1929 (5) TMI 2

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....ings before the Income Tax Officer the assessee put forward the claim that he had migrated from Haripur in British India to Srinagar in the Jammu and Kashmir State, and had been residing and carrying on business at the latter place. He accordingly urged that he had ceased to be a resident in British India, and that, as no income, profits or gains had accrued or arisen to him, or been received by him, in British India, he did not come within the ambit of the Act. The Income Tax Officer did not accept this plea, and served on him a notice under Section 22(4) requiring him to produce certain accounts. The assessee did not comply with the notice and the Income Tax Officer thereupon made an assessment under Section 23(4) to the best of his judgm....

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....d by the law, and that the Income Tax Officer had acted legally in assessing him under Section 23(4) of the Act. The mere fact that the assessment purports to have been made under that Sub-section does not shut out the appeal: it must be shown that the circumstances of the case bring it within the scope of that Sub-section, When the Assistant Commissioner is satisfied that the assessment was made, not ostensibly but genuinely, under that Sub-section, he must stay his hands and decline to adjudicate upon the merits of the appeal on the short ground that the proviso to Section 30(1) bars an appeal in such a case. And it is immaterial whether the order of the Income Tax Officer is impeached on the ground that the assessee was not amenable to t....

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.... business in British India he was not liable to be assessed to Income Tax under the Indian Law. If the Income Tax Officer assesses him to Income Tax under Section 23(4) the assessee has no right of appeal against the assessment, though it is palpably wrong. It is true that Section 27 provides him with a remedy to reopen such an assessment, but the remedy is a precarious one and cannot be invoked unless he proves to the satisfaction of the Income Tax Officer that he was prevented by sufficient cause from making the return. If the assessment is ultra vires the aggrieved person may perhaps bring a suit for a declaration that it is Illegal, vide, Haji Rehemtulla Haji Tarmahomed v. Secy. of State A.I.R. 1926 Bom. 50. 9. Be that as it may, it ....

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....the rate of 9 pies in the rupee. Against this assessment, Bhagat Duni Chand preferred an appeal to the Assistant Commissioner, who dismissed the appeal holding that it fell within the purview of the proviso to Section 30, Income Tax Act, and was therefore not competent. Bhagat Duni Chand thereupon moved the Commissioner of Income Tax to make a reference to the High Court. This was refused on the ground that no point of law was involved. Thereupon Bhagat Duni Chand same up to this Court under Section 66(3), Income Tax Act and a direction was issued by a Division Bench on 6th February 1928 A.I.R. 1928 Lahore 864 directing the Commissioner to refer the following question: Was the Assistant Commissioner bound to decide whether Bhagat D....

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....nt under Section 23(4) If he finds that the Income Tax Officer did so apply his mind, he has no power to 'entertain the appeal. As I understand the position when the Income Tax Officer acts under Section 23(4) and the assessee prefers an appeal to the Assistant Commissioner, all that the Assistant Commissioner has to do is to satisfy himself that the Income Tax Officer has carried out the necessary procedure which entitled him to take action under Section 23(4) and that he has not merely labelled his action as falling within the purview of that section. If the Assistant Commissioner finds that action has really and properly been taken under Section 23(4). he cannot entertain the appeal. 13. On behalf of the assessee Mr. Mehr Mahajan ....