- (1.) THE facts giving rise to this reference under Section 66 (3) of the Indian Income-tax Act, 1922, may be briefly stated :- THE assessee, Lala Pitamber Prasad, was assessed for the assessment year 1934-35 on the 28th May 1935 on a total income of Rs. 4,534. When the assessment proceedings for the year 1935-36 were going on the Income-tax Officer discovered that the assessees income from speculation business had partially escaped assessment during the year 1934-35. A notice under Section 34 read with Section 22 (2) of the Act was accordingly sent to the assessee and was served on him on the 15th of August 1935. THE notice runs as follows :-
(2.) WHEREAS I have reason to believe that your income from business which has been assessed in the financial year ending the 31st March 1935. (a) has partially escaped assessment, and I, therefore, propose (b) to assess the said income that has escaped assessment. I hereby require you to deliver to me....... a return in the attached form of you income from all sources which was assessable in the said year ending the 31st March 1935 . The assessee took some adjournments, but on the 3rd of January 1936 he filed a printed return form duly verified and duly signed but he did not set forth the total income of the previous year which was assessable in the assessment year 1934-35. In the space provided for filling in the income from different sources the petitioner put down the words : No income escaped assessment. Noticed issued is barred by time. The Income-tax Officer did not treat this as a proper compliance with the terms of the notice under Section 34/22 (2) and no notice under Section 23 (2) was issued. On the 27th of January 1936 the assessee was assessed under Section 34 read with Section 22 (2). The total income determined was Rs. 10,932, but this was subsequently reduced to Rs. 10,922. It also appears that a notice under Section 22 (4) was also served on the assessee and he was required to produce accounts for Sambat year 1990. It also appears that a notice under Section 22 (4) was also served on the assessee and he was required to produce accounts for Sambat year 1990 had been stolen. It was said that Pitamber had gone to Delhi and had taken those accounts with him and they were stolen from the train. This statment was not believed and the Income-tax Officer was of the opinion that the non-production of accounts was deliberate and it was done so because a considerable portion of his income from 9speculation had been concealed. The Income-tax Officer in his judgment said, This default is the additional ground for framing assessment under Section 23 (4).
(3.) THERE was no appeal against the assessment order, presumably because no appeal is provided by the Act against an assessment under Section 23 (4) and presumably because the assessee was satisfied that a default had been committed by him in the non-production of account books and an appeal would not be admitted. The assessee then presented an application under Section 27 for cancellation of the assessment, but this application was rejected by the Income-tax Officer on the 16th of May 1936.;