JUDGMENT Collister, J.
1. This is an application under Section 66(3), Income-tax Act (11 of 1922). The assesses is a Hindu family trading under the name of Sheodutt Rai Panna Lal. Sheodutt Rai was the father, but he and Panna Lal are both dead. Sheodutt Rai died in 1924, leaving two sons, Panna Lal and Ganesh Prasad. We are informed that under his will Sheodutt left the whole of his property, which was apparently self-acquired to Panna Lal; the only provision which he made for Ganesh Prasad was in the shape of an allowance of Rs. 5 a month. Panna Lal died during the pendency of the proceedings in this Court, leaving a son, Prem Narain. Panna Lal and Prem Narain did money-lending business and they also manufactured lime and made and sold bricks. The assessment year with which we are concerned is 1937-38, the accounting year being from 1st January 1936 to 31st December 1936. According to the return which the assessee made, the income from money-lending was Rs. 7714 and the profits which the brick-kiln accounts disclosed amounted to Rs. 1302-11-0. The Income-tax Officer regarded the last-named figure as "ridiculously low," and a notice was issued under Section 22(4) and also under Section 23(2) of the Act.
2. The Income-tax Officer bad knowledge that a loan of Rs. 2500 had been advanced by Prem Narain to Ganesh Prasad on 25th January 1935; but the account books which the assessee produced did not disclose this loan and did not disclose an account which Prem Narain had with the Allahabad Bank and another account which he had with the Jwala Bank. Panna Lal and Prem Narain admitted that they were "joint to all intents and purposes," but they denied having any other books of account. Nor were they able to prove their allegation that the amount of Rs. 2500 had been advanced by Prem Narain out of a sum of Rs. 3200 which was a gift to Prem Narain from his grandfather, Sheodutt Rai; their excuse was that the account books of Sheodutt Rai had been thrown into the Ganges. The Income-tax Officer arrived at the conclusion that they were deliberately keeping back some books of account and be accordingly had recourse to the proviso to Section 13 and estimated the money-lending business outside the account books at Rs. 4000, and he made a "best judgment" assessment under Section 23(4) of the Act. The assessee applied under Section 27 of the Act for cancellation of the assessment and for re-assessment, but that application was disallowed. Thereupon the assessee appealed to the Assistant Commissioner both as regards the assessment order and as regards the dismissal of the application under Section 27. Both appeals were unsuccessful. The assessee then applied to the Commissioner of Income-tax to exercise his powers of review under Section 33, or in the alternative to refer certain questions to this Court under Section 66(2) of the Act. The Commissioner declined to give any relief under Section 33 and he also declined to make a reference under Section 66(2) his grounds being that one of the questions did not arise in the appeal and that, as regards the other two matters, no question of law arose. The assessee has accordingly preferred this application under Section 66(3). As regards the appeal against the order of assessment, Mr. Malik, who appears for the assessee, asks us to direct the Commissioner to refer the following question to this Court: whether the Income-tax Officer was in the circumstances competent under the law to make an assessment under Section 23(4) of the Act. Alternatively, he asks us to direct the Commissioner to refer to us a question, alleged to be a question of law, arising out of the appeal against the dismissal of the application under Section 27 of the Act. We shall deal with this matter at a later stage. We propose to consider firsts the question which is said to arise out of the order which was passed in the appeal preferred against the order of assessment.
