SIR PADAMPAT SINGHANIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THERE is one common question of law referred to us in these three references. The question formulated is as follows :

(2.) THE facts relating to this matter are very simple and are not disputed. In compliance with notices issued under S. 23(2) of the Indian IT Act the three assessees, Sir Padampat Singhania, L. Kailashpat Singhania and L. Lakshmipat Singhania, filed their returns. We may mention that these were three separate cases, the three brothers being separate. The notices were issued to them as heads of the HUF represented by each. The ITO then issued notices under S. 22(4) for production of certain account books. These notices were not complied with and he then proceeded to make the assessment under S. 23(4) of the IT Act. No application under S. 27 of the IT Act was filed on behalf of any of the three assessees for cancellation of assessment under S. 23(4) and making a fresh assessment under S. 23(3). The three assessees, however, straightaway filed three appeals before the AAC. The AAC went into the question whether the ITO was justified in making the assessment under S. 23(4) instead of under S. 23(3) and he came to the conclusion that the ITO was not so justified under S. 23(4) and after having recorded that finding he considered the assessment on the merits and made certain adjustments, and so far as Sir Padmapat Singhania Page 2 of 6CTR

(3.) THE point is covered by a recent decision of this Court in Chhotelal Gobardhan Das vs. CIT (1953) 23. ITR 272 (All) : (1953) 23 ITR 272 (All). In that case an application under S. 27 had been filed and had been disposed of. Thereafter there were two appeals before the AAC, one against the order under S. 27 and the other against the assessment under S. 23(4). Both the appeals were disposed of by the AAC. The assessee then filed one appeal before the Tribunal against the order of the AAC the appeal against the assessment under S. 23 (4). He filed no appeal against the order of the AAC in the appeal filed against the order under S. 27, and the question was whether the Tribunal could in that appeal go into the question whether the ITO was justified in making assessment under S. 23(4). We held that the appeal before the Tribunal related to the quantum of the tax payable and in that appeal the question, whether there was sufficient cause for not complying with the previous notice, did not arise, no appeal having been filed against the order under S. 27, though an appeal was provided for by the Indian IT Act.