1929 (4) TMI 5 - AT - Income Tax

Summary

Issues:
1. Compliance with notice under Sec. 22(2) of the Income-tax Act within the stipulated time frame.
2. Rejection of application under Sec. 27 for fresh opportunity to file the return.
3. Formulation of questions of law and fact by the Commissioner of Income-tax.
4. Legality of the notice issued under Sec. 22(2) of the Act.

Compliance with notice under Sec. 22(2) of the Income-tax Act within the stipulated time frame:
The case involved a joint Hindu family where the head, Lala Kalyanmal, was served a notice under Sec. 22(2) of the Income-tax Act to file an income return by a specified date. Despite being granted additional time, Lala Kalyanmal failed to comply with the notice requirements, leading to an assessment made under Sec. 23(4) by the Income-tax Officer. The issue raised was whether the reasons provided by Lala Kalyanmal for non-compliance constituted sufficient cause under Sec. 27 to warrant an extension of time. The Commissioner of Income-tax, the Assistant Commissioner, and the Income-tax Officer all discredited the reasons provided, concluding that no valid legal question arose concerning compliance with the notice.

Rejection of application under Sec. 27 for fresh opportunity to file the return:
Following the initial assessment, Lala Kalyanmal applied under Sec. 27 of the Act for a fresh opportunity to file the return, which was rejected by the Income-tax Officer and the Assistant Commissioner of Income-tax. The matter was brought before the Commissioner of Income-tax, who was tasked with formulating the legal questions for the case. Despite Lala Kalyanmal's assertion that the family's illnesses constituted sufficient cause for non-compliance, it was deemed a question of fact rather than a legal issue by the Commissioner.

Formulation of questions of law and fact by the Commissioner of Income-tax:
The Commissioner of Income-tax, upon reviewing the case, formulated the legal question of whether the assessee was prevented by sufficient cause from making the return required by Sec. 22. This question was seen as a mixed question of fact and law, with the determination dependent on the veracity of the facts presented. The Commissioner highlighted that the facts presented by Lala Kalyanmal regarding the family illnesses were not accepted by the tax authorities, leading to the conclusion that no substantial legal question arose from the case.

Legality of the notice issued under Sec. 22(2) of the Act:
A critical aspect of the judgment was the legality of the notice issued to Lala Kalyanmal under Sec. 22(2) of the Act. It was established that the notice did not comply with the legal requirement of providing a minimum of 30 days for filing the return. Despite a subsequent extension granted, the initial deficiency in the notice rendered the assessment under Sec. 23(4) invalid. The Tribunal held that the notice was illegal, leading to the decision that there could be no valid assessment of income-tax based on the defective notice. The Tribunal directed the Commissioner of Income-tax to be informed of this opinion, with each party bearing their own costs due to the late raising of the notice's illegality issue.