Combined income-tax notices and best judgment assessment upheld where accounts were withheld after return filing.

A combined notice requiring production of accounts under Section 22(4) and attendance with evidence under Section 23(2) of the Income-tax Act, 1922 was held to be valid because the two statutory requirements could be conveyed in one document with one compliance date. The filing of a return did not extinguish the power to call for accounts under Section 22(4), and non-compliance with that notice could still attract best judgment assessment under Section 23(4). Where the assessee withheld the best evidence and failed to produce accounts, the Income-tax Officer was not confined to assessment under Section 23(3) and could proceed under Section 23(4).

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Issues: (i) Whether a combined notice issued under Section 22(4) and Section 23(2) of the Income-tax Act, 1922 was invalid in law; (ii) Whether, after a return is filed and a notice under Section 23(2) is served, failure to comply with a notice under Section 22(4) permits assessment under Section 23(4) rather than under Section 23(3).

Issue (i): Whether a combined notice issued under Section 22(4) and Section 23(2) of the Income-tax Act, 1922 was invalid in law.

Analysis: The statutory scheme permitted the Income-tax Officer to require production of accounts under Section 22(4) and, separately, to require attendance and production of evidence in support of a return under Section 23(2). The two requirements could properly be conveyed in one document fixing one date for compliance. No legal infirmity arose merely because the notices were combined.

Conclusion: The combined notice was valid and not null and void.

Issue (ii): Whether, after a return is filed and a notice under Section 23(2) is served, failure to comply with a notice under Section 22(4) permits assessment under Section 23(4) rather than under Section 23(3).

Analysis: The power under Section 22(4) to call for accounts was not extinguished by the filing of a return, and the existence of a notice under Section 23(2) did not prevent the Officer from acting on the assessee's default in withholding books. Section 23(4) contemplated three distinct defaults, including failure to produce accounts when required. Where the assessee deliberately withheld the best evidence, the Officer was entitled to make a best judgment assessment rather than proceed on the footing of a compliant return under Section 23(3).

Conclusion: Assessment under Section 23(4) was justified; the Officer was not bound to proceed under Section 23(3).

Final Conclusion: The reference was answered against the assessees, and the Income-tax Officer's course of action was upheld on both points.

Ratio Decidendi: A notice to produce accounts under Section 22(4) may validly be combined with a notice under Section 23(2), and the power to require accounts survives the filing of a return; wilful failure to produce accounts justifies best judgment assessment under Section 23(4).

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