TMI Blog1976 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... a pleasant journey. As mentioned to you at Rohtak, I have, since deposited 4,00,000 (Rupees four lakhs) in the Hindustan Commercial Bank Ltd., Jaipur, in your name. I am writing this to you for your information so that you may be in a position to furnish the necessary reply to any reference that may hereafter be made to you in this behalf. We are looking forward to the fulfilment of your promise to visit Bombay this month. Please bring Arjan also with you. Yours sincerely, Makhan Lal. Dr. Munshi Ram Gupta, Rohtak. AND Bombay 2-4-49 My dear Munshi Ram, Just a line to inform you that Rs. four lakhs which I had deposited in the fixed deposit account with the Hindustan Commercial Bank Ltd., Jaipur, in November, 1947, in your name have been duly received back by me with interest thereon. Hope you are quite fit. Yours sincerely, Makhan Lal. Dr. Munshi Ram Gupta, Rohtak. Makhan Lal, the author of the letters, was the Managing Director of Delhi Land and Finance Housing and Construction Company Private Ltd. It appears that at the relevant time Makhan Lal had extensive speculation business and was known as the " Silver King " of Bombay. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction for the determination of the Commissioner of Income-tax under section 124(4), proceeded with the assessment. He gave several opportunities to Arjan Dass to adduce evidence. As Arjan Dass failed to adduce evidence, he finally completed the assessment ex parte under section 144. By his assessment order, the Income-tax Officer overruled the objection regarding jurisdiction. He held that the amount of Rs. 4,00,000 deposited on November 8, 1947, in Dr. Munshi Ram's name in the Jaipur Bank was the concealed income of Dr. Munshi Ram. He made the assessment on that basis. An application under section 146 to reopen the best judgment assessment was also rejected by the Income-tax Officer. Arjan Dass as the heir of Dr. Munshi Ram preferred two appeals to the Appellate Assistant Commissioner, one against the best judgment assessment under section 144 and the other against the order under section 146. In the appeal against the assessment, the Appellate Assistant Commissioner overruled the objection to jurisdiction on the ground that it was not raised within the period of 30 days stipulated in the notice under section 148. However, he allowed the appeal on the merits holding that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Appellate Assistant Commissioner had overstepped his jurisdiction under section 250(4) of the Income-tax Act and that, therefore, the Appellate Assistant Commissioner's order was bad in law ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right, in law, in holding that the Appellate Assistant Commissioner had affirmed the Income-tax Officer's order refusing to reopen the best judgment assessment ? 3. Whether, on the facts and in the circumstances of the case, the finding of the Tribunal regarding Shri Arjan Dass, representing the entire estate of the deceased was perverse as being based on no evidence ? 4. If question No. 3 is answered in favour of Shri Arjan Dass is the back ment proceeding vitiated in law in view of his objection about the absence of service of section 148 notice on the other legal representatives ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was in error in law in not determining the value of the estate left by the deceased ? 6. Whether, on the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee to submit the return and produce his account books, the Income-tax Officer made a best judgment assessment under section 23(4) of the Indian Income-tax Act, 1922. An application under section 27 to reopen the assessment was also dismissed by the Income-tax Officer. The Appellate Assistant Commissioner dismissed the appeal against the order under section 27. In dealing with the appeal against the assessment, the Appellate Assistant Commissioner took the view that there was no material justifying the best judgment assessment of Rs. 65,000. He, therefore, directed the Income-tax Officer to submit a report after re-computing the income on the basis of further enquiry by examining the assessee's account books. After the receipt of the report of the Income-tax Officer, the successor Appellate Assistant Commissioner refused to look into the report on the ground that the previous order was without jurisdiction. He, therefore, confirmed the order of assessment of Rs. 65,000. The Tribunal which reduced the assessment of Rs. 65,000 to Rs. 50,000 referred the question of the jurisdiction of the Appellate Assistant Commissioner to the High Court for its opinion. The question as refra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner must be whether the judgment of the Income-tax Officer was properly exercised under section 23(4) and whether the quantum arrived at by the Income-tax Officer was properly and fairly arrived at. But can it be said that under no circumstances is the Appellate Assistant Commissioner permitted to direct the Income-tax Officer to look at the books of account, which books have not been and cannot be produced for the purpose of the ordinary assessment? We fully appreciate the point of view put forward on behalf of the department that the assessees should not be allowed to sit on the fence, take the chance of a best judgment assessment without producing the books and if they find that the best judgment assessment is not in their favour and the production of the books of account which they have suppressed may result in an assessment more favourable to them, then ask for the examination of their books. We also appreciate the point of view of the department that the weight to be attached to the books of account which have not been produced at the proper time must always be very slight. But what we are considering in this reference is not the right of the assessees to produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late Assistant Commissioner can, under sub-section (2) of section 31, before disposing of any appeal, make such further enquiry as he thinks fit, or cause further enquiry to be made by the Income-tax Officer. This provision vests ample power in the Appellate Assistant Commissioner to remand the case to the Income-tax Officer for fresh disposal if he comes to the conclusion that the basis of the assessment is not valid or the assessment itself is not sustainable. In our view, if the Appellate Assistant Commissioner can remand the case or call for a finding, he can also call for evidence and receive it or hold an enquiry which would place materials before him to make a valid best judgment assessment, subject, however, only to this limitation, that neither the remand order nor the acceptance or receipt of additional evidence should be designed to achieve the object for which an appeal against an order under section 27 was provided for, as otherwise it would amount to holding that the legislature has provided two remedies in respect of the same subject-matter." While expressing our respectful agreement with the observations of Jaganmohan Reddy C.J., we wish to point out that the obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the light of these principles, we find it difficult to say that in the present case the Appellate Assistant Commissioner went beyond the limits of his authority in receiving the additional evidence. The Income-tax Officer had before him the two letters of Makhan Lal which had been produced before the authorities way back in 1956. There was no material before him to doubt the genuineness of the two letters. There was no material to suggest that Makhan Lal had been brought into the picture to camouflage the financial dealings of Dr. Munshi Ram. Yet the Income-tax Officer doubted the genuineness of the letters and thought that Makhan Lal had been introduced into the picture to serve as a stooge for Munshi Ram. The Appellate Assistant Commissioner apparently thought that the inference drawn by the Income-tax Officer was not fair, that there was no material to justify the findings and that the conclusion was not one which could be properly arrived at. He thought that it was unfair to the assessee to throw out of hand the two letters of Makhan Lal produced way back in 1956 without even an attempt to verify whether they were genuine or not. Therefore, he sought additional evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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