Best judgment assessment appeals permit additional evidence and remand, if used to test the assessment and not bypass the separate remedy.

In an appeal against a best judgment assessment under section 23(4) of the Income-tax Act, 1922, the Appellate Assistant Commissioner may examine whether the assessment was properly made on the materials before the Income-tax Officer. The remedies under section 27 and section 31(2) are distinct: section 27 concerns whether sufficient cause existed for non-compliance with notices, while section 31(2) permits the appellate authority to call for further evidence, receive additional material, make further enquiry, or remand the matter to ensure a fair disposal of the assessment appeal. That power is valid so long as it is used to test or correct the assessment and does not circumvent the separate remedy under section 27.

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Issues: Whether, in an appeal against a best judgment assessment under section 23(4) of the Income-tax Act, 1922, the Appellate Assistant Commissioner could call for and receive additional evidence or material not before the Income-tax Officer, and whether he had jurisdiction to remand the matter under section 31(2), subject to the limits of the statutory scheme.

Analysis: The remedies under section 27 and section 31(2) were held to be distinct. An appeal against refusal to cancel an ex parte assessment under section 27 concerns only whether sufficient cause existed for non-compliance with the notices, whereas an appeal against the assessment itself under section 23(4) permits examination of whether the Income-tax Officer exercised a proper best judgment on the materials available to him. The Appellate Assistant Commissioner was held to possess wide powers under section 31(2) to make further enquiry, call for evidence, receive material, or remand the matter where necessary to enable a valid and fair disposal of the appeal. The receipt of additional material was not impermissible merely because it had not been before the Income-tax Officer, provided the power was exercised to test or correct the assessment and not to defeat the separate remedy under section 27.

Conclusion: The Appellate Assistant Commissioner could call for and receive additional evidence or material not available to the Income-tax Officer at the time of making the best judgment assessment and could also remand the matter under section 31(2), subject to the stated limitations, in favour of the assessee.

Final Conclusion: The reference was answered in the assessee's favour, and the appellate authority's power to examine additional material in a best judgment assessment was affirmed within the statutory confines.

Ratio Decidendi: In an appeal against a best judgment assessment, the appellate authority may receive additional evidence and order further enquiry or remand under the appellate provision, so long as the exercise of that power is confined to a proper disposal of the assessment appeal and does not circumvent the separate remedy against refusal to cancel the ex parte assessment.

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