MCNAIR,J. - (1.) TWO questions of law have been referred to this Court by the Tribunal. Question (1) : "Whether in an appeal under S. 30 (1) the validity of an assessment under S. 23 (4) can be challenged when no proceeding under S. 27 of the Act was taken to cancel the order under S. 23 (4)." It appeared that the question had been framed by mistake leaving out the words "under S. 33 (1) from a decision in an appeal" after the words with which the question starts, namely, "whether in an appeal", and the question as re-framed after consultation and agreement with the Advocates appearing now reads, "Whether in an appeal under S. 33 (1) from a decision in appeal under S. 30 (1)" and so on as originally framed. The second question is, "Whether on the facts of the case the lands taken over by the assessees in satisfaction of a debt should be independently valued and such valuation should be considered for the purpose of arriving at the figure of income."
(2.) THE assessees are an HUF carrying on business as money-lenders. On 10th June, 1939, the ITO served them with a notice under S. 22 (2) of the IT Act calling upon them to make a return of income for the year 1939-40. A return was submitted but was signed in Hindi by a person who is said to be a Ammuktear of the assessee. Apparently the ITO did not notice that the signature was not the signature of the assessees and he accepted the return and issued a notice under S. 23 (2) calling for evidence in support of the return. During the proceedings initiated by S. 23 (2) the ITO had reason to believe that certain items of interest had not been disclosed in the return. He thereupon issued a notice on 1st Aug., 1940, calling upon the assessees to show cause why a penalty should not be imposed under S. 28 (1)(c) of the Act. On receipt of that notice the assessees through their pleader informed the ITO that the tax proceedings were misconceived inasmuch as the return was invalid since it had not been signed by the Karta of the Hindu family. The ITO on scrutinising the return accepted the view put forward by the assessees and treated the return as invalid. He then proceeded to assess them under S. 23 (4) on the basis that no return had been made. The assessees contended before the AAC that the assessment should have been made under S. 23 (3) on the ground that the ITO had in the first instance accepted the return as a valid return. The AAC, however, upheld the assessment under S. 23 (4) on the ground that the return was invalid as the assessees had themselves claimed, and he held further that the ITO was therefore entitled to make the assessment under S. 23 (4). The Tribunal held that the assessees could not raise this question in appeal inasmuch as they had not adopted the procedure under s. 27 of the Act, which is provided by the Act for having the assessment re-opened. It is admitted that the assessees did not adopt the procedure under S. 27, but it is contended before this Court that the assessees can nevertheless question the validity of the assessment by way of appeal.
(3.) IT is further contended that although machinery is provided by S. 27 for challenging the assessment there is a further and alternate remedy open to the assessees under S. 30 of the IT Act as now amended. Prior to amendment there was a specific proviso under S. 30 that no appeal shall lie in respect of an assessment made under S. 23(4) or under that sub-section r/w S. 27. That proviso has now been deleted and S. 30 provides, so far as is material, in sub-s. (1) that any assessee objecting to the amount of income assessed under S. 23 or S. 27 or the amount of tax determined under S. 23 or S. 27 or denying his liability to be assessed under this Act or objecting to a refusal of an ITO to make a fresh assessment under S. 27 or objecting to penalties and to other matters which are specially set out in the section may appeal to the AAC against the assessment or against such refusal or order.;