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Issues:
- Interpretation of section 27 of the Indian Income-tax Act regarding reopening assessments based on certain circumstances. - Whether an assessee can raise a contention in an appeal against an assessment without making an application under section 27. - Determining the justification of the Income-tax Officer in holding that books of account were suppressed and making a best judgment assessment. Analysis: 1. The judgment involves a reference under section 66(1) of the Indian Income-tax Act, where the Tribunal raised a question regarding the assessee's right to prove the absence of books of account for a specific business during an appeal against the assessment made under section 23(4) of the Act. 2. The case pertains to an assessee, a Hindu undivided family with business operations in various locations, including Ganganagar. The Income-tax Officer assessed the tax under section 23(4) based on a best judgment assessment due to the alleged suppression of account books from Ganganagar by the assessee. 3. An appeal was filed by the assessee, but the Appellate Assistant Commissioner and the Appellate Tribunal at Bombay did not consider the contention that no separate books were maintained at Ganganagar, as no application under section 27 of the Act was made. 4. The main query raised in the reference was whether it was obligatory for the assessee to file an application under section 27 when the contention about the absence of books of account at Ganganagar was rejected, and if the same contention could be raised in the appeal against the assessment. 5. Section 27 of the Act allows for a de novo inquiry under specific circumstances, but it does not cover situations where the existence of account books is disputed. The section enables reopening assessments in cases of failure to make a return, non-receipt of notices, or inability to comply with notice terms. 6. The judgment emphasized that section 27 does not apply when the Income-tax Officer concludes that account books exist despite the assessee's claim to the contrary. The section only allows for reassessment based on the circumstances specified therein, which do not align with the present case's facts. 7. The judgment clarified that in an appeal against the quantum of assessment, the key issue is whether the Income-tax Officer's decision to disregard or make a best judgment assessment due to suppressed books of account was justified, irrespective of the method used to compute the income. 8. It was determined that an appeal under section 30 involves assessing the justification of the Income-tax Officer's actions regarding suppressed books and best judgment assessments. The judgment concluded that an application under section 27 was not a prerequisite for raising contentions in such appeals. 9. Ultimately, the Court answered the reference affirmatively, stating that the Appellate Assistant Commissioner should have evaluated the assessee's claim regarding the absence of account books. The judgment resolved the issues raised, holding the Department liable for costs and providing clarity on the legal interpretation of the relevant sections of the Income-tax Act.
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