Law:

Section:

Section 253, read with sections 144 and 146 of the Income-tax Act, 1961 [Corresponding to section 33, read with sections 23(4) and 27 of the Indian Income-tax Act, 1922] - Appellate Tribunal - Appeals to - Assessment year 1941-42 - Whether in an appeal under section 33(1) of 1922 Act against an order passed under section 23(4) of 1922 Act, validity of assessment made under section 23(4) of 1922 Act cannot be challenged when no second appeal against order of AAC confirming order of ITO passed under section 27 of 1922 Act refusing to cancel assessment so made was filed - Held, yes FACTS The assessee filed a return claiming that he had suffered a loss. The ITO thereafter issued notice to the assessee to produce his Sauda Bahi so that it might be able to ascertain whether the assessee's contention was correct. As the assessee did not produce the Sauda Bahi, the ITO made an assessment under section 23(4) of 1922 Act on an estimated income. The assessee then made an application under section 27 of 1922 Act which was dismissed by the ITO. On appeal, the AAC modified the assessment order but upheld the order of the ITO dismissing application under section 27 of 1922 Act. Against the order of AAC, the assessee filed an appeal contending that the assessment made under section 23(4) of 1922 Act was wrong and that the application under section 27 of 1922 Act should, therefore, have been granted and a fresh assessment made in accordance with the provisions of that section. The Tribunal stated that as no appeal against the AAC's order under section 31 of 1922 Act confirming the ITO's order under section 27 of 1922 Act having been brought up to the Tribunal and the instant appeal being one relating to the merits of the assessment, it could not go into the question about the propriety of the assessment having been made under section 23(4) of 1922 Act. On reference : HELD The ITO has a right under section 23(4) of 1922 Act to make a best assessment. Against a best assessment under section 23(4) of 1922 Act, previous to the amendment made in 1939, there was no appeal. The assessee, however, had a right to make an application under section 27 of 1922 Act, explaining the reasons…

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