3. Learned counsel for the assessee contends that there were no grounds to justify the Income-tax Officer in proceeding under Section 23(4) of the Act, and in particular be pleads that the basis of the Income-tax Officer's decision to proceed as aforesaid was that the assessee had failed to produce the books of account of Sheodutt Rai although the authorities had not called for and were not competent to call for such books of account by their notice under Section 22(4) of the Act. Sheodutt died in 1924 and so these books were more than three years old; and in fact they were not mentioned in the notice under Section 22(4). We have carefully read the Income-tax Officer's order of assessment dated 30th November 1937, and we have already given an indication of the grounds upon which he proceeded. The books of account which were produced before that officer did not disclose the loan of Rs. 2500 which had been advanced by Prem Narain to Ganesh Prasad and also did not disclose the account which Prem Narain had in the Allahabad Bank and in the Jwala Bank, and the Income-tax Officer (who must be presumed to be acquainted with the business methods of these Marwaris) was of opinion that there must fee other books of account also in the assessee's possession in which this loan and these accounts would be shown; and he also took into consideration the assessee's inability to prove the gift of Rs. 3200 from Sheodutt Rai to his grandson and the improbability of the explanation given that these books had been consigned to the Ganges. Upon a consideration of all the facts he formed the opinion that certain books of account had been deliberately withheld; and this being his view, he thought it his duty to make an assessment under Section 23(4) of the Act. Having made these preliminary observations, we shall proceed to consider the law on the subject. Learned counsel for the department objects that no reference was competent under Section 66(2) or is competent under Section 66(3) of the Act for the reason that the Assistant Commissioner's order was not an order passed under Section 31 of the Act. There are various decisions which are in point, and we shall take them in chronological order. The first is the case in Duni Chand v. Commr. of Income-tax (29) 16 AIR 1929 Lah 593 which was a Full Bench decision of five Judges of the Lahore High Court. The main judgment was delivered by Sir Shadi Lal C.J., but the other learned Judges all agreed with his view. The question before the Court was whether a person who had been assessed under Section 23(4) of the Act is entitled to prefer an appeal to the Assistant Commissioner on the ground that he was not liable to be assessed under the Act, or whether the proviso to Section 30(1) operates as a bar to the appeal. That proviso reads as follows:
Provided that no appeal shall lie in respect of an assessment made under Sub-section (4) of Section 23, or under that sub-section read with Section 27.
4. At pages 600 and 601 the learned Chief Justice observes:
The reason for enacting this proviso is obvious. The law punishes a person who does not comply with a requisition of the Income-tax Officer by depriving him of his right of appeal. But the appellate authority must, before denying him the right of appeal, be satisfied that he had really incurred the penalty prescribed by the law, and that the Income-tax Officer had acted legally in assessing him under Section 23(4) of the Act. The mere fact that the assessment purports to have been made under that sub-section does not shut out the appeal; it must be shown that the circumstances of the case bring it within the scope of that sub-section. When the Assistant Commissioner is satisfied that the assessment was made, not ostensibly but genuinely under that sub-section, he must stay his hands and decline to adjudicate upon the merits of the appeal on the short ground that the proviso to Section 30(1) bars an appeal in such a case.
5. In In the matter of Bhagwati Pershad (32) 19 AIR 1932 All 390 an assessment was made professing to be under Section 23(4) of the Act. The assessee appealed to the Assistant Commissioner and the latter scrutinised the memorandum of appeal and the assessment order and came to the conclusion that the assessment had been rightly made under Section 23(4). He accordingly refused to admit the appeal; but all this he did without hearing the assessee or his counsel. A Bench of this Court, Mukherji and Bennet JJ., held that it was the duty of the Assistant Commissioner to hear the assessee or his counsel and then to decide if the case really fell under Section 23(4) of the Act. The next case is that in In the matter of Suraj Bhan Ugarsen (32) 19 AIR 1932 All 642 which was also a decision by the same two learned Judges of this Court. At p. 643, col. 1, the learned Judges say:
An appeal was filed by the assessee, and the Assistant Commissioner of Income-tax considered the reasons which had led the Income-tax Officer to assess under Sec. 23(4) and he held that those reasons were sufficient and, therefore, no appeal lay under Section 31 in accordance with the proviso to Section 30. As the Assistant Commissioner of Income-tax has considered whether the assessment was properly made under Section 23(4) and has held that no appeal lies, therefore, there was no order under Section 31. As there was no order under Section 31, no reference lies to this Court in accordance with the provisions of Section 66, Sub-section (2).
6. In In re Pallu Mall Bhola Nath (33) 20 AIR 1933 All 541 a similar view was expressed by a Bench of this Court. At p. 542 Niamatullah J., observes:
....I think the Assistant Commissioner was right in so far examining the case as to satisfy himself whether the appeal before him was competent. Without examining the record to some extent he could not have been in a position to find whether the assessment was under Section 23(4) and whether an appeal lay.
