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TMI Blog1962 (3) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... im by his father, who collected outstanding due to him from third parties in the Federated Malary States. A sum of ₹ 11,430-8-10 was alleged to have been advanced by the assessees father during his lifetime but collected by the assessee and brought to India. The Income Tax Officer however chose to treat these sums of money as income earned by the assessee from undisclosed sources. The order of assessment is dated March 29,1956. The officer acted under section 23(4) of the Act in making the assessment. That is a provision which enables the officer to make a best judgment assessment consequent on default by the assessee in complying with the statutory notices issued to him under section 22(4) or 23(2). The assessee filed an appeal against this order and also filed an application under section 27 of the Act to have the assessment cancelled. The ground on which the assessee invoked the aid of section 27 was that he had not received any notice from the officer under section 22(4). On August 24, 1956, the officer passed an order cancelling his previous assessment and on the same day reassessed the assessee again holding that this sum of ₹ 29,430-8-10 was income from hidden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in its order submitting the appeal as follows : Here the assessment under section 23(4) had been set aside and the assessee had not been damnified at all. We see no reason why there should be an appeal in the circumstances. We agree with the Appellate Assistant Commissioner that the appeal becomes infructuous as it is misconceived and dismiss it. 6. Against the order of reassessment dated August 24, 1956, passed by the Income Tax Officer the assessee preferred appeals to the Appellate Assistant Commissioner and to the Income Tax Appellate Tribunal raising various contentions which need not be set out. He failed to establish that the alleged capital of ₹ 29,430-8-10 was not income from an undisclosed source taxable under section 12 of the Act. Hence on an application by the assessee the above question has been referred to us. 7. It is the validity of the assessment order dated August 24, 1956, passed by the Income Tax Officer which is the target of attack in this reference. Learned counsel for the assessee submits that the assessment is without jurisdiction as it has been made beyond the four year period of limitation prescribed under section 34, sub-section (3), of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The only limitation imposed by this second sub-section to section 22(4) upon the Income Tax Officer is that he shall not require the production of any accounts relating to a period more than three years prior to the previous year. Section 23 is the assessment section. The Income Tax Officer may be satisfied with the return made by the assessee and he can complete the assessment accepting the return. If he is not so satisfied he shall under section 23, sub-section (2), serve on the assessee a notice requiring him on a date to be therein specified either to attend his office or to produce or to cause to be produced any evidence on which he may rely in support of the return. On the date specified in the notice after hearing the assessee and scrutinising the evidence that may be produced by him the Income Tax Officer can assess the total income of the assessee and determine the sum payable by him as tax. Now section 23(4) is material and is in these terms : If any person fails to make the return required by any notice given under sub-section (2) of section 22 and has not made a return or a revised return under sub-section (3) of the same section or fails to comply with all the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 23, sub-section (2) or (4). The assessee must show that though he received the notices (section 22(4) or section 23(2) he was prevented by sufficient cause from complying with the said notices. This provision is fairly plain and clear in its terms. The assessee if he had been duly intimated of the proceedings before the officer or had received the statutory notices under section 22(2), (4) or section 23(2) can plead and satisfy the Income Tax Officer that there was sufficient cause for his having committed default in not complying with those notices. 12. Now, Mr. Swaminathan contends that section 27 is hardly applicable to a case like the present where the officer admittedly failed to issue the statutory notice under section 22(4). Reliance is placed upon the order of the Income Tax Officer under section 27 extracted above. We must say that nothing is clear from the said order except the fact that the original assessment was cancelled. The Income Tax Office states in that order that the assessee was represented during the prior proceedings and that he also produced his books of account. It is true that the officer failed to issue the requisite notice under section 22(4). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order under section 27 is bad, because of the bar of limitation. 15. Quite apart from the above considerations, it seems to us that the assessee cannot avoid the applicability of the second proviso to section 34(3) as the terms of that proviso, plain as they are, are fully applicable to the present case. The time bar of four years does not apply to a reassessment made under section 27 . This does not mean that the reassessment was one properly made under section 27. Any order of reassessment which marks the termination of proceedings under section 27 can quite legitimately be called a reassessment under section 27. If the assessee invokes the aid of section 27 and invites the officer to pass an order under that provision and the officer purports to act under that provision, the requirements of the second proviso are fully satisfied. After a reassessment becomes a fail accompli, it would be dangerous to embark upon an investigation of the validity of an order under section 27 at the instance of an assessee seeking to rely upon a bar of limitation under section 34(3). 16. We may also point out that the assessees problem in this case is not so simple as he would like to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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