Valid appointment, reasonable opportunity, and appellate rights govern assessment and best judgment powers under tax law.

Assessment under the Act required a valid appointment to the office exercised: authorisation merely to perform an Income-tax Officer's functions did not make the officer substantively appointed, so the assessment could not stand on that basis. On reassessment, the absence of a fresh notice under the agent provisions did not invalidate the proceedings where the assessees had accepted their status for the year, but a best judgment assessment was unsustainable because no reasonable time was given after retrospective validation of the notice to produce books. The appeal right was determined by the law in force when the assessment order was actually passed, so an appeal lay against the best judgment assessment.

---

---

Issues: (i) whether an Assistant Income-tax Officer appointed merely to perform the functions of an Income-tax Officer could lawfully make the assessment order; (ii) whether the reassessment and best judgment assessment were valid in the absence of a fresh notice under the statutory provision governing agents and in the circumstances of the validated notice to produce books; and (iii) whether an appeal lay against an assessment made under the best judgment provision of the Act.

Issue (i): whether an Assistant Income-tax Officer appointed merely to perform the functions of an Income-tax Officer could lawfully make the assessment order.

Analysis: The appointment order and the Gazette notification described the officer as an Assistant Income-tax Officer and only authorised him to perform the functions of an Income-tax Officer and hold charge of the section. A mere authorisation to discharge functions does not amount to a substantive appointment to the office itself. The assessment orders were also signed in the capacity of Assistant Income-tax Officer, which reinforced that no appointment as Income-tax Officer had been made.

Conclusion: The officer was not duly appointed as an Income-tax Officer, and the assessment order made by him could not be sustained on that footing.

Issue (ii): whether the reassessment and best judgment assessment were valid in the absence of a fresh notice under the statutory provision governing agents and in the circumstances of the validated notice to produce books.

Analysis: For the relevant assessment year the assessees had already been assessed and had paid tax as statutory agents, and their conduct amounted to acceptance of that status for that year. As to non-compliance with the notice to produce books, the assessees were justified in resisting compliance until the notice became legally effective by reason of the retrospective validating ordinance. Once the notice was validated, they were entitled to reasonable time to comply, but no such time was afforded before the best judgment assessment was made. In those circumstances the refusal to allow time and the making of the assessment without it were treated as arbitrary and not based on a fair judicial exercise of judgment.

Conclusion: The challenge to the reassessment on the ground of absence of a fresh notice failed, but the best judgment assessment was invalid for want of reasonable opportunity and proper exercise of judgment.

Issue (iii): whether an appeal lay against an assessment made under the best judgment provision of the Act.

Analysis: The amendment removing the prohibition on appeals was treated as applicable to assessments made after its commencement. The right of appeal was not defeated merely because the assessment proceedings had earlier begun, since no assessment order had been made before the amendment took effect. The statutory bar was directed to assessments made while the earlier provision was in force, not to pending proceedings in which the final order was made later.

Conclusion: An appeal did lie against the assessment order made under the best judgment provision.

Final Conclusion: The reference was answered substantially against the Commissioner, with the principal assessment-related objections resolved in favour of the assessees, and costs were awarded accordingly.

Ratio Decidendi: A person can be assessed only by an officer validly appointed to the office, and where a statutory notice is retrospectively validated the assessee must nevertheless be given a reasonable opportunity to comply before a best judgment assessment is made; an appealable right is determined by the law in force when the assessment order is actually passed.

---