1963 (3) TMI 69 - HC - Income Tax

Summary

Issues Involved:
1. Validity of voluntary loss returns filed by the petitioner firm for the assessment years 1958-59 and 1959-60.
2. Obligation of the Income-tax Officer to consider and act upon the voluntary loss returns.
3. Consideration of applications for renewal of registration of the petitioner firm.

Issue-wise Detailed Analysis:

1. Validity of Voluntary Loss Returns:

The petitioners argued that the voluntary loss returns filed for the assessment years 1958-59 and 1959-60 were good and valid returns under the Indian Income-tax Act, 1922. They contended that even if the returns were filed after the period specified in section 22(2A), they should still be considered valid under section 22(3). The petitioners maintained that section 22(2A) applied only to those who had not been served with a notice under section 22(2) and that the returns were valid under section 22(3) as they were filed before the assessment.

The respondent, however, argued that under section 22 and specifically section 22(2A), no voluntary loss return could be filed except as provided in section 22(2A). They contended that a voluntary loss return not filed within the time specified in section 22(2A) was not a valid return and need not be entertained by the Income-tax Officer.

The court referred to the Supreme Court decision in Commissioner of Income-tax v. Ranchhoddas Karsondas, which held that a voluntary return, even of an income below the taxable limit or of a loss, was a good and valid return under section 22(3) if made before the assessment. The court concluded that the voluntary loss returns filed by the petitioners were good and valid returns, and the Income-tax Officer was bound to act upon them.

2. Obligation of the Income-tax Officer to Consider and Act Upon the Voluntary Loss Returns:

The petitioners claimed that the Income-tax Officer was legally obligated to consider the returns and pass assessment orders. They argued that the refusal to entertain the returns prejudiced them by depriving the partners of the benefit of setting off the loss in their individual assessments.

The respondent contended that even if the returns were valid, the Income-tax Officer was not bound to act on them if no useful purpose would be served. They argued that the Income-tax Officer could file the returns without further action if they did not disclose a taxable income.

The court found that the Income-tax Officer had refused to entertain the returns on the erroneous ground that they were invalid. The court held that since the returns were good and valid, the Income-tax Officer was under a duty to take up the returns and consider them in accordance with law. The court issued a writ of mandamus directing the respondent to take up the returns filed by the petitioners and complete the assessments before the specified deadlines.

3. Consideration of Applications for Renewal of Registration:

The petitioners also sought a writ requiring the respondent to consider their applications for renewal of registration for the assessment years 1958-59 and 1959-60. The respondent argued that no such applications had been filed before him.

The court noted that the petitioners had forwarded the renewal applications to another officer of the same ward at the suggestion of the predecessor of the respondent. While the court acknowledged that the petitioners might not be blamed for submitting the applications to another officer, it found that the respondent could not be blamed for not considering the applications since they were not before him.

The court declined to issue a writ of mandamus requiring the respondent to consider the renewal applications. However, the court noted that the petitioners had made fresh applications before the respondent on 22nd March 1963 and expressed confidence that the respondent would consider them in accordance with law.

Conclusion:

The court directed that a writ of mandamus be issued against the respondent, requiring him to take up the returns filed by the petitioners for the assessment years 1958-59 and 1959-60 and complete the assessments before the specified deadlines. The second prayer of the petitioners, relating to the applications for renewal of registration, was rejected. There was no order as to costs.