There are four proceedings before us and all of them are applications by the assessee, and the prayer in each of them is that we should require the Commissioner of Income-tax under the provisions of Section 66 (3) of the Indian Income-Tax Act to state a case and to refer certain questions of law for our decision.
Two assessment years 1933-34 are in dispute and in Miscellaneous Case No. 287 of 1938 the application before us is for a reference on the question of the assessment order of 1933-34. In Miscellaneous Case No. 288 of 1938 the application before us is for a reference in connection with the assessment order of 1934-35. Miscellaneous Case No. 352 of 1940 arises out of an application under Section 27 of the Act, and the prayer is that we should require the Commissioner to state a case in connection with proceedings under Section 27 of the Act arising out of the assessment year 1933-34. Similarly Miscellaneous Case No. 252 of 1940 is in connection with Section 27 proceedings arisings out of the assessment year 1934-35.
It would thus appear that there are two main questions before us, one arising out of the assessment order itself and the other arising out of proceedings under Section 27 of the Act. We propose to dispose of all the four miscellaneous cases by means of a single judgment.
Hiralal, the assessee, in the two assessment years 1933-34 and 1934-35 was assessed by the Income-tax Officer of Benares under Section 23 (4) of the Act. It was held by the Income-tax Officer that there had been defaults by the assessee in connection with certain notices issued to the assessee for the production of account books.
There was an appeal of the Assistant Commissioner and that officer went thoroughly into the question as to whether the order of the Income-tax Officer was really an order under Section 13 (4) and whether there was real default committed by the assessee. He went into the facts at some length and came to the conclusion that the Income-tax Officer had rightly held that the account books had been deliberately suppressed and the assessment was, therefore, properly made under Section 23 (4). He took the view that no appeal lay against such assessment and he refused to admit the appeal. Obviously he under the proviso to Section 30 and did not pass any order Section 31 of the Act.
The assessee field a combined application under Section 33 and Section 66 (2) of the Act before the Commissioner. The learned Commissioner gave some relief under Section 33 inasmuch as he reduced the assessable income of the view that as no question arose on account of the appellate order of the Assistant Commissioner under Section 31 a reference to the High Court was not competent. The learned Advocate-General appearing for the Department has also taken the objection that no reference lies either under Section 66 (2) or under Section 66 (3) of the Act and he has drawn our attention to the case of Bhikhi Ram Ramdeo v. Commissioner of Income-tax, C. P. & U. P. This Bench held in that case as follows :-
'Where an assessment has been made, not in form only but in fact, not ostensibly but actually and in good faith, under Section 23 (4) of the Income-tax Act and where the Assistant Commissioner upon consideration of the facts, has found that the assessment was properly so made, the proviso to Section 30 bars an appeal, and the order of the Assistant Commissioner rejecting the appeal is not an order under Section 31 isasmuch as he has not disposed of the appeal, and therefore there can be no question of law referable to the High Court under Section 66 (2) or Section 66 (3).'
We think the facts of this authority are very similar to the facts of the present case and we cannot require the Commissioner to state a case to us under Section 66 (3) of the Act. We accordingly reject the application of the assessee. This disposes of Miscellaneous Cases Nos. 287 and 288 of 1938.
Coming to the applications which arise in connection with proceedings under Section 27 of the Act, it is clear that in the majority of cases the question whether the assessee was prevented by sufficient cause from appearing or from complying with the terms of notice issued under the Act would be a question of fact, and in some cases it is possible to say that if the notice issued is an illegal notice or an invalid notice the assessee can very well refuse to comply with that notice and can subsequently say that he was prevented by sufficient cause from complying with the notice. In the present case it is said that the Income-tax Officer of Benares where the two assessments of the years 1933-34 and 1934-35 were made had season of the cases in the beginning but subsequently the cases were transferred to Chapra and were again retransferred to Benares. Notices were issued by the Benares Income-tax Officer under Section 22 (2) and a return was filed by the assessee, but subsequently when the Chapra Courts got jurisdiction over the matter they issued a second notice under Section 22 (2) and a return was filed before the Chapra Income-tax Officer. When the case was agianst retransferred to Benares, the Benares Income-tax Officer took up his own threads and started proceedings on the return which had been filed before him and which had been subsequently filed before the Chapra Courts. No objection was taken by the assessee to the effect that a fresh notice under Section 22 (2) ought to be issued. As a matter of fact, in response to notice issued under Section 23 (2) and under the other sub-clauses of Section 22 the assessee appeared on several occasions before the Income-tax Officer at Benares and in spite of his protests that he did not maintain any account books the Income-tax Officer came to the conclusion that there was a suppression of the real state of affairs and that he was entitled to pass an assessment order under Section 23 (4) of the Act. In the peculiar circumstances of this case we are of the opinion that the assessee was not prejudiced in any manner and he cannot call in question the fact that in the absence of a second notice under Section 22 (2) the entire proceedings in the Benares Court were vitiated and he was, therefore, justified in not complying with the subsequent notice under Section 22 (4). Nor do we think that any question of Section 64 of the Act arises. We think that there is no force in the applications that arise out of proceedings under Section 27 of the Act and we dismiss the Miscellaneous Cases Nos. 352 and 353 of 1940. The result is that all the four Miscellaneous applications are dismissed with costs. The learned Advocate-General is entitled to a fee of Rs. 75 for each application.