V.BHARGAVA, J. - (1.) THE question of law which has been referred to us in this reference is whether in the circumstances of the case as stated and in the absence of proceedings under S. 27 of the Income-tax Act, the Tribunal was right in law in refusing to look into the validity of the assessment made under S. 23 (4) of the Income-tax Act in appeal against the quantum assessment.
(2.) THE facts and circumstances in which this question arose are very brief and simple. For the assessment year 1943-44, the assessee had account books showing a net profit of Rs. 29,375. The Income-tax Officer called on the assessee to produce certain documents under S. 22 (4) of the Act. The accounts and documents required were not produced, and it was held by the Income-tax Officer that the assessee had deliberately suppressed them even though they existed. The Income-tax Officer therefore proceeded to make a best judgment assessment under S. 23 (4) of the Act. The assessee did not file any application under S. 27 of the Act for reopening the assessment and instead filed an appeal against the quantum assessment. In this appeal the assessee sought to challenge the validity of the action taken by the Income-tax Officer in making the assessment under S. 53 (4) of the Income-tax Act. The Assistant Commissioner relying on a decision in Naba Kumar Singh v. Commissioner of Income-tax, Bengal, 1944-12 ITR 327 : (AIR 1945 Cal 104) (A), rejected this ground of appeal holding that it could not be raised in the quantum appeal. This view of the Appellate Assistant Commissioner was upheld by the Appellate Tribunal. Thereupon the assessee moved an application under S. 66 (1) of the Act and the Tribunal referred to us the question mentioned above for our opinion. In the statement of the case submitted by the Appellate Tribunal no mention has been made of the grounds on which the validity of the assessment under S. 23 (4) of the Income-tax Act was challenged before the Appellate Assistant Commissioner by the assessee. The Tribunal did not further attach to the statement of the case any documents which could indicate to us the grounds which had been taken in that appeal for challenging the validity of the assessment. This has somewhat handicapped us in deciding this reference, as in our opinion it was necessary to know what the grounds were on which the validity of the assessment was being challenged in appeal. The validity of the assessment could be challenged on various grounds. One set of grounds could be those on the basis of which an assessee is entitled to ask for cancellation of the assessment and make a request for a fresh assessment under S. 27 of the Act. Then there can be other grounds such as the jurisdiction of the Income-tax Officer to make the assessment or the absence of liability of the assessee on the ground of limitation. Since the statement of the case has nowhere mentioned the grounds which had been taken in appeal, we in answering the question have to frame the answer in such a way as to cover all such cases as might arise.
(3.) ON the whole, the impression given by the statement of the case is that assessment under S. 23 (4) of the Act had been challenged in appeal before the Assistant Commissioner only on one or more of those grounds which could have been taken in an application under S. 27 for cancellation of the assessment and for asking for a fresh assessment. So far as such grounds of appeal are concerned, the earlier decisions of this Court in Chhote Lal Gobardhandas v. Commissioner of Income-tax, 1953-23 ITR 272 : (AIR 1953 All 401) (B) and Padampat Singhania v. Commissioner of Income-tax, 1953-24 ITR 141 : (AIR 1953 All 775) (C), clearly lay down that those grounds of appeal cannot be entertained at the time of deciding an appeal against the quantum assessment under S. 23 (4) of the Act. In the former case it was held : "An assessee may, under S. 30 (1) appeal against an order of refusal to make a fresh assessment under S. 27, but where the Income-tax Officer has made an assessment under S. 23 (4) of the Act, or, has made a fresh assessment under S. 27 the assessee can appeal under S. 30 (1) and object to the amount of income assessed or the amount of loss computed or to the amount of tax determined. ;