7. The Court held that the Assistant Commissioner's order to the effect that no appeal lay did not amount to an order dismissing an appeal under Section 31. In Jot Ram Sher Singh v. Commissioner of Income-tax, United Provinces (34) 21 AIR 1934 All 559 Niamatullah J. at p. 133 says:
Section 30, proviso expressly declares that there shall be no appeal from an assessment to the best of the Income-tax Officer's judgment under Section 23(4) or under that sub-section read with Section 27. Accordingly no question of law or fact arising from such assessment can be the subject of consideration by the Assistant Commissioner for the simple reason that no appeal lies to him, with the result that the Assistant Commissioner can never have an occasion to pass in appeal an order under Section 31 in relation to a best judgment assessment. As already shown, the High Court can require the Commissioner to make a reference for decision by the High Court of a question of law, only if it arises from an order under Section 31.
8. Further on the learned Judge says:
Where the Assistant Commissioner rejects what purports to be an appeal on the ground that none lies, he gives effect to the proviso to Section 30, and his order should be deemed to be one under it and not under Section 31. In passing such an order the Assistant Commissioner refuses to entertain the appeal, and cannot be considered to be 'disposing of an appeal,' which implies the assumption that the appeal lay, was entertained and disposed of, after discussion of some question falling within the purview of the appeal.
9. At page 135 we have the following observation:
As the law stands, the assesses has to be content with such relief as the Commissioner may give him in the exercise of his revisional powers under Section 33, which undoubtedly confers upon him a wide discretion in dealing with questions arising in the course of assessment by officers subordinate to him. He can in the exercise of those powers, interfere with an assessment made by the Income-tax Officer to the best of his judgment under Section 23(4). He may also decide the question whether such assessment was arbitrary and unreasonable.
10. It was also pointed out that the Commissioner of Income-tax is himself competent to make a reference under Section 66(1) of the Act. In a separate judgment Bennet J. took the same view; and the Court held that an order passed by the Assistant Commissioner rejecting an appeal from an order under Section 23(4) on the ground that no appeal lay to him in view of the proviso to Section 30(1) of the Act is an order under Section 30(1) and not an order under Section 31 and the High Court has therefore no power to require the Commissioner under Section 66(3) of the Act to state a case on the questions of law arising out of an assessment under Section 23(4). We shall now mention a case from Rangoon. This is Abdul Bari v. Commissioner of Income-tax, Burma (31) 18 AIR 1931 Rang 194. It was held by a Bench of five Judges that the question whether an assessment made by the Income-tax Officer under Section 23(4) of the Act is valid or not is not a question of law that arises or can arise out of an order of the Assistant Commissioner passed under Section 31, and consequently such a question cannot be made the ground for an order by the High Court under Section 66(3). At p. 296 we have the following observation by Page C.J.:
Under Section 23(4) the Income-tax Officer is the persona designata to make the assessment, and from an assessment so made no appeal lies. If an assessment under Section 23(4) is made by the Income-tax Officer mala, fide, and is "arbitrary" in the sense that I first indicated, it cannot be doubted, I imagine, that the Commissioner would exercise the power of review with which he is entrusted under Section 33. But, in my opinion, an assessment made by the Income-tax Officer under Section 23(4) unless it is cancelled under Section 27, or set aside under Section 31 or Section 33, is made final and conclusive under the provisions of the Act.
