Tax assessment based on estimation is not binding; liquidator may reject unsubstantiated assessment claims in winding up.

An income-tax assessment made on estimated income without audited accounts does not bind the official liquidator; where a claimed judgment-debt or statutory assessment rests on estimation and the liquidator can show circumstances casting doubt on its bona fides or correctness, the liquidator may require proof and the claim can be rejected as not provable in winding up. The court applied the provable-debt principle in insolvency, permitting scrutiny of decree-like assessments founded on less than a real trial, and disallowed the tax officer's claim as unjustified on its face.

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Issues: Whether the income-tax assessment/order for the assessment year 1933-34, made on an estimated income and recorded prior to winding up, is binding on the official liquidator such that the claim by the Income Tax Officer for Rs. 5,770-14-0 must be admitted.

Analysis: The Court considered the statutory framework governing winding up and insolvency, including the applicability of rules governing provable debts under Section 229 of the Companies Act and Section 34(2) of the Provincial Insolvency Act, and the effect of an assessment under Section 22 of the Income-tax Act. The authorities cited establish that decree- or judgment-debts are provable but may be scrutinised by the official liquidator where the decree rests on less than a real trial or where there are circumstances justifying doubt as to the bona fides or correctness of the judgment. The assessment here was made on an estimated income without audited accounts; the audited accounts presented show a substantial loss for the year, undermining the assessed income and tax demand. The Court held that the official liquidator is entitled to require proof and to reject a claim that appears unjustified on its face.

Conclusion: The claim of the Income Tax Officer for Rs. 5,770-14-0 based on the assessment is disallowed; the assessment is not treated as binding on the liquidator and the debt is rejected.

Ratio Decidendi: Where an asserted judgment-debt or assessment is founded on estimation without examination of relevant accounts and the official liquidator can demonstrate circumstances casting doubt on its bona fides or correctness, the liquidator may challenge and the Court may reject the claim as not provable in the winding up.

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