TMI Blog1937 (2) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... case, leading up to the reference, were taken. They are the following: 22.-(1)....... (2) 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 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 aid 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-section (1) or Sub-section (2), or having furnished a return under either of those Sub-section is, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply, or was prevented by sufficient cause from complying, with the terms of the last-mentioned notices, the Income-tax Officer shall cancel the assessment and proceed to make a fresh assessment in accordance with the provisions of Section 23. 30.-(l) Any Assessee objecting to the amount or rate at which he is assessed under Section 23 or Section 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 Section 27, or to any order against him under Sub-section (2) of Section 25 or Section 25-A or Section 23, 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-section (4) of Section 23, or under that Sub-section read with Section 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,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medical certificate, which, however merely stated that the Respondent was suffering from influenza some fifteen days ago, that he had gone very weak since that time and that he was still weak and suffering from a cough. 5. Their Lordships are not surprised that 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 Section 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'' bad shown that his fluid resources amounted to ten lacs. The officer estimated the Respondent's income at one lac. 6. From an assessment made under Section 23(4) there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the Assessee deliberately derived non-compliance or failed to comply with the notice issued under Section 22(4) of the Income Tax Act. (ii) Whether the circumstances alleged and proved by the Assessee could not in law be deemed to be sufficient cause under Section 27 of the Income Tax Act. (iii) In view of the wording of the notice under Section 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 the 19th October, 1931. (iv) Whether procedure adopted by the Income-tax Officer in causing notices to be served under Section 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 Section 23(4) and make ex parte assessment. (v) Is there evidence to substantiate the Income-tax Officer's reasoning in the last paragraph of the order s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 23(4); but they thought that the omission to make and communicate to the Respondent a definite order refusing an adjournment did considerably detract from the technical legality of the summary assessment order. They answered these points in the affirmative, i.e., against the Respondent. In regard to points (ii) and (iii) they considered whether the findings of the officer and the 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 had 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 to the account-books. On the finding that the Respondent could not by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestions of fact, indeed one might say of self-evident fact, and no reference in regard thereto should have been made under Section 66(2). No question of law was involved; nor is it possible to turn a mere question of fact into a question of law by asking whether as a matter of law the officer came to a correct conclusion upon a matter of fact. The Judicial Commissioners have treated the matter as a wrongful exercise of a judicial discretion, the foundation 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 the 19th October, 1931, which they characterised as a failure to observe an elementary rule; and (2) that the Respondent had shown sufficient cause for not complying with the notice under Section 23(2). 16. Their Lordships are unable to appreciate this reasoning. This does not appear to be a case of exercising discretion. Under Section 23(4) the fact of failure to comply with the notice under Section 22(4) made it compulsory on the officer to make an assessment; and under Section 27 unless the officer is satisfied (and he was not, nor on the facts of this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter, it must be honest guess work. In that sense to the assessment must be to some extent arbitrary. Their Lordships think that the section places the officer in the position of a person whose decision as to amount is final and subject to no appeal; but whose decision if it can be shown to have been arrived at without an honest exercise of judgment, may be revised or reviewed by the Commissioner under the powers conferred upon that official by Section 33. 19. Their Lordships can find up justification in the language of the Act for holding that an assessment made by an officer under Section 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. 20. The case of Krishna Kumar v. The Commissioner 5 I.T.C. 295, 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 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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