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Assessment under Section 23(4) of the Indian Income-tax Act for non-compliance with notice to produce account books, applicability of res judicata principle in income-tax proceedings, adequacy of evidence for loss of account books, assessment based on best judgment, and challenge to quantum of assessment. Analysis: The case involved an application under Section 66(2) of the Indian Income-tax Act concerning the assessment of an assessee who claimed the loss of account books for multiple years due to theft. In the assessment year 1945-46, the assessee failed to produce the required account books for the preceding years despite a notice under Section 22(4). The Income-tax Officer made an assessment under Section 23(4) due to the non-compliance. The contention that partial compliance suffices under Section 23(4) was rejected, emphasizing that any default in complying with the notice terms triggers the provision. The judgment clarified that the requirement to produce account books lies with the Income-tax Officer, not the assessee, under Section 22(4). The principle of res judicata does not apply to income-tax proceedings, allowing authorities to revisit prior decisions based on new evidence or due to arbitrary or inadequate previous findings. The Income-tax Officer's discretionary power to assess based on best judgment was upheld, emphasizing the need for adequate evidence to support claims of loss of account books. The court scrutinized the evidence presented by the assessee regarding the alleged loss of account books. It was found that the prior assessments' findings of lost books were not conclusive, as fresh facts and due enquiry were lacking. The Income-tax Officer's assessment under Section 23(4) was deemed lawful, given the inadequacy of evidence supporting the loss claim. The court highlighted that it is not its role to substitute findings of fact made by Income-tax authorities. Lastly, the challenge to the quantum of assessment was dismissed as it was not raised before the Tribunal. The court emphasized that only issues argued before the Tribunal and arising from its findings can be considered for review. The application was ultimately dismissed, upholding the assessment under Section 23(4) and emphasizing the importance of complying with notice terms in income-tax proceedings.
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