Best-judgment assessment distinction preserved appellate remedy where return was filed but accounts were not substantiated.

An assessment is made under Section 23(3) of the Income-tax Act, 1922, and not Section 23(4), where the assessee has filed a return but fails to substantiate it on being called to produce accounts; the mere use of the words "to the best of his judgment" does not convert it into a best-judgment assessment under Section 23(4). Because the assessment was not under Section 23(4), the proviso to Section 30(1) barring an appeal did not apply, so the appellate proceedings were competent. On that basis, the penalty under Section 28 was sustained and the assessee's challenge failed.

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Issues: Whether the appeal before the appellate income-tax authority was incompetent on the ground that the assessment was made under Section 23(4) of the Income-tax Act, 1922, and whether the penalty imposed under Section 28 could be sustained.

Analysis: The assessee had furnished a return of income but failed to substantiate it when called upon to produce his accounts. On that footing, the case fell within Section 23(3) and not Section 23(4). The use by the Income-tax Officer of the words "to the best of his judgment" did not convert the assessment into one under Section 23(4). Since the assessment was not made under Section 23(4), the proviso to Section 30(1) barring an appeal against such an assessment did not apply.

Conclusion: The appellate proceedings were competent, the penalty was valid, and the assessee's challenge failed.

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