Rankin, C.J:— In this case, the Commissioner of Income-tax has referred two points of law to this Court for its opinion, under section 66 of the Indian Income-tax Act (XI of 1922). Before setting out the form of the questions, it may be as well to premise that the assessees in this case are a firm called Messrs Harmukhrai Dulichand.

It appears that on the 4th of May, 1926, an ordinary notice was served upon them, under clause (2) of section 22, requiring them to render a return of their income for the purpose of income-tax. It appears that the year by which this firm goes in maintaining its books of account is the Dewali year and the year of assessment was 1982-1983, the previous year or the year of accounting being, therefore, 1981-1982. On the 22nd of July, 1926, a notice under section 22(4) was served upon them, asking that they should produce their books of; account for the Dewali years 1980-1981 and 1981-1982 and on, the 6th of August, 1926, the assessees submitted a return. The return which they submitted consists of the words and figures “Loss Rs. 26,000” under the head “business”. A notice was then issued upon them, being a combined notice purporting to be under clause (2) of section 23 and also clause (4) of section 22. That required them to produce the accounts for 1980-1981 and 1981-1982 and also gave them an opportunity to call any other evidence on which they might rely in support of their return. On the elate fixed by the notice, the books of 1981-1982 were examined and various adjournments were taken for the production of the books of 1980-1981. There was a hearing, on appointment, on the 26th of August, 1926, on the 10th January, 1927, and on the 16th of February, 1927, and the final order of assessment was not made till the 26th of February, 1927. Although, therefore, these books for 1980-1981 were called for, at all events, on the 6th of August, 1926, they were not produced by the following February, at the time when the assessment was made. The Income-tax authorities have held that ample time was given for their production and that their non-production was wilful, as indeed is reasonably obvious from the dates and also from the inconsistent stories told by these assessees to the effect that their books for the year in question were sent to Bikanir because of the Calcutta riots and also because of settling some disputes. The finding of fact is that these accounts are still deliberately withheld. There can be no question that, for the purpose of finding what was the profit or loss for the year 1981-1982, it is necessary to get the books of the year previous to that because, on any question of loss caused by fall in the value of the stock, it is most necessary to see on what basis the valuation has been taken. The result, therefore, was that the assessees had deliberately withheld the best evidence—indeed the only evidence—that would enable one to test the accuracy of the return.

It is, in these circumstances, that the assessees, having failed before the Income-tax authorities, requested that two points of law should be referred to this High Court by the Commissioner of Income-tax. The first question is: “Was the notice under section 22(4), which was issued in this case, so defective as to be legally null and void”? The second, question is this: “If an assessee has made a return in compliance with a notice under section 22(2) and thereafter a notice has been served upon him under section 23(2) and also a notice under section 22(4) and the assessee has complied with the terms of the notice under section 23(2) by producing the evidence upon which he relies, but has failed to comply with the notice under section 22(4), is the Income-tax Officer entitled to make an assessment under section 23(4), for failure to comply with the notice under section 22(4), or is he bound to proceed under section 23(3)?”. In my opinion both of these questions must be answered against the assessees.

The first question is whether there is anything illegal in the issue of a notice under section 23(2) and section 22(4). I am of opinion that there is no reason why these two notices should not be comprised in one document. The position is that the assessee is given, one date on which he is first of all to produce certain accounts or documents required by the Income-tax Officer and he is also told that on that same date he will get an opportunity of producing any further evidence upon which he relies. I can see no objection at all to that procedure and I observe that in the case cited to us from the Allahabad High Court, In the Matter of Chandra Sun Jaini, Vaid, Etawah a Division Bench of that Court was of the same opinion. In my judgment there is no difficulty upon the answer to the first question.

The second question depends upon the construction to be put upon the 22nd and 23rd sections of the Income-tax Act. By section 22, provision is made to the effect, in the case of companies, that the principal officer shall, before the fifteenth of June in each year, furnish a return of income without being asked. Provision is also made, in the case of other persons, whose total income is, in the Income-tax Officer's opinion, such as to render such persons liable to income-tax, that the Income-tax Officer may serve a notice requiring a return to be made. The concluding paragraph of that section then provides that the Income-tax Officer may serve on the principal officer of any company or on any person upon whom a notice has been served under sub-section (2), a notice requiring him, on a date to be therein specified, to produce or cause to be produced, such accounts or documents as the Income-tax Officer may require, provided that he shall not require the production of any accounts relating to a period more than three years prior to the previous year. That provision which enables the Income-tax Officer to require the production of accounts or documents is in the case of persons, other than companies, a power given on condition that a notice has been served requiring the making of a return. There is no sign in that clause of any further condition.

