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Issues:
1. Proper exercise of discretion under Section 27 regarding assessment. 2. Refusal of the Commissioner to state a case and refer a question of law. 3. Compliance with statutory requirements for filing returns. Analysis: Issue 1: Proper exercise of discretion under Section 27 regarding assessment The case involved an assessee, a Hindu undivided family engaged in a money lending business, who failed to file a return in accordance with the statutory requirements. The Income Tax Officer made an assessment under Section 23(4) to the best of his judgment due to the assessee's default. The assessee then sought a fresh assessment under Section 27, claiming sufficient cause prevented timely filing. The Assistant Commissioner upheld the assessment, stating the return did not meet statutory requirements. The Commissioner also refused to interfere. The High Court held that the Income Tax Officer's discretion under Section 27 must be exercised judiciously, considering if the cause shown by the assessee was sufficient. In this case, the failure to comply with note 5 requirements indicated insufficient cause, justifying the Officer's decision. The Court concluded that the discretion under Section 27 was properly exercised. Issue 2: Refusal of the Commissioner to state a case and refer a question of law The Commissioner initially refused to state a case and refer a question of law upon the assessee's request. However, the High Court found the Commissioner's refusal to be erroneous. The Court ordered the Commissioner to pay the costs of the application to compel the case's reference. Subsequently, the Court decided in favor of the Commissioner on the question of law, directing the assessee to bear the costs of the reference. Issue 3: Compliance with statutory requirements for filing returns The case highlighted the importance of complying with statutory requirements for filing returns under the Income Tax Act. The Court emphasized that the notes appended to the return form hold the same validity as the statement of total income. Failure to adhere to these requirements can lead to assessments made to the best of the Officer's judgment. In this instance, the Court found the assessee's reason for non-compliance insufficient, as the necessary information could have been extracted from the books to meet legal obligations. In conclusion, the High Court ruled in favor of the Income Tax Officer's assessment under Section 23(4) and upheld the proper exercise of discretion under Section 27. The Court also rectified the Commissioner's refusal to state a case, emphasizing the importance of adhering to statutory requirements and the need for judicious exercise of discretion in tax assessments.
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