Incomplete income-tax return and head-office jurisdiction justify best judgment assessment under Section 23(4).

An Income-tax Officer at the head office could require a return covering all branches, and Section 64(4) did not curtail that authority. A return knowingly confined to only part of the assessee's total income was treated as no compliance with the notice under Section 22(2), so Section 23(4) applied rather than Section 23(2), which was limited to a bona fide but incorrect or incomplete return. The time allowed for compliance was found adequate, and the earlier branch-wise return practice did not require continuation. The reference application was rejected, with the Revenue succeeding on the substantive issues.

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Issues: (i) whether the Income-tax Officer at Benares had jurisdiction to call for a return covering the assessee's other branches; (ii) whether the return filed, which omitted branch income, amounted to compliance with the notice under Section 22(2) or attracted proceedings under Section 23(2) instead of Section 23(4); (iii) whether the assessee had sufficient time to comply with the notice; and (iv) whether the earlier practice of demanding separate returns at the other branches should have been continued.

Issue (i): whether the Income-tax Officer at Benares had jurisdiction to call for a return covering the assessee's other branches.

Analysis: The jurisdiction was held to rest with the officer at the head office at Benares, and Section 64(4) was treated as not limiting that power. The Court adopted the view that the officer having jurisdiction at the head office could require a return of the income of all branches.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): whether the return filed, which omitted branch income, amounted to compliance with the notice under Section 22(2) or attracted proceedings under Section 23(2) instead of Section 23(4).

Analysis: A return knowingly confined to only part of the total income was treated as no return within the meaning of the notice under Section 22(2). The Court held that Section 23(4) applied where there was failure to comply with a return required under Section 22(2), while Section 23(2) was confined to cases of a bona fide return that was merely incorrect or incomplete.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (iii): whether the assessee had sufficient time to comply with the notice.

Analysis: The time granted for compliance was held to be adequate on the facts.

Conclusion: The issue was decided against the assessee.

Issue (iv): whether the earlier practice of demanding separate returns at the other branches should have been continued.

Analysis: The matter was treated as one for the Income-tax Officer at the headquarters to decide, and no interference was warranted.

Conclusion: The issue was decided against the assessee.

Final Conclusion: The application for reference was rejected because the assessee failed on all substantive grounds, including jurisdiction, the sufficiency of the return, and the challenge to the assessment procedure.

Ratio Decidendi: A return that deliberately omits part of the assessee's total income is not a compliance return under Section 22(2), and in such a case the Income-tax Officer may proceed to a best judgment assessment under Section 23(4).

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