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TMI Blog1937 (2) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ) In the case of any person other than a company whose total income is, in the Income tax Officer's opinion, of such an amount as to render such person liable to income-tax, the Income Tax Officer shall serve a notice upon him requiring him to furnish, within such period not being less than thirty days as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income during the previous year. (3) If any person has not furnished a return within the time allowed by or under sub-S. (1) or sub-S. (2), or having furnished a return under either of those sub-sections, discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made, and any return so made shall be deemed to be a return made, in due time under this section. (4) The Income Tax Officer may serve on the principal officer of any company or on any person upon whom a notice has been served under sub-S. (2) a notice requiring him, on a date to be therein specified to produce, or cause to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make a fresh assessment in accordance with the provisions of S. 23 . 30. (1) Any assessee objecting to the amount or rate at which he is assessed under S. 23 or S. 27, or denying his liability to be assessed under this Act, or objecting to a refusal of an Income-tax Officer to make a fresh assessment under S. 27, or to any order against him under sub-S. (2) of S. 25 or S. 25-A or S. 28 made by an Income-tax Officer, may appeal to the Assistant Commissioner against the assessment or against such refusal or order: Provided that no appeal shall lie in respect of an assessment made under sub-S. (4) of S. 23, or under that sub-section read with S. 27. (2) ... ... (3) ... ... 31. (1) ... (2) The Assistant Commissioner may, before disposing of any appeal, make such further inquiry as he thinks fit, or cause further inquiry to be made by the Income-tax Officer. (3) In disposing of an appeal the Assistant Commissioner may, in the case of an order of assessment,-- (a) confirm, reduce, enhance or annul the assessment, or (b) set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further inquiry as the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the officer was unable to accept such a certificate, and refused to grant any further adjournment. There would appear to be ample ground for his view that the application, backed by such a certificate, was merely a device to obtain a postponement. No accounts were produced or caused to be produced by the respondent, and the officer proceeded as enjoined to do by S. 23 (4) to make the assessment to the best of his judgment. No accounts being available he took into consideration the local repute that the respondent's money-lending business was extensive, and included the purchasing of debts at large profit to himself, and that he was easily the richest man in the District. Further, as stated in the assessment note, local inquiries had shown that his fluid resources amounted to ten lacs. The officer estimated the respondent's income at one lac. From an assessment made under S. 23(4) there is no appeal; but the assessee may endeavour to satisfy the officer as to the relevant question of fact specified in S. 27, and if he succeeds, the officer must cancel the assessment and make a fresh assessment in accordance with the provisions of S. 23. The respondent applied for ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wording of the notice under S. 22(a) (sic) of the Act and the undisputed fact that the assessee was too ill to attend the Court and the further admitted fact that the Income- tax Officer did not pass or communicate to the assessee's servant or to the assessee any order for immediate production of account books or any other fair order, could not the assessee under law claim cancellation of the ex parte assessment order, dated October 19, 1931. (iv) Whether the procedure adopted by the Income-tax Officer in causing notices to be served under Ss. 23(2) and 22(4) of the Income Tax Act was legal and proper and whether the Income-tax Officer could, under the circumstances, proceed under S. 23(4) and make ex parte assessment. (v) In their evidence to substantiate the Income-tax Officer's reasoning in the last paragraph of the order saying that legal enquiries prove that the assessee made in the account year taxable income of a lakh of rupees. (vi) Is not the judgment of the Income-tax Officer vitiated by imaginary assumptions or irregular enquiries and hearsay evidence which the assessee has no chance to meet and which are not borne out by his account books which the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assistant Commissioner that the respondent had not shown sufficient cause for re-opening the ex parte assessment satisfies the test that it was arrived at after the exercise of judicial discretion. They held that several relevant facts have been left out of consideration, viz: (1) that if the respondent's Court agent had been informed that no adjournment would be granted because the account books should have been sent with the Munim, it was possible that the notice for production might have been complied with; (2) that the failure by the officer in observing this elementary rule had contributed to the non-compliance with the terms of the notice; and (3) that the respondent desired to testify in person to the accuracy of the account books. On the finding that the respondent could not by reason of illness himself attend the Court on the appointed day, they were of opinion that the only reasonable finding which should have been recorded was that the respondent had shown sufficient cause for non-compliance with the terms of the notice under s. 23(2) [i.e., the notice as to evidence, not the notice as to producing accounts], and that it followed that he had clearly made out suf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undation for the allegation of wrongful conduct being the facts that (1) no previous intimation had been given of the intention of the officer to refuse a further adjournment on October 19, 1931, which they characterised as failure to observe an elementary rule; and (2) that the respondent had shown sufficient cause for not complying with the notice under S. 23(2). Their Lordships are unable to appreciate this reasoning. This does not appear to be a case of exercising a discretion. Under S. 23(4) the fact of failure to comply with the notice under S. 22 (4) made it compulsory on the officer to make an assessment, and under S. 27 unless the officer is satisfied (and he was not, nor on the facts of this case, could he have been) that the respondent had not a reasonable opportunity to comply or was prevented by sufficient cause from complying with that notice, the assessment must stand. That he had sufficient cause for not complying with another notice is irrelevant. And their Lordships are unaware of any rule by which the officer was bound or ought to announce beforehand how he proposes to deal with an application for an adjournment. The respondent had already obtained one adjourn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the language of the Act for holding that an assessment made by an officer under S. 23(4) without conducting a local inquiry and without recording the details and results of that inquiry cannot have been made to the best of his judgment within the meaning of the section. Nor can they find any such justification in the authorities upon which the Judicial Commissioners appear to have relied. The case of Krishna Kumar v. Commissioner of Income Tax seems to be the foundation of their two rules . The question referred for decision in that case was in the following words:- The Income Tax Officer simply puts 'Business. ₹ 30,000.' No basis or details are apparent. Can this be an assessment to the best of one's judgment? The Court simply answered yes. This, as a decision, does not seem to afford any basis for the rules. But the Judicial Commissioners refer to the fact that the Commissioner stated in his case that the officer had made a local inquiry and had recorded a note of the details and results of his inquiry, and say that it is apparent that the answer would have been in the negative if the Income-tax Officer had made no local inquiry and not placed a detaile ..... X X X X Extracts X X X X X X X X Extracts X X X X
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