1. In the assessment of the assessee for the assessment year 1949-50 for which the account year was Maru Year 2004-2005, notices were issued by the Income-tax Officer under section 22(4) on the 12th October, 1953, and on the 21st December, 1953. By the said notices the Income-tax Officer had called upon the assessee to furnish accounts, documents and information in respect of the items specified by him in a letter accompanying each of the notices. The assessee failed to comply fully with the said notices and the Income-tax Officer made a best judgment assessment under section 23(4) on the 28th January, 1954. On the 1st March, 1954, the assessee filled an application under section 27 for setting aside the best judgment assessment under section 23(4). It was alleged in the said application by the assessee that he had complied with the requisition of the notices issued by the Income-tax Officer and the best judgment assessment, therefore, was not justified. The application was rejected by the Income-tax Officer. In the arguments before the Appellate Assistant Commissioner in the appeal, which the assessee referred again the order of the Income-tax Officer, an additional ground was taken, viz., that the notice sunder section 22(4) were invalid and, consequently, the Income-tax Officer had no right to make a best judgment assessment for non-compliance with the said notices. The argument advanced was that prior to the amendment of section 22(4) by the Amending Act of 1953, the Income-tax Officer could under the said section ask only for the production of accounts and documents and not for any other information or particulars. The amendment made by the Amending Act of 1953 gave power to the Income-tax Officer to require the assessee to supply particulars and information in addition to the accounts and documents, but this amendment became operative only from the 1st April, 1952, and, therefore, could not apply to assessments of a period prior to the said date. Since the assessment in the present case was for the assessment year 1949-50, the Income-tax Officer had no power to require the assessee to furnish particulars or information on a notice under section 22(4). The argument was negatived by the Appellate Assistant Commissioner who took the view that the amendment of section 22(4) effected by the Amendment Act was clearly a procedural amendment and was, therefore, applicable to all assessments, which were then pending. Since the notices issued under section 22(4) were subsequent to the date since when the amendment had become effective, the notices issued were perfectly good and valid and the Income-tax Officer was, therefore, justified in proceeding to a best judgment assessment for non-compliance with the said notices by the assessee. In the appeal before the Income-tax Appellate Tribunal, the same contention was again raised by the assessee and it was further sought to be reinforced by an argument that if the amendment effected in section 22(4) was made applicable to assessments of a date prior to its introduction, such an interpretation of the said provision would make it discriminatory and, therefore, violative of the fundamental rights under article 14 of the Constitution. The Tribunal did not accept the contentions raised by the assessee before it, and confirmed the orders passed by the income-tax authorities. Thereafter, at the instance of the assessee, it drew up a statement of the case and referred to this court the following question under section 66(1) of the Indian Income-tax Act :
'Whether oh the facts and circumstances of the case the notices dated 12th October, 1953, and 21st December, 1953, issued under section 22(4) are valid ?'
2. Mr. Kolah, the, learned counsel appearing for the assessee, has argued that the provision of section 22(4) of the Indian Income-tax Act is not merely a procedural provision and, therefore, the rule that a procedural provision is ordinarily retrospective cannot apply to the said provision. Secondly he has argued that the legislature at the time of enacting the said provision, having made the Act retrospective only from a specified date, viz, 1st April, 1952, no greater retrospective effect could be given to the said provision. Mr. Kolah argues that the even though in the absence of the legislature having expressed its intention it may have been possible to say that the rule that a procedural amendment is retrospective could have applied to the present provision. In view of the specific intention declared by the legislature, no greater retrospective effect than making it operative only from 1st April, 1952, can be given to the said provision. Mr. Kolah's further argument is that even if it is assumed that the amendment is only in the procedural law, the procedural law is also subject to constitutional limitations and, consequently, even the procedural law, which is discriminatory will be affected by article 14 of the Constitution and thus rendered ineffective. Mr. Kolah's argument in this connection is that by giving retrospective effect to the provision of section 22(4) assessee similarly situated will have affected differently. According to him, all assessee, who are liable to pay income-tax for a given assessment year, are persons similarly situated. Thus all assessee who are liable to pay income-tax for the assessment year 1949-50 form a class of persons similarly situated. Now, in the case of some persons o this class of their assessments might have been completed before the amendment of section 22(4) was brought in by the Amending Act of 1953. In the assessments proceedings of these persons, the Income-tax Officer could have no authority it require them by a notice under section 22(4) to furnish particulars and information. In the case of persons, however, whose assessments for the year 1949-50 were not completed until the amendment came on the stature book, the Income-tax Officer would have the right to give a notice under section 22(4) requiring them not only to produce accounts and documents but also to produce particulars and information, and if they failed to comply with the notice requiring particulars and information to be supplied, he could make a best judgment assessment under section 23(4) against them although for the same failure on the part of the others, whose assessments were completed, he could not have done so, Mr. Kolah, therefore, argues that the mere fortuitous circumstance that the assessments of one assessee was completed before a particular date while that of another similarly situated assessee was not completed, the Income-tax Officer would be in a position to treat the other man in a manner different from that in which he treated the first one. Since such a result is likely to follow by interpreting the provisions of section 22(4) as being retrospective, Mr. Kolah's argument is that no such interpretation could be given to it. Mr. Kolah has referred us to State of West Bengal v. Anwar Ali Sarkar and Dhirendra Kumar Mandal v. Superintendent and Remembrancer of Legal Affairs to the Government of West Bengal for his submission that a procedural law comes as much within the purview of article 14 of the Constitution as any other law. For his argument that the provision of section 22(4) is not purely procedural but affairs the liability of the assessee and, therefore, would be violative of article 14 of the Constitution, if retrospective effect is given to it, he has referred us to certain observations in Shree Meenakshi Mills Ltd. v. A. V. Visvanatha Sastri and M. C. Muthiah v. Commissioner of Income-tax.
