Limitation under Section 34(3): assessment date, not service, governs time-bar; best-judgment estimates upheld when supported by contemporaneous evidence.

Section 34(3) governs the time-bar by reference to the date the assessing officer makes the order within the statutory period, not the subsequent date of service; accordingly the March 29, 1957 assessment is not time-barred. Under the duty in Section 23(4) an assessing officer may make a best-judgment assessment where the assessee defaults, provided the estimate rests on relevant contemporaneous material, prior records and not mere suspicion; on those facts the Tribunal's confirmation of the reduced estimate is supported by evidence and the income estimate is sustainable in law.

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Issues: (i) Whether the assessment made on March 29, 1957, is barred by limitation under Section 34(3) of the Income-tax Act; (ii) Whether the estimate of the income for the assessment year 1952-53 at Rs. 50,000 is sustainable in law.

Issue (i): Whether the assessment dated March 29, 1957 was barred by limitation because a copy of the order and demand notice was served on the assessee only on April 6, 1957.

Analysis: The Court examined the language of Section 34(3) of the Income-tax Act, 1922 and distinguished authorities cited by the assessee concerning communication-based limitation rules in other statutes. The Court held that Section 34(3) prescribes the time-limit for making an assessment measured from the end of the year in which the income was first assessable and that the operative date is the date the assessing officer made the order, not the date on which a copy of the order or demand notice was served.

Conclusion: The assessment made on March 29, 1957 is not barred by limitation; issue decided against the assessee.

Issue (ii): Whether, on the facts, the estimate of income at Rs. 50,000 for assessment year 1952-53 is sustainable.

Analysis: The Court reviewed the materials available to the assessing officer and the Tribunal, including contemporaneous reports of unauthorised purchases and stock discrepancies, a partner's letter indicating large undisclosed profits, prior high assessments in earlier years, and the assessing officer's duty under Section 23(4) to make a best judgment assessment where the assessee defaulted in furnishing information. The Court applied authorities on the permissible scope of Tribunal fact-finding, noting that findings cannot rest on mere suspicion but that assessing authorities may rely on local knowledge, prior returns, and relevant material to form a fair estimate. The Tribunal's confirmation of the Appellate Assistant Commissioner's reduced estimate was held to be supported by material beyond mere conjecture.

Conclusion: The estimate of income at Rs. 50,000 is sustainable in law; issue decided against the assessee.

Final Conclusion: Both questions referred were answered against the assessee; the assessment stands and the tax estimation of Rs. 50,000 is upheld.

Ratio Decidendi: Under Section 34(3) of the Income-tax Act, 1922 the validity of an assessment is determined by the date the assessing officer makes the order within the statutory period, not by the subsequent date of service of the order; and under Section 23(4) of the Income-tax Act, 1922 an assessing officer may, in default of information, make a best-judgment assessment based on relevant contemporaneous material and prior records, provided the conclusion is supported by evidence and not mere suspicion.

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