Appellate power to change computation: Assistant Commissioner may substitute method on appeal after report, altering assessment outcome.

The central issue is whether an Assistant Commissioner on appeal may substitute a different method of profit computation than that adopted by the Income tax Officer. The analysis applies statutory appellate and supervisory principles: a remand for report is permissible, and after considering the officer's report and accounts the Assistant Commissioner may, in exercise of appellate power, confirm, reduce or enhance assessment and substitute a computation method where accounts permit direct determination of profits. The proviso allowing the assessing officer to adopt a method where books are insufficient does not oust appellate supervisory powers. Outcome: appellate substitution of computation method upheld in favour of revenue.

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Issues: Whether the Assistant Commissioner in appeal had jurisdiction to substitute a different method of computation for the method adopted by the Income-tax Officer.

Analysis: The Court examined the statutory scheme governing assessments and appeals under the Income-tax Act, 1922, particularly Sections 31 and 32 read with Section 66(3) and the proviso to Section 13. Section 66(3) empowers the High Court to require the Commissioner to state a case where a question of law arises. Section 31(2) authorises the Assistant Commissioner to call for a report from the Income-tax Officer (a remand for report), and Section 31(3) permits the Assistant Commissioner on hearing to confirm, reduce or enhance an assessment. The proviso to Section 13 permits the Income-tax Officer to compute profits by such method as he thinks best when books do not afford sufficient data, but this proviso does not, by its language, remove the supervisory or appellate powers conferred on higher authorities. The Court treated the Assistant Commissioner's request for a report as permissible under Section 31(2) and held that, having considered the officer's report and the accounts, the Assistant Commissioner was entitled under Section 31(3) to substitute a different method of computation, to disallow flat-rate additions where the accounts permitted direct determination of profits, and to alter the assessment accordingly.

Conclusion: The Assistant Commissioner had jurisdiction in appeal to substitute a different method of computation for the method adopted by the Income-tax Officer; the question is answered in the affirmative (decision in favour of the Revenue).

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