TMI Blog1965 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... ng. The account books required by this notice under section 22(4) were never produced but on 26th May, 1958, which was the last date for compliance with the last of these notices, one of the ex-partners of the firm, the firm by that time having been dissolved, appeared before the Income-tax Officer and sought an adjournment on the ground that another person, by name Chandiprasad, who was looking to the income-tax matters of the assessee-firm, had met with an accident and was unable to attend. The adjournment was refused by the Income-tax Officer and he proceeded to a best judgment assessment, which he made on the 27th May, 1958. Simultaneously with the assessment of the firm he also made a best judgment assessment of Chiranjilal, a partner of the firm, who had also failed to comply with the notices issued to him under sections 22(2) and 22(4) of the Income-tax Act. The Income-tax Officer also made an order under section 28 imposing a penalty on Chiranjilal. Applications under section 27 were made by the firm and Chiranjilal to the Income-tax Officer for setting aside the best judgment assessment orders but the said applications were rejected by him. Thereafter, the assessee and Chi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o make a return as required by notice under section 22(2) and also failed to comply with the terms of the notice issued under section 22(4) and the assessee failed to satisfy the Income-tax Officer that he was prevented by sufficient cause from making a return as required by section 22(2), it is obligatory upon the Income-tax Officer to cancel the said assessment and proceed to make a fresh assessment in accordance with the provisions of section 23 as provided in section 27 of the Income-tax Act? A notice of motion has been taken out by the assessee requesting that the question referred to this court by the Tribunal may be reframed and some more material may be taken on record and made part of the statement of the case. The notice of motion, however, has not been very seriously pressed by the learned counsel who appears for the assessee and he has stated that he would only like to draw our attention to the contents of the notice which had been issued to the assessee under section 22(4) in respect of one of the contentions which he will raise before us. We do not, therefore, find it necessary to deal with the notice of motion and make no order on the same. In the order which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lt under section 22 (2) had not been explained, since the other default, viz., the failure to comply with the notice under section 22(4), was explained by the assessee, the best judgment assessment order was liable to be set aside under the provisions of section 27 of the Indian Income-tax Act. In the appeals before the Income-tax Appellate Tribunal, the only contention, which appears to have been urged, was whether the Appellate Assistant Commissioner was right in taking the view that if the assessee had committed more than one default which had led the Income-tax Officer to make a best judgment assessment against him under section 23(4) and if in the application made under section 27 for the cancellation of the said order, the assessees were able to satisfy that there was good and sufficient explanation for one of the defaults committed by it, the best judgment assessment order was liable to be cancelled. The Tribunal answered this question against the assessee and, in consequence, set aside the Appellate Assistant Commissioner's order. The question, as has been framed by the Tribunal and referred to us on the present reference, is also based on the only contention which appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lkhivala wants us to associate that statement with what is contained in the earlier paragraphs which relate to the non-production of the account books on the 26th May, 1958, and hold that the reasons stated in the said earlier paragraphs were meant and intended by the assessee to be the reasons for its failure to submit the return of income for more than a year after the notice to submit the same was given. We do not find anything in the earlier paragraphs which can be regarded as an explanation for the non-submission of the return and the statement in paragraph 4 is a mere factual statement that the return has been submitted on 9th June, 1958. However, from the orders of the Income-tax Officer and the Appellate Assistant Commissioner it does not appear that any submissions were urged before these authorities to explain the failure to submit the return. It appears, on the other hand, that before the Appellate Assistant Commissioner, the default in filing the return was acknowledged but it was contended that since there was good and sufficient explanation for the default of not complying with the notice issued under section 22(4), the best judgment assessment order must be cancelled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed the assessee extension of time to submit the return till the 26th of May, 1958, by the last notice given by him under section 22(4). Mr. Palkhivala argues that if time was thus extended to submit the return till the 26th May, 1958, the assessee could not be said to have committed any default until that date and if for not submitting the return on that date the assessee has a valid explanation, then there is no default at all under section 22(2) which could sustain the best judgment assessment order. He has for that purpose invited our attention to the last notice under section 22(4) which was given by the Income-tax Officer. A copy of the notice has been annexed to the notice of motion taken out by the assessee. In particularising the accounts and documents, which the notice required the assessee to produce, the items mentioned are the books of account for the Samvat Year 2012 and return of income for Samvat Year 2012. Mr. Palkhivala's argument is that the mention of the return of income for the Samvat Year 2012 in this notice amounts to giving an extension of time to the assessee to submit his return until the expiry of the time given by this notice. We do not think tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, he is entitled to have the best judgment assessment cancelled and a fresh assessment made under section 23. It may be, says the learned counsel, that the fresh assessment which may be made may also be a best judgment assessment if all the defaults are not explained, but the best judgment assessment which is made on the basis of all the defaults together must be set aside. In the fresh best judgment assessment which may be made thereafter, the assessee must be entitled to take advantage of complying with that notice for the failure to comply with which he has offered good and sufficient reasons. We do not think that the submission, which has been urged by Mr. Palkhivala, has much force in it. Section 23(4) enumerates the defaults which lead to the consequence of a best judgment assessment and the language of the section shows that the presence of even one of them, though there may be more or all in a given case, requires the Income-tax Officer to proceed to a best judgment assessment. The best judgment assessment which is made by reason of the existence of these faults can only be cancelled under section 27 if sufficient cause has been shown for each of the defaults. It is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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