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Issues Involved:
1. Validity of the assessment for the year 1945-46 under section 34(1) of the Income-tax Act. 2. Validity of the assessment for the year 1947-48 under section 23(3) of the Income-tax Act. 3. Application of section 28(1)(c) for concealment of income. 4. Applicability of section 34(3) concerning the period of limitation. Issue-wise Detailed Analysis: 1. Validity of the assessment for the year 1945-46 under section 34(1) of the Income-tax Act: The petitioner did not file returns for the assessment years 1945-46, 1946-47, and 1947-48 within the prescribed period. However, returns were voluntarily filed on March 20, 1954. For the year 1945-46, the Income-tax Officer initiated proceedings under section 34 and finalized the assessment on March 5, 1955. The court held that a return filed by the assessee after four years cannot form the basis of a valid assessment. Therefore, the assessment for 1945-46 was valid as it was initiated under section 34(1) due to the absence of a timely return. 2. Validity of the assessment for the year 1947-48 under section 23(3) of the Income-tax Act: For the year 1947-48, no proceedings under section 34 were initiated. The Income-tax Officer completed the assessment under section 23(3) on March 26, 1956. The court noted that the Income-tax Officer issued a notice under section 28(1)(c) for concealment of income. Section 34(3) removes the bar of limitation if section 28(1)(c) applies. The bench concluded that the assessment was not barred by limitation due to the express finding of income concealment. 3. Application of section 28(1)(c) for concealment of income: The petitioner argued that the return filed beyond four years is non est in law, and hence, section 28(1)(c) should not apply. The court agreed, stating that section 28(1)(c) applies only when there is a return with concealed particulars or inaccurate particulars. Without a return, section 28(1)(c) cannot be invoked. The court emphasized that section 28(1)(a) covers cases where no return is filed, and section 28(1)(c) pertains to concealment or inaccurate particulars in a filed return. 4. Applicability of section 34(3) concerning the period of limitation: The court considered whether an assessment could be made beyond the four-year period without invoking section 34(1). It concluded that the return filed beyond four years cannot form the basis of a valid assessment, and the only way to assess such income is by issuing a notice under section 34(1). Since no such notice was issued for the year 1947-48, the assessment was invalid. The court found that section 28(1)(a) and section 28(1)(c) are mutually exclusive, and without a return, section 28(1)(c) does not apply, thus not removing the limitation bar of section 34(3). Conclusion: The review petition was allowed, and the assessment for the year 1947-48 was deemed invalid due to the absence of a valid return and the improper application of section 28(1)(c). The judgment emphasized the necessity of adhering to statutory limitations and the specific conditions under which different sections of the Income-tax Act apply.
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