11. By "arbitrary" his Lordship was envisaging a case where the Income-tax Officer, regardless of information in his possession, has deliberately, recklessly or fraudulently made an assessment under Section 23(4) which he knows that he was not justified in making: vide p. 294. We now come to two decisions of the Privy Council. In Commissioner of Income-tax, U.P. and C.P. v. Badridas Ramrai Shop, Akola (37) 24 AIR 1937 PC 133 an incomplete and unsatisfactory return had been furnished in compliance with a notice under Section 22(2) of the Act. Thereupon a combined notice under Sections 22(4) and 23(2) was served on the respondent. The latter applied for and obtained an adjournment; but when he applied for a further adjournment, his application was refused and the Income-tax Officer made an assessment under Section 23(4). At p. 933 their Lordships observe:
If the assessment in this case was made by the officer to the best of his judgment, it must stand unless the assessee succeeded in satisfying the officer that he had not a reasonable opportunity to comply or was prevented by sufficient cause from complying with the terms of the notice under Section 22(4) requiring him to produce or cause to be produced his accounts for three years. This he failed to do, and upon the undisputed and indisputable facts of the case he necessarily so failed. His application under Section 27 for the cancellation of the assessment was doomed to failure, and his appeal to the Assistant Commissioner under Section 30 was equally incapable of success. There the matter should have ended, unless the Commissioner chose to proceed under Section 33.
12. At pp. 934 and 935 their Lordships say:
There remains for consideration the point whether the assessment can be attacked on the ground that it was not made by the officer to the best of his judgment within the meaning of Section 27. The Judicial Commissioners have laid down two rules which impose upon the officer the duty of (i) conducting some kind of local inquiry before making the assessment under Section 23(4) and (ii) recording a note of the details and results of such inquiry.
Their Lordships find it impossible' to extract these requirements from the language of the Act, which after all is, in such matters, the primary and safest guide. 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 or vindictively or capriciously because he must exercise his 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, their Lordships think, 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 assesses, and all other matters which he thinks will assist him in arriving at a fair and proper estimate; and though there must necessarily be guess-work in the matter it must be honest guess-work. In that sense too the assessment must be to some extent arbitrary. Their Lordships think that the section places the officer in the position of a person whose decision as to amount is final and subject to no appeal; but whose decision if it can be shown to have been arrived at without an honest exercise of judgment, may be revised or reviewed by the Commissioner under the powers conferred upon that official by Section 33.
Their Lordships can find no justification in the language of the Act for holding that an assessment made by an officer under Section 23(4) without conducting a local inquiry and without recording the details and results of that inquiry cannot have teen made to the best of his judgment within the meaning of the section. Nor can they find any such justification in the authorities upon which the Judicial Commissioners appear to have relied.
13. In conclusion their Lordships remarked thai they were in agreement with the views which had been expressed by the High Court at Rangoon in Abdul Bari v. Commissioner of Income-tax, Burma (31) 18 AIR 1931 Rang 194. The last case which we propose to consider is Commissioner of Income-tax, Bombay Presidency and Aden v. Khemchand Ramdas (38) 25 AIR 1938 PC 175. In that case a firm was assessed to income-tax on 17th January 1927. On that same date the firm applied For registration and accordingly no super-tax was levied; but, subsequently, the Commissioner of Income-tax cancelled the order of registration and directed the Income-tax Officer to take necessary action, and the latter assessed the firm to super-tax by an order, dated 4th May 1929, in pursuance of a notice of demand which was issued beyond the time prescribed by Section 35. As regards the assessment of 17th January 1927, their Lordships say at p. 757:
So far...as the respondents were concerned, their assessment for the year...had become final and conclusive. For though by Section 30(1) a right of appeal to the Assistant Commissioner is given to an assessee objecting to the amount or rate at which he is assessed under Section 23 or denying his liability to be assessed under the Act, the subsection contains a proviso to the effect that no appeal shall lie in respect of an assessment made under Section 23(4).
14. The assessee appealed to the Assistant Commissioner. The latter did not deal with the question of the competency of the appeal and expressed no opinion upon the question whether the assessment was under Section 23(4). He merely held that the order of 4th May 1929 was valid, and confirmed the tax thereby acting, or purporting to act, under Section 31(3)(a) of the Act. An application to the Commissioner to set aside the order of the Income-tax Officer or to state a case for the High Court was rejected, the view of the Commissioner being that the assessment was under Section 23(4) and no appeal lay. At p. 758 their Lordships say:
Another question arising upon the appeal was as to its competency. Having regard to Section 58(1) of the Act the provisions contained in Section 30(1), giving a right to appeal to the Assistant Commissioner in the case of an assessee denying his liability to be 'assessed under the Act', which must mean in that context 'charged with tax under the Act', is as applicable to super-tax as it is to ordinary income-tax. But the proviso to that sub-section has to be considered. If the order of 4th May 1929 can properly be described as an assessment under Section 23(4) no appeal would lie.