When we come to the next section we find that the section begins by dealing with the case of a return as to which the Income-tax Officer is satisfied. In that case he assesses on the basis of the return. It then goes on to deal with a case where the Income-tax Officer has reason to believe that a return made is in correct or incomplete and the language of the statute imposes upon the Income-tax Officer the duty of serving upon the assessee a notice requiring him either to attend at the Income-tax Officer's office or to produce any evidence on which such person may rely in support of the return. The meaning of that clause is that, when a return is made, the Income-tax Officer shall not reject it and take some other basis as the basis of assessment without giving the assessee an opportunity to appear before him and give any evidence which he may desire to give. The power under clause (4) of section 22 is a power to the Income-tax Officer which has reference to accounts and documents and to no other form of evidence. The right under section 23(2) is a right to call any evidence that the assessee may desire to call.

The last clause of section 23 deals with three different cases and for that reason perhaps the section is not so clearly drafted as it might be. It begins by taking the case of an assessee who makes no return at all and it says that the Income-tax Officer shall assess him to the best of his judgment. It then deals with the case of a person who has been ordered to produce accounts or documents and has failed to comply with the requirements. His is the same fate; the Income-tax Officer makes the assessment to the best of his judgment. It then deals with the third case—the case of a person, who having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of section 23. Upon that, the contentions that are raised are, first, that no notice to produce accounts or documents can validly issue after the return is filed and, secondly, that if, in fact, a notice is issued under section 23(2), it is impossible for the assessee to be penalised for the mere non-production of accounts: in other words, the second case contemplated by clause (4) of section 23 is no longer a case of which the assessee can be deemed to be an instance.

In my judgment the exposition which the Commissioner of Income-tax has given is correct. He points out that the sub-section contemplates three distinct cases and, to my mind, it is abundantly shown by him that there is no warrant in the statute for saying that after a return is made the power given by clause (4) of section 22 is gone. The only ground which I have discovered for that opinion is the insertion of the harmless words “having made a return” into clause (4) of section 23. It seems paradoxical and improbable that the making of a return should put an end to the power of the Income-tax Officer to require the production of accounts. One would naturally suppose that the Income-tax Officer, having seen a return, may, in some cases, be in a better position than he would otherwise have been to say whether he thinks it necessary to inspect books of accounts or other documents or not. But apart from that question, it is at least extraordinary that a limit, upon the power given by clause (4), of section 22 should be made in the dubious and inferential manner which is suggested, namely, by the words “having made a return” being inserted in clause (4) of section 23. In my judgment, there is no basis either as a matter of business or as a matter of construction for the opinion that the moment a return is filed the right of the Income-tax Officer to require the production of accounts under section 22(4) is gone.

If that be so, the next question is whether it can be contended that because in fact a notice under clause (2) of section 23 was served upon this firm the power provided by clause (4) of that section to meet a case of withholding of accounts can no longer be exercised. In my judgment, there is no ground for that contention either. The Income-tax Officer in this case had asked the assessees, first of all, to produce their books, secondly, to attend upon him and thirdly, at the same time, to produce any other evidence they like. If the assessees are not in default, if they produce their books and attend, then, whether they produce other evidence or not, it will, no doubt, be for the Income-tax Officer to proceed against the assessees under sub-section (3) of that section. But if, when the date comes, it turns out that the assessees are withholding their books of account, but want to produce some other evidence, it seems to me reasonably plain that the Income-tax Officer may well say “you are in default for withholding your accounts, you will be dealt with on that basis. In the absence of available accounts, neither argument nor other evidence is anything but a waste of time. It is mera palpatio, you will be treated as defaulters and in no other way”. In my judgment that is what the statute intends. The statute intends that persons who deliberately make default in producing their accounts when asked to do so under clause (4) of section 22 shall be treated as defaulters and that the Income-tax Officer shall make the assessment to the best of his judgment.

