Bhagwati, J.:— The short question of law which arises in this reference turns on the construction of an order passed by the Income-tax Officer. The assessee is a firm which was originally constituted under a deed of partnership dated 30th October, 1957, and it appears that for the assessment year prior to the assessment year 1961-62 with which we are concerned in the present reference, it was registered under section 26A of the Income-tax Act, 1922. There was a change in the constitution of the assessee from the commencement of Sam vat year 2016, being the relevant previous year for the assessment year 1961-62, and a new partnership deed dated 5th March, 1960, was executed between the partners. On 29th June, 1961, a notice under section 22(2) calling for a return of income for the assessment year 1961-62 was served on the assessee but the assessee neither filed a return of its income nor applied for extension of time to file its return. The Income-tax Officer, therefore, proceeded to make a best judgment assessment on the assessee under section 23(4) and by an assessment order dated 23rd December, 1961, he assessed the assessee on an estimated income of Rs. 45,000. The assessee thereafter made an application for cancellation of the best judgment assessment under section 27 but the application was rejected by the Income-tax Officer, and on appeal the order rejecting the application was confirmed by the Appellate Assistant Commissioner and the Tribunal. The result was that the best judgment assessment made under section 23(4) remained undisturbed against the assessee. The assessee had also made two applications for registration under section 26A: one being an application for registration dated 26th May, 1960, and the other being an application for renewal of registration dated 26th June, 1961. Both the applications related to the same assessment year, namely, 1961-62. The Income-tax Officer by an order dated 23rd December, 1961, rejected both the applications and as the entire Controversy between the patties turns on the true construction of this order, it is desirable to set out the same in extenso. The order was in the following terms:

“Order under section 26A.

An application for renewal as well as an application for registration has been filed on 26-6-61 and 26-5-60 respectively. As no return has been filed and no partners' accounts have been furnished, the correctness of the statements made in the application cannot be verified. Further, the assessment is being completed under section 23(4) and under the discretion vested in this section, I refuse to renew registration and consider the very application for registration as improper, as the facts stated therein cannot be verified.”

2. The assessee, being aggrieved by the order, preferred an appeal to the Appellate Assistant Commissioner but the Appellate Assistant Commissioner dismissed the appeal on the ground that the registration was refused by the Income-tax Officer in the exercise of his discretion under section 23(4) and there was no ground for interference with such discretion. The assessee thereupon carried the matter in further appeal to the Tribunal. The Tribunal took the view that, though the order of the Income-tax Officer contained a reference to section 23(4), the discretion conferred under that section was not specifically exercised by the-Income-tax Officer and that the order was therefore not an order under section 23(4) but was an order under section 26A and, since the grounds on which the order was based were not grounds which could legitimately be taken into account in refusing registration under section 26A, the order was bad and the assessee was entitled to registration under section 26A. The Commissioner thereupon applied for a reference, but the application for reference was rejected by the Tribunal on the ground that no question of law arose out of the order of the Tribunal. This led to the filing of an application by the Commissioner to this court for a reference and on the application of the Commissioner, we directed the Tribunal to state a case and refer to this court the following question of law which in our view arose out of the order of the Tribunal:

“Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the Income-tax Officer had failed to exercise the discretion vested in him under section 23(4), before refusing registration and/or renewal of registration of the assessee-firm and in granting registration to the assessee-firm for the assessment year 1961-62?”

3. Hence, the present reference to us at the instance of the Commissioner. In order to arrive at a proper determination of the question, it is necessary to notice the relevant provisions of the Act. There are two sections under which the Income-tax Officer has power to refuse registration of a firm: one is section 26A and the other is section 23(4). Section 26A provides:

“26A. (1) Application may be made to the Income-tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time beirg in force relating to income-tax or super-tax.

(2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner as may be prescribed and it shall be dealt with by the Income-tax Officer in such manner as may be prescribed.”

4. The manner of disposal of such an application is prescribed by rules 2 to 6 of the Income-tax Rules and rule 4, which is the material rule, says:

“4. (1) If, on receipt of the application referred to in rule 3, the Income-tax Officer is satisfied that there is or was a firm in existence con stituted as shown in the instrument of partnership and that the application has been properly made, he shall enter in writing at the foot of the instru ment or certified copy, as the case may be, a certificate in the following form, namely:—………

(2) If the Income-tax Officer is not so satisfied he shall pass an order in writing refusing to recognise the instrument of partnership, or the certified copy thereof, and furnish a copy of such order to the applicants”

5. Section 23(4) deals with a case where an assessee fails to make the return required by a notice given under section 22(2) and has not made a return or a revised return under section 22(3) or fails to comply with all the terms of a notice issued under section 22(4) or having made a return, fails to comply with all the terms of a notice issued under section 23(2) and provides that in such a case:

“… 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.”