15. At p. 760, after mentioning that the Commissioner had quashed the proceedings before the Assistant Commissioner, their Lordships say:
In their Lordships' opinion the Commissioner was plainly wrong in so doing. One of the questions of law arising out of the order of the Assistant Commissioner was whether the appeal to him was competent in view of the proviso to Section 30(1). By deciding this question himself adversely to the respondents, the Commissioner could not deprive the respondents of the right of having the question decided by the Court. This was the view of the matter rightly taken by the Court, who upon application made to them by the respondents under Section 66(3) ordered the Commissioner to state a case and refer it to them for their decision.
16. At the end their Lordships observe, in respect to the order of 4th May 1929:
If it was made, as the Commissioner has found, in purported exercise of the powers given by Section 23(4), the assessee nevertheless had a right of appeal to the Assistant Commissioner under Section 30, and the Commissioner was in error when he quashed the proceedings on that appeal.
17. In this connexion their Lordships approved the observation of Sir Shadi Lal in Duni Chand v. Commr. of Income-tax (29) 16 AIR 1929 Lah 593, already referred to, to the effect that:
The mere fact that the assessment purports to have been made under that sub-section does not shut out the appeal; it must be shown that the circumstances of the case bring it within the scope of that sub-section.
18. Having regard to the authorities which we have cited, we are of opinion that where, as in the case before us an assessment has been made, not in form only but in fact, not ostensibly but actually and in good faith, under Section 23(4) of the Act, and where as here the Assistant Commissioner, upon consideration of the facts, has found that the assessment was properly so made, the proviso to Section 30 bars an appeal; and the order of the Assistant Commissioner rejecting the appeal is not an order under Section 31 inasmuch as he has not "disposed of" the appeal. It follows from this, having regard to the provisions of Sub-section (2) of Section 66, that there can be no question of law referable to the High Court under that subsection or under Sub-section (3). We express no opinion, for it is unnecessary to do so, as to what the law would be in a case where the income-tax Officer merely purports to make an assessment under Section 23(4) and where the Assistant Commissioner rejects the appeal under the proviso to Section 30 without having given any consideration to the propriety or otherwise of the order of assessment. Whether in such a case a reference would be competent under Section 66(2) or Section 66(3) or whether the assessee's remedy would be confined to an application under Section 33 is a question which does not fall to be considered in these proceedings. Alternatively learned Counsel for the assessee pleads that there is a question of law arising out of the Assistant Commissioner's order dismissing the assessee's application under Section 27. The question which he formulates is this: "Whether the assessee had sufficient cause for not complying with the notice under Section 22(4)."
19. It was held in Abdul Bari v. Commissioner of Income-tax, Burma (31) 18 AIR 1931 Rang 194 at p. 299 that under Section 27 the issue is essentially one of fact; and in Commissioner of Income-tax, U.P. and C.P. v. Badridas Ramrai Shop, Akola (37) 24 AIR 1937 PC 133 their Lordships of the Privy Council held that the question whether on the facts of that case the respondent had sufficient cause within the meaning of Section 27 was a question of fact and no reference with regard to it was competent under Section 66(2). There can be no doubt whatever that the question whether an assessee had or had not sufficient cause within the meaning of Section 27 of the Act is ordinarily a question of fact, and in the present case there is a finding by the Assistant Commissioner that the assessee had only produced partial accounts and that there must exist a supplementary set of accounts which had not been produced. Upon these findings it is impossible to say that the issue whether the assessee had sufficient cause within the meaning of Section 27, involves any question of law. The result of our findings is that we dismiss this application with costs. Learned counsel for the department is entitled to a fee of Rs. 75. A copy of this order under the seal of the Court and the signature of the Registrar will be sent to the Commissioner of Income-tax.