Statutory notice service on accredited agent and limited reference jurisdiction under the Income-tax Act were upheld.

Service of a statutory notice on an assessee's accredited agent was held sufficient, and the assessee's failure to produce the books actually found to exist amounted to non-compliance with the notice under the Income-tax Act, 1922; the assessment under Section 23(4) was therefore upheld. The High Court also held that reference jurisdiction under Section 66 did not extend to the Commissioner's original order imposing penalty under Section 28, because Section 66 was confined to orders within the appellate chain. On both grounds, the assessee obtained no relief.

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Issues: (i) Whether the assessment made under Section 23(4) of the Income-tax Act, 1922 was invalid for want of proper service of notice or for alleged non-compliance with the notice under Section 22(4); (ii) Whether the High Court could require a reference under Section 66 of the Income-tax Act, 1922 in respect of the Commissioner's original order imposing penalty under Section 28.

Issue (i): Whether the assessment made under Section 23(4) of the Income-tax Act, 1922 was invalid for want of proper service of notice or for alleged non-compliance with the notice under Section 22(4).

Analysis: The assessee's books were found, on the Commissioner's findings, to have been inspected earlier by the Income-tax Officer and the books later produced were not the real books. The notice directing production of the books was served on the assessee's accredited agent, the gomashta, which was sufficient service. A mere denial that the books existed did not excuse production when the books were in fact found to be in existence, and failure to produce them amounted to non-compliance with the statutory notice.

Conclusion: The assessment under Section 23(4) was not invalid and was upheld.

Issue (ii): Whether the High Court could require a reference under Section 66 of the Income-tax Act, 1922 in respect of the Commissioner's original order imposing penalty under Section 28.

Analysis: The language of Section 66 was confined to orders passed in the appellate chain and did not extend to an original order made by the Commissioner. The penalty order under challenge was an original order of the Commissioner and not an appellate order within the scope of the reference jurisdiction.

Conclusion: No reference could be required under Section 66 in respect of the Commissioner's original penalty order.

Final Conclusion: The application failed on all substantial grounds and the assessee obtained no relief.

Ratio Decidendi: Service of a statutory notice on an assessee's accredited agent is sufficient, and the reference jurisdiction under Section 66 does not extend to an original order of the Commissioner.

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