Law: Income Tax Act, 1922

Section: 23(2),23(4)

Law: Civil Procedure Code (V of 1908)

Section: 86

Law: Limitation Act, 1877

Section: 142,3

Income-tax Act, 1922 -Sections 23(3), 23(4) - Exparte assessment Non-production of account books, having been stolen -Exparte assessment for failure to produce account books, whether permissible -Held no -"Failure", meaning of -- Account books found to have been stolen -Non-production of books, in circumstances, does not attract provisions of subsection (4) of section 23 -Income-tax Officer should proceed in such case under section 23(3) -- JUDGMENT The judgment of the court was delivered by MUSHTAQ HUSSAIN J..---Messrs. Warris Silk Weaving and Knitting Mills, Gujranwala, were served under Section 23(2) of the Income-tax act on 23-5-1957. In consequence of non-compliance, their factory was visited and 61 account books were impounded. Some of them were returned later and the others still later on a written assurance and undertaking to produce the books when required. This undertaking was not honoured on the plea that they had been stolen. The I.T.O. did not accept the plea and an assessment was made under Section 23(4) on the ground of failure to comply with the terms of the notice requiring to produce the books. The Appellate Assistant Commissioner accepted the appeal and cancelled the assessment. The Tribunal accepted the Department's appeal, set aside the first appellate order and sent the case back to the A.A.C. to re-examine the case and record a fresh order. The matter went up before a different Appellate Assistant Commissioner who by his order dated 25-4-1963 held that the assessee was in default and that the excuse under which the books had been withheld attracted the provisions of Section 23(4) of the Income-tax Act. The appeal of the assessee was thus rejected. The Tribunal was again moved and by its order dated 14-10-1963 it held that the theft story was quite believable, the Appellate Assistant Commissioner should have instead of cancelling the assessment order, changed the label of assessment from sub-section (4) to sub-section (3) of Section 23. It, therefore, vacated the assessment made under Section 23, sub-section (4) and held that the assessment should have been claimed under Section 23, sub-section (3). The Department has felt aggrieved and on…

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