3. In our opinion none of the arguments, which the learned counsel has advanced before us, has any substance. There can be no doubt whatsoever that the provisions of sections 22(4) and 23 of the Indian Income-tax Act are provisions of the machinery sections enacted for the purposes of computation of the tax liability of the assessee, which is fixed and charged by the charging sections of the Act. As has been often said, there are three stages in the imposition of a tax. There is the declaration of the liability, then there is the assessment and finally the recovery and collection. As was observed by the Federal Court in Chatturam v. Commissioner of Income-tax :
'The liability to pay the tax is founded on sections 3 and 4 of the Income-tax Act, which are the charging sections. Section 22, etc., are the machinery sections to determine the amount of tax.'
4. It is in the procedure prescribed for the determination of the amount of tax liability of the assessee that section 22(4) provides that the Income-tax Officer may require the assessee to furnish him with certain accounts or document or certain other particulars and information. Before the amendment in 1953, the provision of this section had only provided for accounts and documents to be called for. It has now by the amendment also provided that further particulars and information may also be called. But these, it must be remembered, are matters which are relevant and which would help the Income-tax Officer in correctly determining the tax liability of the assessee which, it is the duly and obligation of the assessee, to discharge. The provision of section 22(4) by itself is, no doubt, purely procedural and simply because there has been a change in this procedural provision, which perhaps is little inconvenient to the assessee, that would not make the usual the inapplicable to this provision, viz., that a procedural provision will have application to all pending proceedings subsequent to its introduction. Mr. Kolah's argument, however, is that, although the provision of section 22(4) appears to be procedural in its nature, it affects the liability of the assessee in view of the provision of section 23(4) and, consequently, the provision cannot be regarded as purely procedural. Mr. Kolah says that a failure to comply with the requisition under section 22(4) subjects the assessee to a best judgment assessment at the hands of the Income-tax Officer, and, therefore, affects his liability. Since the consequence of a best judgment follows on a non-compliance with the notice under section 22(4), the content of section 22(4) is directly linked with the liability of the assessee and, therefore, it would not be correct to look upon the provision as being a mere procedural provision.
5. Now, it is true that under section 23(4), if a notice under section 22(4) has not been complied with an Income-tax Officer would be entitled to make a best judgment assessment, but that would not make the provision of section 22(4) anything different from a mere procedural provision. As we have already stated earlier, the purpose of the provision of section 22(4) is to enable the Income-tax Officer to obtain certain material from the assessee relevant for the purpose assessment. If the assessee fails to comply with the requisition of the Income-tax Officer, and fails to supply such material, the Income-tax Officer makes the assessment according to his best judgment. The best judgment assessment is one of the methods of the tax liability of the assessee and this method, under the law, he is entitled to follow, if the assessee does not put before him all the relevant material, which he requires for the proper determination of the tax liability of the assessee. Now, before the amendment of section 22(4) the material, which he could call upon the assessee to supply, was accounts and documents. Subsequent to the amendment he is also empowered to call for other Particulars and information, but all this is for the purpose of the proper determination of the tax liability, which it is is the duty of the Income-tax Officer to determine and of the assessee to discharge. If, for the purpose of the proper determination of this liability, a few things more than what were formerly regarded as sufficient were required to be called for from the assessee, that would not in our opinion, change either the basic content of the provision or subject the assess has any hardship or prejudicial treatment. It could not be said that the assessee has any right not to divulge any information or particulars, which are not convenient to him. Up to the time of the amendment of section 22(4) the legislature had not empowered the Income-tax Officer to require them to be furnished by the assessee. But that, in our opinion, is nothing more than a mere change in the procedure. The power under section 22(4) to make a best judgment assessment remains the same as before, viz, for non-compliance with the notice under section 22(4). The circumstance that the failure to comply with the procedural provision involves a certain consequence will not make the provision any the less a procedural provision.
