Timing of income-tax notice under section 22(2) clarified: service before return deadline can be valid.

A notice under section 22(2) of the Indian Income-tax Act, 1922 may validly be served before the time for filing a return under section 22(1) expires, because the two provisions operate in different fields and section 22(2) contains no postponement requirement. The text states that the Income-tax Officer may issue the specific notice at any time during the assessment year once the requisite opinion of liability is formed. On that basis, the Tribunal's contrary view was erroneous, and the ex parte assessment under section 23(4), together with the consequential order under section 27 and penalty under section 271(1)(i), was stated to be sustainable.

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Issues: Whether a notice under section 22(2) of the Indian Income-tax Act, 1922 could validly be served before the expiry of the time allowed for filing a return under section 22(1), and whether, on that basis, the ex parte assessment under section 23(4) and the consequential order under section 27 and penalty under section 271(1)(i) were sustainable.

Analysis: Section 22(1) requires a general published notice to all persons within the taxable limit and fixes the period for filing the return, while section 22(2) empowers the Income-tax Officer to serve a specific notice when he is of opinion that a person is liable to income-tax. The two provisions operate in different fields. Nothing in section 22(2) postpones the issuance of such a notice until after the expiry of the time mentioned in section 22(1). The absence of a time restriction in section 22(2) shows that the Income-tax Officer may issue that notice at any time during the assessment year, provided the requisite opinion has been formed. A contrary view would unduly limit the statutory power and impede prompt assessment proceedings.

Conclusion: A notice under section 22(2) could validly be served before the period under section 22(1) expired. The Tribunal was in holding the notice invalid, and the assessment under section 23(4) as well as the orders under section 27 and section 271(1)(i) were sustainable.

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