1931 (7) TMI 21 - HC - Income Tax

Summary

Issues:
1. Assessment year and year of account for unregistered firm with multiple branches.
2. Notice issued by Income Tax Officer under Section 22 (2) and subsequent default in submitting return.
3. Action taken by Income Tax Officer upon receiving the return showing income.
4. Correctness of Income Tax Officer's actions in issuing notices under Sections 23 (2) and 22 (4).
5. Adequacy of the opportunity given to the assessees to produce evidence in support of their return.
6. Assessment made by Income Tax Officer under Section 23 (4) based on failure to produce books of account.
7. Interpretation of Section 22 regarding deemed return made in due time.
8. Validity of the assessment made by the Income Tax Officer.

Detailed Analysis:
1. The case involves an unregistered firm with branches in different locations, facing assessment for the year 1929-30 with the year of account being Ram-navami 1985.

2. The Income Tax Officer issued a notice under Section 22 (2) for the assessees to submit their total income return by a specified date. Despite delays and petitions for more time due to discrepancies in branch accounts, the assessees were considered in default for not submitting the return on time.

3. Upon receiving the return showing an income of &8377;18,000 with a note of accounts under adjustment, the Income Tax Officer issued notices under Sections 23 (2) and 22 (4) for evidence and accounts of the Head Office and branches.

4. The question arose regarding the correctness of the actions taken by the Income Tax Officer in issuing notices for evidence and accounts under Sections 23 (2) and 22 (4) respectively.

5. The adequacy of the opportunity given to the assessees to produce evidence in support of their return was questioned, especially considering the short notice period provided to comply with the requirements.

6. The assessment made by the Income Tax Officer under Section 23 (4) was based on the failure of the assessees to produce their books of account, leading to a dispute on the validity of the assessment.

7. The interpretation of Section 22 (3) regarding a return made in due time and the entitlement of the assessees to a reasonable opportunity to produce evidence in support of their return was crucial in determining the validity of the assessment.

8. Ultimately, the court held that the assessment made by the Income Tax Officer on 19th December was invalid due to inadequate opportunity provided to the assessees to comply with the statutory requirements, emphasizing the importance of fair treatment and proper adherence to procedural rules in tax assessments.