Best judgment assessment requires strict statutory default; non-compliance with a section 37 notice did not confer jurisdiction.

Best judgment assessment under section 23(4) of the Indian Income-tax Act, 1922 is confined to the statutory defaults expressly listed in that provision: failure to file a return, failure to comply with a section 22(4) notice, or failure to produce evidence relied on under section 23(2). Non-compliance with a section 37 notice did not, by itself, justify invocation of section 23(4), and the assessment was therefore without jurisdiction and invalid. The existence of remedies under the Act did not bar relief under article 226 where the challenge went to the very assumption of jurisdiction, so the writ petition was maintainable and the assessment was quashed.

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Issues: (i) Whether the Income-tax Officer was justified in making a best judgment assessment under section 23(4) of the Indian Income-tax Act, 1922 on the facts of the case; (ii) Whether the existence of remedies under the Act barred relief under article 226 of the Constitution of India.

Issue (i): Whether the Income-tax Officer was justified in making a best judgment assessment under section 23(4) of the Indian Income-tax Act, 1922 on the facts of the case.

Analysis: Section 23(4) authorises best judgment assessment only where the assessee fails to make a return, fails to comply with a notice under section 22(4), or having made a return, fails to comply with a notice under section 23(2) by not producing the evidence on which he relies in support of the return. The assessee's omission to produce material in response to a notice under section 37 did not by itself attract section 23(4). Since the record did not show that the assessee had relied on the evidence demanded under section 23(2), the statutory conditions for invoking best judgment assessment were not satisfied.

Conclusion: The assessment under section 23(4) was without jurisdiction and invalid.

Issue (ii): Whether the existence of remedies under the Act barred relief under article 226 of the Constitution of India.

Analysis: Although the Act provided remedies by way of reopening and appeal, the challenge went to the very assumption of jurisdiction for the best judgment assessment. In the circumstances, and having regard to the facts including the dispute over service and delay, the availability of statutory remedies did not compel the Court to decline relief under article 226.

Conclusion: The writ petition was maintainable and the Court declined to interfere with the exercise of writ jurisdiction.

Final Conclusion: The assessment was quashed for want of jurisdiction, and the revenue was left free to proceed in accordance with law.

Ratio Decidendi: A best judgment assessment under section 23(4) can be made only on the specific statutory defaults enumerated in that provision, and failure to comply with a notice under section 37 does not substitute for a failure under section 23(2) so as to confer jurisdiction.

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