for refusal of registration even with reference to material on record unless we accept learned Departmental representative s argument that ex parte order, by itself, justifies automatic refusal of registration. Such argument was found unacceptable. There is also another angle to this question. There is valid registration application on record. Sec. 185(1) requires enquiry into genuineness of firm. Since words used are shall inquire into genuineness of firm and its constitution on receipt of application, such enquiry is mandatory. Sec. 185(2) provides statutorily opportunity of one month for removing even defect in application. No doubt, s. 185(5) authorises refusal of registration in case of assessment under s. 144. I t means that issue of notice giving specific opportunity regarding registration may not always be mandatory in case of ex parte assessment. But t h e circumstances should indicate something to suggest non-genuineness or there should be some enquiry in this regard for which there is non-compliance. Where application is prime facie in order and there is no material either on record to doubt genuineness of partnership or non-production of materials which have no relevance to genuineness of partnership, we are of view that principle of natural justice require that there is opportunity in respect of registration claim as well either in connection with processing of registration application or, at least, as part of assessment proceedings. It is all more difficult to justify non-registration in case like this where non-production is not absolute but only partial where there is return and formal application of registration. We ordinarily expect enquiry to be simultaneous and no adverse inference regarding one is drawn for non-compliance regarding other. If such procedure is not followed, there would have been no necessity of two orders in respect of firm claiming registration, one for registration and other for quantum. It is also seen that two appeals are provided in statute, one in respect of registration and other on quantum. At any rate, we are or view that even where refusal of registration is done as consequence of ex parte order, statute requires formal order under s. 185(1)(b), r/w s. 185(5) on application validly filed in time. Merely describing firm as unregistered one in cause title to assessment order or casual mention regarding application in assessment order does not, in our opinion, satisfy statutory requirement and scheme of Acts especially since separate appeals are provided against quantum assessment order under s. 144 and refusal of registration under s. 185(5) under cl. (d) and (j), respectively, of s. 246. In case before us, there is no order disposing of assessee s application for registration apparently because ITO thought that is was invalid since it was wrongly addressed to some other officer, notwithstanding fact that it reached him before assessment. Under circumstances of case, application for registration before ITO should be dealt with afresh in accordance with law after giving assessee opportunity, since such opportunity for registration was not given during assessment proceedings and since principles of natural justice would require such course. appeal on question of registration will, therefore, be treated as allowed. As regards quantum of assessment, we are of view that, where there is no separate order on application for registration, assessee could not be shut out from questioning registration in appeal against quantum assessment in view of liability imposed on it unregistered firm. No doubt, question is not free from doubt since Allahabad High Court in ITO vs. Vinod Krishna Som Prakash (1979) 117 ITR 594 and Patna High Court in Madhur Jalpan s case (supra) are in favour of single appeal, while Orissa High Court in Nilamani Ghosh & Partners vs. CIT (1976) CTR (Ori) 347: (1977) 106 ITR 281 requires two appeals which were considered necessary even in case of single order by ITO. In such circumstances Calcutta High Court in Fuel Supply Co. vs. CIT (1965) 58 ITR 130 with reference to analogous provision under 1922 Act, held that separate appeals are necessary. But same High Court has taken different view with reference to provision of 1961 Act distinguishing its earlier decision and holding that single consolidated appeal will do in CIT vs. Rupa Traders (1979) 118 ITR 412 (Cal). Before considering matter further, we will deal with issue on merits. net income computed is Rs. 25,000 on turnover of Rs. 10.09 lakhs. It works out to Rs. 2.5 per cent net. Merely because loss was proved for subsequent years, we cannot interfere unless we hold estimate is dishonest, vindictive or capricious on basis of guideline for interference in appeal as laid down by Supreme Court in State of Kerala vs. C. Velukutty (1966) 60 ITR 239. On other hand in assessee s case, estimate cannot even be characterised as unreasonable. Under circumstances, there is no merits in quantum appeal. Firstly, assessee having opted for registration issue only in case it is decided that there is right of only one appeal, issue regarding quantum has become academic as even otherwise there is no relief to assessee on merits. Secondly, we have also found that assessee s application has not been dealt with on misconception of law that if it were wrongly addressed, it need not be dealt with. We have now directed him to dispose of matter. In view of these two circumstances, issue as to whether there should be single or two appeals has become academic. However, we would like to add that in view of preponderant had in his (sic) case law noticed we are of view that single appeal is sufficient in facts and circumstances of assessee s case. In result, appeal on point claiming registration is allowed in manner indicated in paragraph 8 supra. Since other relief in quantum is declined appeal is partly allowed. *** G. GOPALA REDDY CLOTH CENTRE v. INCOME TAX OFFICER