P L D 1958 (W (PLP)

(1) ?????? Whether the finding that the applicants maintained duplicate set of accounts was based on any evidence or material a (2) ?????? whether the assessment under section 23(4) of the Income?tax Act was a valid assessment ; (3) ?????? Whether increase of turnover from Rs. 38,00,000 to Rs. 60,00,000 was valid and proper under the law. Mr. Dingomal, the learned counsel for the applicants, has taken us through the entire record filed along with his application and has submitted that the Income‑tax Officer's notice under section 22 (4) required the applicants to produce (1) Journals (2) Ledgers (3) Cash Book rough and fair and (4) Bank Pass Book. All these docu?ments were produced before them. The applicants were never asked to produce the rough journal or Jama node. This was never called for at any time and therefore the non‑production of this particular account book cannot be considered to be a default under section 22 (4) of the Income‑tax Act. If the position taken by the learned counsel for the applicant would have been correct, perhaps we might have considered this matter as a fit one to be referred to the High Court under section 66 of the Income‑tax Act. It, however, appears that the Income‑tax Officer suspected that the accounts filed before him were not based on true books of account maintained by the applicants' firm. The account books produced before him were not found genuine as the purchase vouchers of several parties were entered in the Jama node produced before the Income‑tax Officer on different pages than those men?tioned in the voucher itself. Moreover, there were wrong entries regarding the purchase of certain goods from Mr. Noor Muhammad Suleman and certain other goods purchased by them were also not found in the account books produced before him. The Income‑tax Officer therefore by his letter dated the 20th of June 1951 wrote :‑ "From the accounts produced in connection with your assessment for the year 1950‑51, there is ample evidence that you have maintained a duplicate set of accounts whereby you have withheld your correct position. I accordingly advise you in your own interest to produce the correct set of accounts before me on 25‑6‑1951 at 9 a.m. at my office for which pur?pose notice under section 22 (4) is enclosed herewith." The account books specified in the notice under section 22 (4) were (1) Journals (3) Ledgers (3) Cash Books, rough and fair (4) Bank pass book for the year ending 31st December 1949. The applications, however, produced before the income‑tax Officer the same account books which they produced on the previous occasion, and in their letter‑dated the 12th of July 1951 empha?tically stated that "there are no other accounts which are being withheld from you", On these facts the Income‑tax Officer, the Appellate Assistant Commissioner of Income‑tax and the Income?tax Appellate Tribunal came to the conclusion that the applicants have not complied with the notice issued to them under section 22 (4). We have carefully considered the contention raised before us and we are clearly of the opinion that the finding of the Income‑tax Tribunal on this question is a finding of fact and there as no doubt that this finding of fact is based on the evidence produced on the record before the Income‑tax Authorities. The question whether they were justified in arriving at that conclusion is certainly not a question of law and is a pure question of fact This view finds support from a decision reported in (Muzaffar Ali Khan v. Commissioner of Income‑tax, U. P.) (A I R 1932 Oudh 164). A Division Bench of the Oudh Chief Court in this connection observed :‑ "The question whether there has been a compliance with the terms of the notice is not a question of law but a question of fact. Further whether the evidence before the Income‑tax Officer is sufficient to justify him in rejecting the accounts of the assessee is also a question of fact". We are in complete agreement with the observations made in this decision and hold that the Income‑tax Appellate Tribunal in the circumstances of the present case was perfectly justified in refusing to refer the question to the High Court. The next point urged by the learned counsel for the applicant is that the estimated turnover of the sales of the applicants' firm in the disputed years is based on no material and it is a pure guess work, and at least the question whether the Income‑tax Authorities were justified in estimating the turnover at such a figure on the evidence on the record is a question of law which should have been referred for the opinion of the High Court. There is no force in this contention. An assessment under section 23 (4) is always made according to the best judgment of the Income‑tax Officer. This is evident from the observation of their Lordships of the Privy Council in a case reported in Commissioner of Income‑tax United & Central Provinces v. Laxminarayan Badridas Shrawagi (A I R 1937 P C 133). Their Lordships in that case observed :‑ "The officer is to make an assessment to the best of his judgment against a person who is in default as regards supplying information. He must not act dishonestly, vindictively or capriciously because he must exercise judgment in the matter. He must make what he honestly believes to be a fair estimate of the proper figure of assessment, and for this purpose he must be able to take into consideration local knowledge and repute in regard to the assessee's circumstances, and his own knowledge of previous returns by and assessments of the assessee, and all other matters which he thinks will assist him in arriving at a fair and proper estimate : and though there must necessarily be guesswork in the matter, it must be honest guesswork in that sense too the assessment must be to some extent arbitrary." It would thus appear that their Lordships have definitely indicated that an assessment under section 23 (4) is bound to be based on guesswork, but it should not be dishonest and must be based on a fair and proper assessment of the facts of a particular case. Judging this question on the test laid down by their Lordships of the Privy Council in the above‑mentioned case it is abundantly clear to us that the Income‑tax Appellate Tribunal was perfectly justified in estimating the gross turnover of the applicants' sales during the assessment year at Rs. 60,00,

000. The petitioners showed Rs. 34,00,000 as gross turnover of their sales in the year of assessment. During the next year they showed their gross turnover in the sum of Rs. 97,00,

000. The Appellate Income‑tax Tribunal were perfectly justified in taking this fact into con?sideration and coming to the conclusion that the applicants' gross turnover during the year of assessment should be estimated at Rs. 60,00,

000. This estimate is based on the material placed on the record and cannot be considered to be a vindictive and capricious, approach to the dispute between the parties. Moreover, the finding of the Income‑tax Appellate Tribunal on the second question was also a finding of fact. In our opinion this finding of fact cannot be converted into a question of law merely, on the ground that the authorities concerned did not come to a correct .conclusion upon a matter of fact. We are satisfied that no question of law arises in this matter and the Appellate Income?tax Tribunal was justified in refusing to refer the question raised for opinion of the High Court. For the reasons given above the application is dismissed with costs. K. M. A.????????????????????????????????????????????????????????????????????????????????? Application dismissed.