Best judgment assessment cancellation requires sufficient cause for every triggering default, not just one notice failure.

Section 23(4) of the Income-tax Act, 1922 required a best judgment assessment where an assessee committed any specified default, and section 27 allowed cancellation only if sufficient cause was shown for the default or defaults that led to that assessment. Read harmoniously, the provisions mean that where multiple defaults triggered the assessment, the assessee must explain each relevant non-compliance. Cancellation cannot be obtained by proving sufficient cause for only one notice while leaving another default unexplained. On that basis, the assessee was not entitled to cancellation because there was no sufficient cause for failure to comply with the section 22(2) notice.

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Issues: Whether an assessee who failed to comply with notices under section 22(2) and section 22(4) of the Income-tax Act, 1922 could obtain cancellation of a best judgment assessment under section 23(4) by showing sufficient cause only for non-compliance with one of the defaults.

Analysis: Section 23(4) required a best judgment assessment when any of the specified defaults occurred. Section 27 permitted cancellation only where sufficient cause was shown for the relevant default or defaults that led to the assessment. The expression used in section 27 had to be read harmoniously with section 23(4), so that an assessee with multiple defaults could not secure cancellation by establishing sufficient cause for only one default while leaving the other default unexplained.

Conclusion: The assessee was not entitled to cancellation of the assessment on proof of sufficient cause for only the section 22(4) notice when there was no sufficient cause for non-compliance with section 22(2). The answer was against the assessee and in favour of the Revenue.

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