Reasonable opportunity for an assessee to produce accounts is a question of law capable of reference.

Short notice to produce evidence and accounts under sections 23(2) and 22(4) left the assessee without a real opportunity to file books, support the returns, or answer the department's case. The court treated the adequacy of time and opportunity given to an assessee as a question of law capable of reference. It also noted that the Tribunal's own observation that the assessee was not confronted with the department's assumptions supported the existence of a legal issue, not merely a factual dispute. The Tribunal therefore ought to have referred the question to the High Court under section 66(2).

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Issues: Whether the assessee was afforded a reasonable opportunity to produce his books of account, produce evidence in support of the returns, and rebut the case set up by the Income-tax department, and whether the Tribunal was justified in refusing to refer that question as one of law.

Analysis: The notice to produce evidence under section 23(2) and the later notice to produce accounts and documents under section 22(4) were issued on short time. The assessee sought time, and the facts showed that he was not given a real opportunity to comply. The Court treated the adequacy of the opportunity and the sufficiency of time allowed to an assessee as a question of law capable of reference. The Tribunal's own observation that the assessee was not faced with the department's assumptions supported the contention that the matter raised a legal issue and not merely one of fact.

Conclusion: The assessee was not afforded a reasonable opportunity in the circumstances, and the Tribunal ought to have referred the question to the High Court under section 66(2).

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