1982 (7) TMI 12 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the return of income furnished by the assessee under s. 139(4) read with s. 139(1) of the I.T. Act, 1961.
2. Whether the Tribunal was correct in cancelling the assessment made by the Income-tax Officer within four years from the end of the relevant assessment year based on the return of income furnished by the assessee as void.

Issue-wise Detailed Analysis:

1. Validity of the Return of Income:
The primary issue was whether the return of income furnished by the assessee was valid under s. 139(4) read with s. 139(1) of the I.T. Act, 1961. The facts revealed that a search was conducted at the assessee's premises in December 1965, leading to the belief that the income had escaped assessment for the assessment years 1964-65 and 1965-66. Notices u/s. 148 were issued on February 3, 1967, without specifying the status of the assessee. The assessee filed returns on February 17, 1967, in the status of HUF. The Tribunal initially held the notices defective due to the lack of status specification, but the High Court found that the returns filed within four years could be treated as valid returns. The Supreme Court's decision in CIT v. S. Raman Chettiar [1965] 55 ITR 630 supported this view, indicating that returns filed before the time mentioned in s. 34(3) were valid and could be assessed.

2. Cancellation of Assessment by the Tribunal:
The second issue was whether the Tribunal was correct in cancelling the assessments made by the Income-tax Officer within four years based on the return of income furnished by the assessee. The Tribunal had dismissed the departmental appeals, holding that the notices served were defective. However, the High Court found no conflict between the Supreme Court decisions in CIT v. K. Adinarayana Murthy [1967] 65 ITR 607 and CIT v. S. Raman Chettiar [1965] 55 ITR 630. The High Court noted that the facts of the present case were similar to Raman Chettiar, where returns filed within the permissible period were valid, and assessments could be made on those returns. The High Court concluded that the returns were valid, and the assessments made on those returns were not invalid merely because the notices u/s. 148 were defective. The ITO had jurisdiction to pass the assessment orders without invoking s. 148, as the returns were filed within the statutory period.

Conclusion:
The High Court answered the first question in the affirmative, confirming the validity of the returns, and the second question in the negative, stating that the Tribunal was incorrect in cancelling the assessments. Each party was ordered to bear its own costs.