Section 23(4) assessment can follow non-compliance with income-tax notice under section 22(2) alone

Section 23(4) of the Indian Income-tax Act, 1922 was explained as applying when any one of the specified defaults occurred, including failure to comply with a notice under section 22(2). Section 22(3) was treated as only an additional opportunity to file a return before assessment, not as a separate statutory duty whose breach was required for section 23(4) action. On that construction, non-compliance with section 22(2) alone was sufficient to justify proceeding under section 23(4), and no further default under section 22(3) was necessary.

---

---

Issues: Whether an assessment under section 23(4) of the Indian Income-tax Act, 1922, could be made only if the assessee had defaulted not merely under section 22(2) but also under section 22(3) of the Act.

Analysis: The scheme of section 23(4) shows that it is attracted on the occurrence of any one of the contingencies specified therein, including failure to make the return required by notice under section 22(2). Section 22(3) does not impose any duty on the assessee; it merely gives an additional opportunity to file a return before assessment is completed. Mere failure to take advantage of that privilege is not a statutory default. The decisive default is non-compliance with the notice under section 22(2), and once such non-compliance is admitted, the Income-tax Officer is justified in proceeding under section 23(4).

Conclusion: An assessment under section 23(4) could be validly made on default under section 22(2) alone, and no further default under section 22(3) was required. The reference was answered in the negative and in favour of the Revenue.

---