6. Coming to the next contention of the learned counsel, viz, that the amending Act of 1953, having specified in terms that, unless otherwise expressly provided therein, its provisions would came into operation from the 1st April, 1952, no amendments effected by the said Act can be given a greater retrospective operation, it appears to us that the meaning of the provision in the Act of 1953 making it operative from 1st April, 1952, has not been properly appreciated by the learned counsel. In so far as the amendment made in the present provision of section 22 is concerned, what is meant by saying that the amendment will be operative from 1st April, 1952, is that notices issued under section 22(4) which confirm to the requirements of the amended provision will be good and in order from the date of 1st April. 1952, even though in respect of some of the matters required to be furnished by the assessee the unamended section made no provision. In other words, calling for particulars and information besides accounts and documents would be goods and valid notice under the amended provisions of the section, even through at the time when the said notices were issued the amended part of the section was not there, if the notices were issued after the 1st April, 1952, Mr.Kolah wants to contend that the reference to 1st April, 1952. is to assessments of a period subsequent to 1st April, 1952, that the notices should be given in accordance with the amended provision of section 22(4). But for all earlier assessments, notice could be given only under the unamended provision and not under the amended one.
7. We are not inclined to agree with that view and the correct position is, according to us, as stated earlier, that the reference to April 1,1952, is to regulate all notices which had asked for particulars and information in addition to accounts and documents subsequent to that date even though at the time when the said notices were given the amended part of the said section was not on the stature book.
8. Coming to the last argument of Mr. Kolah that retrospective effect cannot be given to the provision of section 22(4) because giving it such effect would involve violation of article 14 of the constitution, we are included to take the view that no violation of article 14 is involved as is contended by Mr. Kolah. Article 14 would be violated if persons similarly situated are treated differently. It is true that even a procedural law has to confirm to constitutional limitations and, therefore, if a procedural provision becomes discriminative because it treats persons similarly situated vision becomes discriminative because it treats persons similarly situated to confirm to constitutional limitations and, therefore, if a procedural provision becomes discriminative because it treats persons similarly situated differently, it will have to be regarded as affected by article 14 of the constitution, but the procedural provision, which, when it is effected, treats all persons to whom it becomes applicable since its introduction in the same manner, can in no way be discriminatory and it cannot have the vice of being discriminatory simply because persons, whose proceedings had already been completed before the change has been introduced, are not affected by the change. Mr. Kolah's argument is that all persons, who are liable to pay tax for a given assessment year form a class of persons, who are similarly situated. If a change of procedure has been brought about at a time when it cannot uniformly be applied to all the persons belonging to this class, but will only affect such of them whose cases are pending and not closed, the procedural change would be discriminatory and, therefore, not capable of being effected.
9. We are not inclined to agree with this argument of Mr. Kolah. We may point out that nobody has, in the first place, a vested right in procedure. Secondly, the procedure which has to be applied is the procedure which exists at the time of the application. There is no discrimination if the procedure, when it becomes applicable, applies equally to all person's to whom it is capable of being applied. In the present case it is impossible to say that the change effected in section 22(4) by the amendment is capable of being applied differently to different persons form amongst those whose assessments were pending at the time when the change came on the statute. We are not inclined to agree with Mr.Kolah when he says that so far as the present provision with which we are concerned,the person, who were liable to pay tax for a given assessment year, are a class of persons similarly situated. In our opinion, the class of persons, who are similarly situated so far as the operation of section 22(4) is concrened, is of all those persons whose assessments had not been finished at the time when the amended provision when applied to this class of persons is not capable of treating them differently. The decision in Shree Meenakshi Mills Ltd v. Visvanatha Sastri, and M. Ct. Muthiah v. Commissioner of Income-tax, which have been referred to by Mr. Kolah, are clearly distinguishable. In Shree Meenakshi Mills Ltd. v. Visvanatha Sastri the provision of sub-section (1) of section 5 of the Taxation on Income (Investigation Commission) Act (XXX of 1947), which was held by the Supreme Court ad discriminatory under article 14 of the constitution, provided for a different treatment involving different consequences of some of the persons who belonged to the same class to which the provision of section 34 of the Income-tax Act applied. The same was also the ratio of the decision in other case, viz, M. Ct. Muthiah v. Commissioner of Income-tax. As we have already pointed out, in the present case befores, the provision being applicable to all cases, which are pending before the Income-tax Officer, will have no discriminatory effect in its application.
10. In the result, therefore, the view taken by the income-tax authorities and the Income-tax Appellate Tribunal is correct and the question, which has been referred to us on this reference, must be answered in the affirmative. We answer it accordingly. The assessee will pay the costs of the department.
11. Question answered in the affirmative.