Production notice limits: books not in the assessee's possession or control cannot trigger a valid best judgment assessment.

The power to require production of accounts under Section 22(4) is confined to documents in the assessee's possession or control, and cannot extend to books of a separate legal entity that the assessee cannot lawfully produce. On the facts, there was no evidence that the Hongkong company's books were within the assessee's reach or control, so the notice was unwarranted. A default assessment under Section 23(4) could not be sustained on the basis of non-compliance with an impossible demand, and the consequential best judgment assessment was set aside in favour of the assessee.

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Issues: Whether the Income-tax Officer could validly require the assessee to produce books of account of a separate company which were not shown to be in the assessee's possession or control, and whether a default under that notice could sustain an assessment under Section 23(4).

Analysis: Section 22(4) authorises a call for accounts or documents only where they are in the possession or under the control of the person served with notice. A statutory default cannot be founded on an impossibility in law, and the penalty consequences flowing from non-production reinforce that the provision cannot extend to documents which the assessee is incapable of producing. On the facts, there was no evidence that the assessee could produce the books of the Hongkong company, which was a distinct legal entity, and no material justified the conclusion that the books were within the assessee's control. The notice under Section 22(4) was therefore unwarranted, and the assessment made in consequence under Section 23(4) could not stand.

Conclusion: The reference was answered in the negative. The demand for production of the other company's books was invalid and the consequential best judgment assessment was unjustified, in favour of the assessee.

Final Conclusion: The judgment confined the revenue's power to documents actually within the assessee's reach and rejected the use of a default assessment where compliance was legally impossible.

Ratio Decidendi: Section 22(4) of the Indian Income-tax Act empowers requisition only of accounts or documents in the assessee's possession or control, and a default assessment under Section 23(4) cannot be sustained where the notice demanded production of documents beyond the assessee's legal capacity to produce.

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