6. These provisions show that a firm for the purpose of its assessment can apply for registration under section 26A. If the Income-tax Officer is satisfied that the firm is in existence as shown in the partnership and the application has been properly made, he is bound to register it. He can refuse registration under section 26A only if he is not satisfied in regard to these matters. There is no other ground on which he can refuse registration under section 26A. But even where the conditions laid down in rule 4 are complied with and the Income-tax Officer has no power to refuse registration under section 26A, section 23(4) confers upon him an overriding power to refuse registration if the conditions set out in the section are satisfied. The use of the words “may refuse… or may cancel” in contradiction to the words “shall make the assessment” in the preceding part of the section shows that section 23(4) does not prescribe automatic refusal of registration in the event of the fulfilment of the conditions set out in the section but confers a discretionary power on the Income-tax Officer to refuse registration in such a case. The Income-tax Officer can, therefore, in the exercise of his descretion under section 23(4) refuse registration in a case falling under that section even though the conditions laid down in rule 4 are complied with and he could not have refused registration under section 26A. The Income-tax Officer has thus two powers to refuse registration of a firm; one under section 26A, and the other, under section 23(4). The two powers are distinct and independent; the scope of the two powers is different and different conditions govern the exercise of the two powers. But that does not mean that the Income-tax Officer cannot exercise both the powers simultaneously and make an order refusing registration under both the sections. The Income-tax Officer can refuse registration under section 26A or in the exercise of his discretion under section 23(4) or simultaneously under section 26A and in the exercise of his discretion under section 23(4). It is, therefore, necessary to determine whether the order in the present case refusing registration to the assessee was made under section 26A or under section 23(4) or both under section 26A and section 23(4). If the order was made under section 26A and not under section 23(4) as held by the Tribunal, it is obvious that the Tribunal was right in granting registration to the assessee since the grounds on which registration was refused by the Income-tax Officer were clearly not relevant under section 26A and the order of the Income-tax Officer could not be sustained under that section. But such in our view is not the position. The order of the Income-tax Officer refusing registration was an order both under section 26A and section 23(4).

7. Turning to the order of the Income-tax Officer we find—and that was the circumstance strongly relied upon on behalf of the assessee—that the order is intituled “Order under section 26A” but no undue emphasis can be placed on the mere title of the order. The question as to the true nature of the order, whether it was made under section 26A or under section 23(4) or under both, must be decided not by reading one or other part of the order in isolation but on a proper reading of the order as a whole in all its parts and in doing so, two principles of importance must not be overlooked. The first is that a construction must be placed which gives meaning to every part of the order and does not render any part superfluous or meaningless and the second is that regard must be had to the substance of the order and not the form. If we read the order in this manner, it is clear that the order is made by the Income-tax Officer not only under section 26A but also under section 23(4). The Income-tax Officer has not only referred to section 23(4) but in express terms he has stated that he is exercising the discretion vested in him under that section. The words “…the assessment is being completed under section 23(4) and under the discretion vested in this section, I refuse to renew registration…” leave no doubt that the Income-tax Officer was consciously exercising his power under section 23(4) when he refused the application for registration. The argument urged on behalf of the assessee was that the reference to section 23(4) was merely a casual reference and there was nothing to show that the discretion under that section was exercised by the Income-tax Officer. But this argument is plainly contrary to the clear and specific words used by the Income-tax Officer in the order and fails to give due effect to them. The argument in effect comes to this; that though the Income-tax Officer has in terms stated that he is refusing to renew registration in exercise of the discretion vested in him under section 23(4), still he must be held not to have exercised the discretion under that section. We cannot accept such an argument: the argument carries its own refutation. It is undoubtedly true that, before referring to section 23(4), the Income-tax Officer also pointed out the difficulty of verifying the correctness of the statements made in the application owing to the failure of the assessee to file a return and the partners' accounts and this statement, read with the title of the order, might suggest that the Income-tax Officer was also acting under section 26A. But that does not exclude the conclusion which follows clearly from the succeeding words quoted above, that the Income-tax Officer was also exercising his discretion under section 23(4) in making the order. The order was an order under both sections 26A and 23(4) and the Income-tax Officer simultaneously exercised his powers under both the sections in refusing registration to the assessee.

