Pre-inquiry tax notice limits shape summary assessment powers and distinguish original assessment from supplementary assessment.

Section 22(4) of the Income-tax Act, 1922 was construed as a pre-inquiry power meant to operate before the assessment inquiry under Section 23(3), so the officer can decide whether to accept the return or proceed further. Section 23(4) was treated as confined to the defaults expressly listed in that provision and not to a default arising after a Section 23(3) inquiry has begun. Applying that construction, a notice issued after commencement of the original assessment inquiry for 1925-1926 was invalid and could not support summary assessment, while the notice issued for the supplementary assessment under Section 34 for 1924-1925 was valid.

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Issues: Whether a notice under Section 22(4) of the Income-tax Act, 1922 could be validly issued after the commencement of an inquiry under Section 23(3), and whether default in complying with such a notice justified a summary assessment under Section 23(4), having regard to the different position in a supplementary assessment under Section 34.

Analysis: Section 22 deals with return of income and the power to call for documents and accounts, while Section 23 governs assessment. The power under Section 22(4) was held to be intended to operate before the inquiry stage under Section 23(3), so that the officer may decide whether to accept the return or proceed further. Section 23(4) was read as authorising summary assessment only for the specific defaults there enumerated, and not for a default arising after the inquiry under Section 23(3) has begun. The construction was reinforced by the context of fiscal legislation, where an interpretation favourable to the subject is preferred in case of doubt. On the facts of the supplementary assessment for 1924-1925, the notice under Section 22(4) issued in connection with Section 34 was valid; but for the original assessment for 1925-1926, the notice issued after commencement of the Section 23(3) inquiry was not valid.

Conclusion: The notice under Section 22(4) was invalid for the assessment year 1925-1926 and could not support a summary assessment under Section 23(4), but it was valid for the supplementary assessment for 1924-1925.

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