MANNILAL SAGARMAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question of law which has been referred to us in this reference is 'whether in the circumstances of the case as stated and in the absence of proceedings under Section 27 of the Income-tax Act, the Tribunal was right in law in refusing to look into the validity of the assessment made under Section 23 (4) of the Income-tax Act in appeal against the quantum assessment.'

(2.) THE facts and circumstances in which this question arose are very brief and simple. For the assessment year 1943-44, the assessee had account books showing a net profit of Rs. 29,375. THE Income-tax Officer called on the assessee to produce certain documents under Section 22 (4) of the Act. THE accounts and documents required were net produced, and it was held by the Income-tax Officer that the assessee had deliberately suppressed them even though they existed. THE Income-tax Officer therefore proceeded to make a best judgment assessment under Section 23 (4) of the Act. THE assessee did not file any application under Section 27 of the Act for reopening the assessment and instead filed an appeal against the quantum assessment.

(3.) CONSEQUENTLY, our answer to the question referred to us is that in an appeal under Section 30 (1) of the Income-tax Act against an assessment made by the Income-tax Officer under Section 23 (4) of the Income-tax Act, it is open to the assessee to challenge the assessment or its validity on any ground other than the grounds on the basis of which he could have made an application under Section 27 of the Income-tax Act for cancellation of the assessment and for a fresh assessment. In the circumstances of this case the parties shall bear their own costs of the reference.