Brij Raj-Rang Lal vs Commissioner of Income Tax

B.K. Mullick, Acting C.J.

It is difficult to understand what is the special question of law upon which the Commissioner of Income Tax is asking for an opinion. It is not sufficient for an assessee to suggest to the Commissioner the questions of law. It is for the Commissioner to find the facts first and then to state the point of law which arises out of those facts and on which he desires our opinion. He may then, if he likes, give his own opinion on the case.

Both parties, however, have agreed before us to ask our opinion on the following question of law:

Is an assessment u/s 23, Clause (4) of the Indian Income Tax valid in this case?

The answer depends upon whether or not a breach of Section 22(4) was committed.

Accounts or documents can be called for by the Income Tax Officer u/s 22(4) after issue of notice and before the filing of the return.

After the filing of the return Sections 23(2) 23(3) and 37 give ample powers to the Income Tax Officer to call for whatever documents he requires. The failure to comply with any of the notices under these sections does not authorise the Income Tax Officer to make a summary assessment to the best of his judgment under Clause (4) of Section 23.

This last mentioned clause runs as follows:

If the principal officer of any company or any other person fails to make a return under Sub-section (1) or Sub-section (2) of Section 22, as the case may be, or fails to comply with all the terms of a notice issued under Sub-section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under Sub-section (2) of this section, the Income Tax Officer shall make the assessment to the best of the judgment.

The words "or having made a return" would be quite unnecessary if they were not intended to be in sharp antithesis to the preceding words and to show that in the view of the Legislature a notice u/s 22(4) concerns only the stage before the filing of a return. Duni Chand Dhani Ram v. Commissioner of Income Tax, Punjab 94 Ind. Cas. 614 : 7 Lah. 201 : 8 LL.J. 106 : AIR 1926 Lah. 161 : 27 P.L.R. 836 and Pitta Ramaswamiah Vs. Commissioner of Income Tax, were cited but it does not appear that the point was clearly raised and decided in these cases.

If then notice u/s 22(4) can only be issued before the filing of a return, there could have been no breach of a notice under this clause in the present case and the summary assessment was illegal.

This assumes that there was in fact a notice issued u/s 22(4) but the finding of the Income Tax Commissioner on this point is not clear.

He thinks that the order entered on the order-sheet of the 18th December, 1925, was sufficient to constitute a notice u/s 22(4). But what is there to show that the notice was under this section? The notice might have been one u/s 37 or 23(3).

Therefore, even if we assume that notice u/s 22(4) can be issued after a return has been filed, such notice not having been issued in this case the summary assessment was illegal.

The assessee succeeds and will get the costs of this proceeding. Hearing fee five gold mohurs. He will be entitled to include in his costs his deposit of Rs. 100 but not for the printing of the paper-book.

Sen, J.

I agree.