Rejection of unreliable books and estimated assessment did not raise a question of law on these facts.

Rejection of unreliable books and an estimated assessment made under the statutory scheme did not, on these facts, raise a referable question of law. The books were scrutinised and found unreliable, and the estimate was based on a rational examination of the accounts and surrounding material rather than arbitrary guesswork. A challenge directed only to the correctness of factual appreciation of doubtful accounts remains factual in nature, not a legal question. The reference application was therefore dismissed.

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Issues: Whether the rejection of the assessee's books as unreliable and the assessment made on an estimated basis under the proviso to Section 13 and Section 23(3) of the Income-tax Act, 1922 raised any referable question of law.

Analysis: The assessee's books were found unreliable after notice and scrutiny, and the Income-tax Officer proceeded to assess under Section 23(3) by applying the proviso to Section 13 for computation. The assessment was not based on a mere guess or arbitrary figure, but on a rational examination of the books and surrounding material. A question turning only on the correctness of the factual appreciation of unreliable accounts does not become a question of law merely because it is challenged as erroneous. On the facts, the officer acted within the statutory scheme and the estimate could not be treated as capricious, dishonest, or capricious guesswork.

Conclusion: No question of law arose from the assessment or from the rejection of the books, and the application for reference was rightly dismissed.

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