Law:

Section:

Section 144, read with section 142 of the Income-tax Act, 1961 [Corresponding to section 23(4), read with section 22(3) of the Indian Income-tax Act, 1922] - Best assessment - Assessment year 1945-46 - For assessment years 1943-44 and 1944-45, assessee stated that his books of account were lost in transit - Said explanation was accepted and assessments were completed under section 23(3) of 1922 Act - While completing assessment for assessment year 1945-46, ITO issued a notice under section 22(4) of 1922 Act to produce accounts books for proceeding two years - Assessee pleaded loss of those books - Assessee examined such witnesses as were unhelpful to verify correctness of entries said to have been brought forward in account year and genuineness of those entries - There was no ledger from which accounts could be made and there was no cash book from date of loss till end of year - ITO disbelieved story of loss of accounts books and completed assessments under section 23(4) of 1922 Act - Whether ITO was entitled to issue a notice under section 22(4) of 1922 Act requiring assessee to produce account books of previous years, to test correctness of return submitted by him - Held, yes - Whether there was sufficient material for finding of ITO that story of loss of account books was not true - Held, yes - Whether having disbelieved explanation for non-production of books, ITO acted according to law in making assessment under section 23(4) of 1922 Act - Held, yes FACTS In the assessment year 1943-44, the assessee did not produce the books of account saying that those books along with one cash book for Samvat 1999-2000 were stolen from the railway train. This explanation was accepted and income was worked out on the basis of other evidence and assessment was made under section 23(3). In the subsequent assessment year also the books of the account year were not produced for the same reason. The assessment was made under section 23(3) on an estimated income though the assessment had returned a loss. In the assessment year 1945-46, the assessee was required by a notice under section 22(4) to produce the account books for the two years preceding the account year. The…

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