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TMI Blog1925 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... ion with regard to the first two items is whether they represented interest on loans taken by the firm from the persons to whom the sums were paid. The question with regard to the third item is whether the sum of ₹ 20,155 which was paid to persons outside British India should be treated as part of the assessee's income, or whether under the provisions of section 42 of the Act, it should be treated as the income of the recipients and the tax collected from the assessee as agent on their behalf. In the latter event the rate would be lower than if the sum in question were treated as part of the assesse's income. It appears that the assessee carries on business at Monghyr and other places in this Province as well as at Calcutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was ordered to produce further evidence by the 1st November. On that date further time was given up to the 26th November for the production of accounts. The accounts were then examined in the office with the result that a recommendation was made that the assessee should be assessed at the sum of ₹ 45,228-13-3. On the 25th January 1924 he was served with notice to show cause by the 3rd February why he should not be assessed at that sum. He failed to appear on the day fixed but on the following day filed a petition saying he was ill and could not appear and asked that he might be assessed on the basis of his accounts already produced. On the 6th February he was also served with notice to show cause by the 14th why he should not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced. It was not, in my opinion, a case where the assessee failed to comply with a notice issued under subsection (2) of section 23 so as to make it incumbent on the Income-tax Officer to make the assessment under sub-section (4) of section 23. The evidence that the assessee wished to rely upon was all before the Income-tax Officer and assessment was rightly made under section 23(3). It was suggested in the course of argument that the assessment could not in the circumstances be made under the third-sub-section but should have been made under sub-section (4) as the terms of the notice, if any, were not complied with, but even so and assuming the assessment should have been under sub-section (4), this would not help the assessee as in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was merely an alternative in the event of the sum being proved to be interest on loans due to persons outside British India. Both questions might have to be considered but the second would only arise in the event of the sum in question being found to be interest on loans and in my opinion the notice of the. 6th February did not preclude the Income-tax Officer from treating the sum in question as part of the assessee's taxable income in the absence of any explanation or any evidence to the contrary. With regard to the two sums of ₹ 5,357 and ₹ 5,278 the Commissioner was further directed to consider the question whether there was any evidence that these sums were paid to the recipients thereof as interest on partners' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are usually kept, he concluded that these payments represented interest on a partner's capital debited as frequently happens in the names of various relations. Again I think the Income-tax Officer was in the circumstances justified in drawing this inference. I have already dealt with the questions in dispute as to the item of ₹ 20,155. I may add that it appears from the Commissioner's statement of the case that during the pendency of the appeal the assessee in a petition stated that he was not the agent of the persons to whom this sum was paid although at a later age when the matter was before the Commissioner on review the assessee's pleader stated that he wished to be assessed as agent. As the Commissioner of Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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