COMMISSIONER OF INCOME-TAX, MYSORE versus SEGU BUCHIAH SETTY

Citation: [1971] 1 S.C.R. 352 · Decided: 23-04-1970 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

352 
COMMISSIONER OF INCOME-TAX, MYSORE 
A 
v. 
SEGU BUCHIAH SETTY 
April 23, 1970 
[J. C. SHAH, K. S. HEGDE AND A. N. GROVER, JJ.] 
B 
•
Income-tax Aci ( 11 of 1922},~ .. ,22, ],3 and 27-Non-compUance with 
notices under s . . 22(2) 
and s. 
22:(4 )-Besi judgment· assessme11r 
under 
s. 23(4)-Sufjicient cause 
for 
non-compliance 
shown 
only 
with respect notices under s. ·22(4)-/f assessment can be re-opened under 
s. 27. 
. 
. 
Notices. undet s. 22(2) of the Income-tax Act, 1922, were not com-
c 
plied with by the respondent (assessee) and the Income-tax Officer issued 
notices under 's. 22(4) .. Sin·ce they were also· not complied with the 
· Income.tax ·amcer !flade a best judgment assessment under s. 
23 ( 4). 
Thereupon, the assessee applied under s. 27 for reopening the assessment. 
The ~ncome-tai< Officer found that there was sufficient caute 'for non-
compliance wiih the notices under s. 22(4), but, as there was no sufficient 
.cause for non-compnance with the notices under s. 22(2), he declined to 
D 
reopen the assessment. 
The order was confirmed in appeal and by the 
)· Tribunal. 
But the High Court held in favour of the assessee. 
In appeal to this Court, 
HELD: Under s. 23(4) on the 
assessee committing any of the 
defaults mentioned therein. namely, failure to make a return as reQuired 
'
by a notice under s. 22(2) or a revised return under s. 22(3) or non· 
compliance with the terms of a notice under s. 22( 4) or failure to com-
E 
' 
ply with the. terms of a notice under s. 23(2). the Income-tax Officer 
is 
bound to make a best judgment assessment. Section 27 
empowers 
the 
Income-tax Officer to cancel the assessment when sufficient cause is shown; 
but, such cause has to be shown for each default. Therefore, if the assessce 
makes default by not filing a return pursuant to a notice under s. 22(2) and 
also does not complv with a notice under s. 22(.t') he must show sufficient 
cause for non-compliance with both the provisions. The Legislature could 
F 
not have intended that in case of multiple defaults, 
for 
each 
one of 
which an ex parte best judgment assessment has to be made, the assessee 
can ask for cancellation of the assessment by merely showing cause 
for 
one of such defaults. [355 D-H] 
Chiranji/al Tihrewala v. Commissioner of Income-tax. Bombay City ll, 
59 J.T.R. 42, approved. 
lf! 
CIVIL APPELLATE JURISDICTIOI<: Civil Appeals Nos. 235 and 
236 of 1967. 
G 
Appeals from the judgment arid order dated March 21. 1966 
of the Mysore High Court in Income-tax Referred Case No. 19 
Of 1964. 
laKadish Swarup, Solicitoi: General, G. C. Sharma and B. D. 
H 
Sharma, for the appellant (in both the appeals). 
R. Gopalakrishnan, for the respondent (in both the appeals). 
r..1.T. v. s. B. SETTY (Grover,!.} 
353 
A 
The Judgment of the cdurt was delivered by 
B 
c 
D 
E 
F 
G 
H 
Grover, J. 
These appeals by certificate arise out of a common 
judgment of the Mysore High Court in references made with regard 
to the assessments relating to the assessment years 1953-54 and. 
1954-55. 
For the assessment year 1953-54 the assessee was served with 
a notice under s. 22 ( 2) of the Income tax Act 1922, hereinafter 
called the "Act", on March 5, 1954. A similar notice was served 
in respect of the assessment year 1954-55 on June 5, 1954. The 
assessee failed to file any return in compliance with the notices. 
Thereupon he was served with notices under s. 22 ( 4) for both the 
assessment years and was required to produce accounts on speci-
fied dates. None appeared on any one of those dates but applica-
tions were submitted praying for adjournment on certain grounds. 
The Incom~ tax Officer was not satisfied with the .reasons given 
for seeking adjournments and he proceeded to make the assess-
ment under s. 23 ( 4) of the Act. The assessee moved the Income 
Tax Officer under s. 27 to reopen the assessments on the grounds 
given in the applications filed in that behalf. The Income Tax 
Officer appeared to be satisfied that there was sufficient cause for 
non-complianc.~ with the notices issued under s. 22 ( 4) of the Act 
but he was of the view that the assessee had been a babitual de-
faulter inasmuch as he had not submitted the return under s. 22(2) 
even for several preceding years for which the assessments had to 
be completed under s. 23 ( 4) of the Act. He declined to reopen 
the assessment under s. 27. 
Appeals to the Appellate Assistant 
Commissioner w.~re filed. 
According to the Appellate Assist

Excerpt shown. Read the full judgment & AI analysis in Lexace.