Best judgment assessment power where taxpayer withholds required documents; later assessments do not invalidate earlier competence.

Deliberate withholding of books and documents called for by a notice under the income tax statute constitutes non compliance, authorising the assessing officer to make a best judgment assessment; the assessing officer alone determines which documents are required and repeated concealment supports estimation. Competence to assess under the best judgment provision arises from that non compliance, and subsequent assessments or use of the same material in later years do not retroactively invalidate a legally competent earlier assessment.

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Issues: (i) Whether there was non-compliance with the terms of the notice issued under sub-section (4) of Section 22 of the Income-tax Act, 1922; (ii) Whether the Income Tax Officer and the Assistant Commissioner were legally competent to assess the petitioner under sub-section (4) of Section 23 of the Income-tax Act, 1922 when subsequent year assessments used the same material.

Issue (i): Whether there was non-compliance with the terms of the notice issued under sub-section (4) of Section 22 of the Income-tax Act, 1922.

Analysis: Sub-section (4) of Section 22 requires production of such accounts or documents as the assessing officer may require; sub-section (4) of Section 23 mandates assessment to the best of judgment where there is failure to comply with all terms of that notice. The assessing authority is the arbiter of what documents it requires; withholding books called for by the officer, even if some produced books are used in estimation, constitutes non-compliance where the officer repeatedly found concealment and deliberate non-production.

Conclusion: There was non-compliance with the terms of the notice issued under sub-section (4) of Section 22 of the Income-tax Act, 1922.

Issue (ii): Whether the Income Tax Officer and the Assistant Commissioner were legally competent to assess the petitioner under sub-section (4) of Section 23 of the Income-tax Act, 1922 notwithstanding that a subsequent year assessment used the same material.

Analysis: Competence to assess under sub-section (4) of Section 23 arises from failure to comply with the notice under Section 22(4); what occurred in a subsequent year is not a valid criterion to overturn or invalidate a legally competent earlier assessment. An assessing officer's later conduct or that of a successor does not retroactively render the prior assessment incompetent if no legal ground for objection exists to the earlier order.

Conclusion: The Income Tax Officer and the Assistant Commissioner were legally competent to assess under sub-section (4) of Section 23 of the Income-tax Act, 1922.

Final Conclusion: The non-compliance with the notice under Section 22(4) justified a best-judgment assessment under Section 23(4), and subsequent year assessments do not negate the competence or validity of the earlier assessment.

Ratio Decidendi: Where an assessing officer issues a notice under Section 22(4) of the Income-tax Act, 1922 the officer alone determines the documents required; deliberate withholding of books called for by that notice constitutes non-compliance and authorises a best-judgment assessment under Section 23(4) of the Income-tax Act, 1922.

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