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Issues Involved:
1. Assessment under Section 23(4) of the Indian Income Tax Act, 1922. 2. Validity of the Income-tax Officer's power to determine the sum payable. 3. Registration and its impact on super-tax liability. 4. Competency of appeal to the Assistant Commissioner. 5. Application of Sections 34 and 35 of the Act concerning reassessment and rectification of mistakes. Detailed Analysis: 1. Assessment under Section 23(4) of the Indian Income Tax Act, 1922: The respondents, a firm operating outside British India, were assessable to taxation under the Indian Income Tax Act, 1922. They ignored notices served by the Income-tax Officer under Section 22(2) and (4) to make a return of their income and produce relevant accounts. Consequently, the Income-tax Officer made an assessment to the best of his judgment under Section 23(4). The term "assessment" was debated, with questions about whether it included the determination of tax payable or merely the computation of income. The judgment clarified that even if not explicitly stated, the power to determine the sum payable is implied within the section, corroborated by Section 29, which mandates serving a notice of demand specifying the sum payable. 2. Validity of the Income-tax Officer's power to determine the sum payable: The Income-tax Officer's assessment dated January 17, 1927, included a computation of income and a notice of demand under Section 29. The assessment became final and conclusive as no appeal lay against an assessment made under Section 23(4). The Commissioner later canceled the firm's registration, affecting their super-tax liability. However, the judgment emphasized that the final assessment could not be reopened except under Sections 34 and 35, which provide specific circumstances and time limits for reassessment and rectification. 3. Registration and its impact on super-tax liability: The respondents applied for and were granted registration on January 17, 1927, which exempted them from super-tax. The Commissioner later canceled this registration, claiming the partnership deed was invalid. The respondents conceded that they could be liable for super-tax if proper steps were taken. The Income-tax Officer issued a new order on May 4, 1929, assessing super-tax, but this was more than a year after the initial assessment, raising questions about its validity. 4. Competency of appeal to the Assistant Commissioner: The respondents appealed to the Assistant Commissioner, challenging the Income-tax Officer's power to issue the May 4, 1929 order. The Assistant Commissioner dismissed the appeal on its merits without addressing its competency. The Commissioner later quashed the appellate proceedings, asserting that no appeal lay against an assessment under Section 23(4). The judgment clarified that the appeal was competent as the order was not a fresh assessment under Section 23(4) but should have been made under Sections 34 or 35. 5. Application of Sections 34 and 35 of the Act concerning reassessment and rectification of mistakes: Sections 34 and 35 prescribe the only circumstances and time limits for making fresh assessments or issuing new notices of demand. Section 34 allows reassessment within one year if income has escaped assessment or been assessed at too low a rate. Section 35 allows rectification of mistakes within one year from the date of demand. The judgment concluded that the Income-tax Officer's May 4, 1929 order was invalid as it was issued beyond the permissible time limits and without following the procedures outlined in these sections. Conclusion: The judgment dismissed the appeal, affirming that the Income-tax Officer had no power to issue the May 4, 1929 order, and the respondents' appeal to the Assistant Commissioner was competent. The final assessment made on January 17, 1927, could not be reopened except under the specific provisions and time limits of Sections 34 and 35. The appeal was dismissed with costs, and the decision was advised to His Majesty accordingly.
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