8. It was however urged on behalf of the assessee that the order of the Income-tax Officer did not state the grounds on which the Income-tax Officer was alleged to have exercised his discretion under section 23(4) and the inference was, therefore, irresistible that he ha, d not really exercised his discretion under section 23(4) and the reference to section 23(4) was merely a casual reference. The assessees pointed out that the discretion to be exercised by the Income-tax Officer under section 23(4) is a judicial discretion and, therefore, if the Income-tax Officer was exercising his discretion under section 23(4), he would have certainly given the grounds in support of the exercise of the discretion and the absence of the grounds clearly indicated that there was no exercise of discretion by him under section 23(4) This argument is plainly incorrect and must be rejected. The assessee is undoubtedly right and we agree with it when it says that the discretion to be exercised under section 23(4) is a judicial discretion and it cannot be exercised arbitrarily or capriciously but must be exercised on proper relevant considerations based on the material on record but we do not agree that from mere absence of the statement of reasons in the order as to why the discretion is exercised in a particular manner, it would be legitimate to conclude that the discretion is not exercised at all. If no reasons are given by the Income-tax Officer, it may be a valid ground for contending that the discretion is exercised arbitrarily or capriciously and the assessee may agitate this grievance before the appellate forum but it cannot support the inference that there is in fact no exercise of discretion at all by the Income-tax Officer. Whether the power under section 23(4) has in fact been exercised or not must depend on the terms of the order and so far as that goes, there is no doubt that, on a true construction of the order, the Income-tax Officer did exercise his power under section 23(4) in rejecting the application for registration. Strong reliance was placed on behalf of the assessee on a decision of the Andhra Pradesh High Court in Commissioner of Income-tax v. Krishnamma and Co. [1955] 28 I.T.R 273., but that decision does not carry the matter any further. It does not lay down any principle different from what we have stated. In that case the application for registration of a firm under section 26A was rejected on the ground that the partnership was illegal since a minor was made a full-fledged partner liable to share the losses also but at the end of the order there was an observation to the following effect:

“I am unable to register the firm now, inasmuch as the assessment of the firm is made under section 23(4) of the Act.”

9. On appeal it was found that the partnership deed did not make the minor liable for losses and the partnership was, therefore, not invalid and on this view the order refusing registration was not sustainable under section 26A. But the order was sought to be supported, on the basis of the aforesaid observation, as one made under section 23(4). Dealing with this contention, Snbba Rao C.J (as he then was) said:

“A perusal of the entire order clearly shows that the Income-tax Officer refused registration as, in his view, the provisions of rule 4 of the Income-tax Rules were not complied with. He did not exercise his discretion under section 23(4), but made only a casual observation in regard to his power under that section. Section 23(4) does not purport to prescribe an automatic refusal of registration. Under that section, discretionary power is conferred on the Income-tax Officer to refuse registration in case an assessment is made under that section and, in this case, he did not purport to exercise his discretion one way or other. The order must, therefore, be deemed to have been made under section 26A(1)…..”

10. We do not see how these observations lend any support to the argument of the assessee. We entirely agree that section 23(4) does not purport to prescribe automatic refusal of registration but confers power on the Income-tax Officer to refuse registration if the conditions specified in that section are satisfied. But the question in every case must be whether the discretionary power conferred under section 23(4) has in fact been exercised by the Income-tax Officer. On a construction of the order of the Income-tax Officer in that case, the Andhra Pradesh High Court held that the discretionary power under section 23(4) was not exercised by the Income-tax Officer and the last words in the order quoted above were merely a casual observation. But when we turn to the present order of the Income-tax Officer, we find that in so many terms he has stated that he is refusing registration in the exercise of discretion conferred upon him under section 23(4). This decision of the Andhra Pradesh High Court does not, therefore, compel us to reach a different conclusion.

11. We are, therefore, of the view that the order of the Income-tax Officer refusing registration to the assessee was an order both under section 23(4) and section 26A. It is undoubtedly true that the order was bad in so far as it rested on section 26A for the grounds set out in the order were not grounds on which registration could be refused under section 26 A. But the order being also one under section 23(4), it would have to be considered by the Tribunal whether the discretion under that section was properly exercised by the Income-tax Officer in refusing registration to the assessee. We, therefore, answer the question referred to us by saying that the Income-tax Officer did exercise the discretion vested in him under section 23(4) before refusing registration to the assessee and the Tribunal was in error in granting registration to the assessee on the ground that the order was not an order under section 23(4) but was an order only under section 26A. The assessee will pay the costs of the reference to the Commissioner.