Power to require a statement of case does not extend to Commissioner's original orders; original penalty orders therefore upheld.

Validity of assessment: the Commissioner's factual findings that the ITO inspected and signed books, that produced books later differed and that the assessee failed to produce called-for books were accepted, and service on an accredited agent sufficed; assessment under section 23(4) was held valid in favour of the revenue. Legality of penalty and jurisdiction: the Commissioner's exercise of original jurisdiction to impose penalty was sustained and the HC lacks power under section 66 to require a statement of case in respect of a Commissioner's original order. Genuineness of books: factual findings on genuineness were binding and not vitiated by misdirection.

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Issues: (i) Whether the assessment made under section 23(4) of the Indian Income-tax Act, 1922 was valid; (ii) Whether the order imposing penalty under section 28 of the Indian Income-tax Act, 1922 was legal and whether this Court could require the Commissioner to state a case under section 66 in respect of such an original order; (iii) Whether there was misdirection in the finding as to the genuineness of the account books and whether that finding was legal.

Issue (i): Validity of assessment under section 23(4) of the Indian Income-tax Act, 1922.

Analysis: The Commissioner's findings of fact that the Income-tax Officer inspected and signed certain books on 30-7-1926, that the books subsequently produced differed from those inspected, and that the assessee failed to produce the books called for were accepted. Service of the notice upon the assessee's accredited gomastha who produced the books was held to satisfy service requirements. The denial by the assessee of the existence of the required books did not negate liability where evidence supported their existence and non-production.

Conclusion: Held against the assessee; the assessment under section 23(4) was valid (in favour of the revenue).

Issue (ii): Legality of the penalty order under section 28 of the Indian Income-tax Act, 1922 and jurisdiction under section 66 to require a statement of case in respect of an original order by the Commissioner.

Analysis: The Commissioner found procedural irregularity in the Income-tax Officer's show-cause step but, exercising his own jurisdiction, issued an original order imposing penalty. The plain language of section 66 was interpreted as not empowering the High Court to require the Commissioner to state a case in respect of an original order passed by the Commissioner (as opposed to an order passed by the Commissioner on appeal under sections 31 or 32).

Conclusion: Held against the petitioner on jurisdiction; the High Court cannot require a statement of case under section 66 in respect of an original order of the Commissioner, and the Commissioner's exercise of original jurisdiction to impose penalty was sustained (in favour of the revenue).

Issue (iii): Alleged misdirection in the finding about genuineness of account books.

Analysis: The Commissioner's factual findings that the books produced on inquiry differed from those inspected earlier and that the books signed by the Income-tax Officer existed were accepted as binding on this Court. No reappraisal of primary facts was undertaken.

Conclusion: Held against the assessee; there was no sustainable misdirection that would invalidate the finding on genuineness of the books (in favour of the revenue).

Final Conclusion: The petitioner's application seeking a reference under section 66 and relief against the Commissioner's orders was refused; the Commissioner's factual findings and consequent orders were sustained and the relief sought by the petitioner was denied.

Ratio Decidendi: Where a superior court is asked to require the Commissioner to state a case under section 66, that power does not extend to original orders passed by the Commissioner; findings of fact by the Commissioner are binding on the court unless challengeable on grounds validly invoking appellate review.

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