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Issues Involved:
1. Justification of the Appellate Tribunal's estimate of the assessee's share income from the partnership firm. 2. Material basis for the Appellate Tribunal's decision to add Rs. 30,000 to the assessee's disclosed income. Issue-Wise Detailed Analysis: 1. Justification of the Appellate Tribunal's estimate of the assessee's share income from the partnership firm: The first issue pertains to whether the Appellate Tribunal was justified in sustaining the estimate of the assessee's share income from the partnership firm of M.S. Pictures at Rs. 20,000, even though the share income was eventually ascertained at Rs. 15,091. The court noted that the assessee failed to comply with the notice under section 23(2) of the Indian Income-tax Act, leading the Income-tax Officer to complete the assessment under section 23(4) to the best of his judgment. The court emphasized that the provisions of section 23(4) are "express, explicit and mandatory," requiring the Income-tax Officer to make an assessment following the assessee's default. The court referenced the Judicial Committee's observation in Commissioner of Income-tax v. Laxminarain, which stated that failure to comply with the notice made it compulsory for the officer to make an assessment. The court concluded that the estimate of the Income-tax Officer regarding the assessee's share income was not erroneous at the time of the assessment and that subsequent events should not invalidate a best judgment assessment. 2. Material basis for the Appellate Tribunal's decision to add Rs. 30,000 to the assessee's disclosed income: The second issue concerns whether there was material before the Appellate Tribunal to justify the decision to add Rs. 30,000 to the assessee's disclosed income based on an estimate under section 23(4). The assessee filed a return showing a loss of Rs. 60,000 for the assessment year 1953-54, but the Income-tax Officer estimated the income at Rs. 30,000 due to the assessee's failure to appear with supporting evidence. The court noted that the assessee's persistent default left the department no choice but to pass assessment orders under section 23(4). The court highlighted that the assessee had the option to apply for rectification under section 35(5) but failed to do so. The court found no evidence to suggest that the assessment was improper, arbitrary, or capricious. The court also emphasized that appellate authorities should be slow to substitute their judgment for that of the Income-tax Officer in matters of best judgment assessment, citing Singh Engineering Works v. Commissioner of Income-tax. The court concluded that the Tribunal's acceptance of the department's assessment was not an error of law. Conclusion: The court answered both questions against the assessee, emphasizing that the assessee's persistent default justified the best judgment assessments made by the Income-tax Officer and upheld by the Appellate Tribunal. The assessee was ordered to pay the costs of the department, with counsel's fee set at Rs. 250 for each case.
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