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Issues Involved:
1. Principal place of business determination under Section 64 of the Income-tax Act, 1922. 2. Validity of summary assessment amidst a bona fide dispute. 3. Duty of Income-tax authorities under Section 64(3). 4. Jurisdiction of Income-tax authorities to assess a dissolved firm. Issue-wise Detailed Analysis: 1. Principal Place of Business Determination: The primary issue was whether the assessee's business was carried on in Cawnpore within the meaning of Section 64. The court noted that the Income-tax Officer of Cawnpore assessed the entire profit of the business presuming Cawnpore as the principal place of business without resolving the dispute as required by Section 64(3). The court emphasized that the principal place of business should be where the firm's directing minds operate, not necessarily where the bulk of the practical business is conducted. The facts indicated that the Calcutta firm initiated and financed the partnership, the contract with the East Indian Railway was made in Calcutta, and payments were made to Calcutta. Thus, the court concluded that there was no evidence to support that Cawnpore was the principal place of business. 2. Validity of Summary Assessment Amidst Bona Fide Dispute: The court addressed whether the Income-tax authorities acted in accordance with the Act by making a summary assessment during an ongoing bona fide dispute regarding the place of assessment. The court held that the assessment should have been decided in accordance with Section 64(3), which requires the determination of the principal place of business by the Commissioners concerned or the Board of Inland Revenue if the dispute involves more than one province. The court found that the Income-tax Officer's assumption of jurisdiction without resolving the dispute was unauthorized and illegal. 3. Duty of Income-tax Authorities under Section 64(3): The court affirmed that it was the duty of the Income-tax authorities to obtain a decision under Section 64(3) when a question about the principal place of business arises. The Income-tax Officer should have communicated the dispute to the Commissioner, who would then determine the principal place of business, giving the assessee an opportunity to present their views. The failure to follow this procedure resulted in an illegal assessment. 4. Jurisdiction to Assess a Dissolved Firm: The court considered whether the Income-tax authorities at Cawnpore had jurisdiction to make an assessment on the firm after it had dissolved. The court noted that if the business had been carried on wholly in Cawnpore, the dissolution would not deprive the Income-tax Officer of jurisdiction to make the assessment. However, since the principal place of business was determined to be in Calcutta, this issue became superfluous. Conclusion: The court concluded that the principal place of business was in Calcutta, not Cawnpore, and the assessment by the Income-tax Officer in Cawnpore was unauthorized. The court emphasized the importance of following the procedure outlined in Section 64(3) and held that the existence of an alternative remedy under this section did not bar the appellant's right to have a case stated and the High Court's jurisdiction to answer the questions. Both parties were ordered to bear their own costs due to the irregularities and the destruction of books by the assessee.
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