It has been said that the Income-tax Officer must proceed in a judicial manner and section 37 has been mentioned in this connection. Fundamentally, no doubt, the Income-tax Officer must proceed in a judicial spirit and come to a judicial conclusion upon properly ascertained facts; though I would point out that the Income-tax Officer is not a Court, he has not the procedure of a Court, and he is to some extent a party or Judge in his own case. However true it be and for whatever purpose it be true that the assessment to income-tax is to be done in a judicial manner, the first thing which must be laid down as a condition before a person can complain of any departure from this principle is this that he too must produce the evidence which the law requires him to produce. It is idle and absurd for a person who has books of account and deliberately withholds them to complain of not being treated in a judicial manner. The judicial manner is a manner which proceeds upon evidence, and the basis of the statute is to see that available evidence is produced. It is then and only then that the assessment is to be made upon a judicial consideration of the evidence. Otherwise it is to be made “to the best of his judgment” and brevi manu.

In my judgment, there is no foundation for the assessees' contention on either of the points that have been referred to us. It seems to me, therefore, that the answer to these two questions should be, as I have indicated, to the first “No,” to the second “Yes.”.

It only remains to mention certain cases which have been drawn to our attention. One is a decision of the High Court of Patna in Brij Raj Ranglal v. Commissioner of Income Tax. In that, case it would appear that the learned Judges were not satisfied that a notice under section 22(4) had been issued at all. They seem to think on the basis of the words “having made a return” under section 23(4) that the power to call for books and documents is limited to the period prior to the filing of the return. But they say that “even if we assume that notice under section 22(4) can be issued after a return has been filed, such notice not having been issued in this case, summary assessment was illegal”. It appears to me, therefore, that the view that the right to issue a notice under clause (4) of section 22 comes to an end on the making of a return was not essential to the decision in that case; but, in any event, I disagree with that opinion. It seems to me to have no merits whether as a matter of business or of construction of the statute.

The next case to which we were referred was the case of Duni Chand-Dhani Ram v. The Commissioner of Income-tax, decided by Mr. Justice Le Rossignol and Mr. Justice Martineau. That was a case where it seems to me that no law was laid down which is not in harmony with the view which I have endeavoured to express. That was a case where an assessee had made a return of his income. He was called upon to produce his books of account and he did produce his books of account. That being so, he was in the position of a man who must under clause (2) of section 23, be given a proper-opportunity to support his own return by such evidence as he desires and whether his return was supported by further evidence or not, the Commissioner was bound to assess him, not on the footing that he was a defaulter, but on the footing that his return ought to be accepted, save in so far as there might be good reason for criticising it. The learned Judges in that case, so far as I can see, have laid down no law to the effect that a person who is in default by wilful failure to produce accounts is not within the summary power given by clause (4) of section 23.

Another case to which we have been referred is all decision of Mr. Justice Greaves and Mr. Justice-Mukerji of this Court in the case of Nirmal Kumar-Singh Nowlaksha v. The Secretary of State for India-in Council. There again, we have a case of an assessee who made a return and produced his accounts. At the time when he produced his accounts, various matters were gone into between his gomasta and the Income-tax Officer. Without giving a proper notice-requiring him to produce such evidence as he might desire in support of his return, the Income-tax Officer-assessed him upon a basis inconsistent with his return and, in these circumstances, one learned Judge thought that the Statute had been substantially complied with and the other learned Judge (Mr. Justice Mukerji) took the view that the informality was one-which had not been waived and could not safely be ignored. In the course of that judgment, there is not only nothing to the effect that the power to call for accounts must be exercised before the making of the return, but that judgment supports what the Income-tax Officer has done in this case.

Two cases have been drawn to our attention on the part of the Advocate General. One contains some expressions in a judgment of my own in an Income-tax Reference, In the matter of Ramkissen Das Bagri and the other is a judgment of the Allahabad High Court in In the Matter of Chandra Sen Jaini, Vaid, Etawah. There, too, the dictum in the Patna case, to which I have referred, was dissented from and there, too, it was held that a combined notice under section 22(4) and section 23(2) was a proper notice.

In these circumstances it appears to me that the questions put to us must be answered against the assessees and that the assessees must pay the costs of this Reference.

Ghose, J.:— I agree.

Buckland, J.:— I agree.

Vakil for the assessee: Amulya Charan Sen.

Attorney for the Crown: G.C Gooding.

S.M

Reference accepted.