Premature assessment notice for discontinued business valid before assessment year begins; assessment and registration consequences followed.

A notice for premature assessment of a discontinued business could validly be issued before the assessment year began under the Indian Income-tax Act, 1922, because section 22(2) operated independently of section 22(1). Section 25(1) also permitted assessment on the income of the broken period between the end of the previous year and discontinuance. The assessment and the assessee's liability were not conditional on the validity of the notice, and a return filed in response to the notice did not become ineffective merely because the notice was challenged. Refusal of registration was consequential to the assessment result and could not stand independently once the assessment issue was considered.

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Issues: Whether a notice issued under section 22(2) read with section 25(1) of the Indian Income-tax Act, 1922, before the commencement of the assessment year for a broken period was valid, whether the assessment made on the basis of such notice and the subsequent return was invalid, and whether the refusal of registration could stand once the assessment was challenged.

Analysis: Section 22(2) operated in a field distinct from section 22(1), and a notice under section 22(2) could validly be issued even before the commencement of the assessment year. Section 25(1) authorised a premature assessment in the year of discontinuance on the income of the broken period between the end of the previous year and the date of discontinuance. The validity of the assessment and the assessee's liability were not made conditional on the validity of the notice. A return filed in response to the notice could not be treated as ineffective merely because the notice was challenged, and the later return did not alter the legal position. The refusal of registration was only consequential to the assessment result.

Conclusion: The notice under section 22(2) read with section 25(1) was valid, the assessment was valid, and the challenge to the refusal of registration also failed.

Ratio Decidendi: A notice for premature assessment of a discontinued business under section 22(2) read with section 25(1) of the Indian Income-tax Act, 1922 can validly be issued before the assessment year begins, and the jurisdiction to assess is not dependent on the validity of that notice.

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