1961 (10) TMI 89 - HC - Income Tax

Summary

Issues:
1. Appeal against judgment dismissing O.P. No. 662 of 1960 under article 226 of the Constitution.
2. Cancellation of two orders: one dated February 11, 1960, and another dated April 26, 1960.
3. Assessment under section 23(4) of the Indian Income-tax Act, 1922, for the assessment year 1959-60.
4. Non-compliance with notices under sub-sections (2) and (4) of section 22 leading to best judgment assessment.
5. Interpretation of sub-section (3) of section 22 regarding filing a return before assessment is made.
6. Application of case law regarding computation of limitation period and communication of orders to the party concerned.

Analysis:
The judgment concerns an appeal against the dismissal of O.P. No. 662 of 1960 under article 226 of the Constitution, where the appellant sought to cancel two orders: one dated February 11, 1960, and another dated April 26, 1960. The first order was an assessment under section 23(4) of the Indian Income-tax Act, 1922, for the assessment year 1959-60, based on the appellant's income for the accounting period 1958-59. The second order rejected the appellant's request to reconsider the matter due to a return filed on February 15, 1960. It was established that the appellant did not comply with notices under sub-sections (2) and (4) of section 22, leading to a best judgment assessment under sub-section (4) of section 23.

The crux of the issue revolved around the interpretation of sub-section (3) of section 22, which allows a person to furnish a return or a revised return before the assessment is made. The appellant filed a return on February 15, 1960, but the assessment was made on February 11, 1960, with the order served on February 23, 1960. The contention was whether the return filed before the assessment was served should be considered. The court referred to case law emphasizing that the making of an order should mean either actual or constructive communication to the party concerned, determining the starting point of limitation or the expiry of a grace period granted to the assessee.

In light of the legal principles discussed, the court concluded that the making of the assessment should be considered when the officer does so, not when the order is communicated to the assessee. Therefore, the appeal was dismissed, and the appellant's request to consider the return filed before the assessment was served was rejected. The court highlighted the importance of adherence to statutory timelines and the significance of actual or constructive communication of orders to parties concerned in legal proceedings.