1968 (8) TMI 6 - SC - Income Tax

Notice issued by ITO under s. 34 - Preamble of notice was defective but in the body of notice assessment year was clearly specified - negligence in drawing up of the preamble to notice did not affect the validity of notice - Assessee s appeal dismissed

Summary

Issues:
1. Competency of initiating reassessment proceedings for the assessment year 1945-46 based on a notice issued for the assessment year 1946-47.
2. Effect of filing a return for the assessment year 1946-47 on the competency of issuing a notice under section 34 or section 148.
3. Interpretation of provisions under section 22(1), section 22(3), and section 34 of the Income-tax Act, 1922.

Analysis:

1. The appellant argued that the reassessment proceedings for the assessment year 1945-46, initiated based on a notice intended for the assessment year 1946-47, were incompetent. The court noted that while there was a discrepancy in the notice preamble, the body clearly indicated the correct assessment year. The appellant's admission of misunderstanding the notice further supported this finding. The court held that the notice was valid as the appellant was informed to file a return for the correct assessment year.

2. The appellant contended that since a return for the assessment year 1946-47 was filed, any subsequent notice under section 34 or section 148 was incompetent until the assessment of the filed return was completed. The court disagreed, stating that voluntary returns do not bar the Income-tax Officer from issuing a reassessment notice. Referring to previous cases, the court clarified that the principle of voluntary returns affecting reassessment applies only when no assessment has been made, not when an assessment already exists. Therefore, the return filed did not prevent the Income-tax Officer from initiating reassessment proceedings.

3. The court analyzed the provisions of section 22(1), section 22(3), and section 34 of the Income-tax Act, 1922. It emphasized that while a revised return can be furnished before assessment, once an assessment is made, the assessee cannot file another return for the same year to seek reassessment. The court highlighted that a notice under section 34 is also a notice of assessment, but an assessee cannot rectify a return post-assessment. The court concluded that the Income-tax Officer had jurisdiction to start proceedings under section 34, and after the Act's repeal, under section 148 of the Income-tax Act, 1961, if no prior assessment proceedings had begun before April 1, 1962.

In summary, the Supreme Court dismissed the appeal, upholding the competency of the reassessment proceedings for the assessment year 1945-46, despite the notice discrepancy, and clarifying that filing a return for a different assessment year does not prevent the initiation of reassessment proceedings. The court's analysis of relevant provisions emphasized the limitations on filing returns post-assessment and affirmed the Income-tax Officer's jurisdiction to issue reassessment notices under the applicable laws.