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TMI Blog1956 (1) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... d section 34 was not, however, discovered at an early stage. A partner of the assessee appeared before the Income-tax Officer on 8th November, 1948, and he told the Income-tax Officer that the books were not yet closed and therefore the return could not be filed and he prayed for time till the end of January, 1949. The Income-tax Officer said that he could not grant the request. Failure to grant the request would entail assessment under section 23(4) and penalty under section 28. It seemed to us quite clear that the assessee found it necessary to appear before the Income-tax Officer to pray for further time to file a return only because of the notice issued on 23rd August, 1948, and served upon the assessee. The assessee, however, did not file his return by 23rd November, 1948, either. He filed it three months later, on 24th February, 1949. The Income-tax Officer subsequently discovered that any assessment completed on the basis of the notice issued on 23rd August, 1948, would be invalid. He therefore proceeded to issue a fresh notice under section 34(1) after obtaining the satisfaction of the Commissioner under proviso (1) to that sub-section. This was in March, 1951. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er has no comments to offer. The assessee says he has lost the draft statement and proceeds to make lengthy suggestions much of which is argument. We consider that the facts necessary for the decision of the point really involved have been adequately stated. The statement of the case will now be submitted to the High Court. K. P. Sinha and S. K. Banerjee, for the assessees. E. R. Meyer and Balailal Pal, for the Commissioner. JUDGMENT CHAKRAVARTTI, C. J.- The assessee at whose instance this reference under section 66(1) of the Income-tax Act has been made is a firm. In maintaining its accounts, it observes the calendar year. Admittedly, during the year 1945 the assessee earned a taxable income, but it did not file any return in response to the general notice issued under section 22(1) of the Act, nor did the Income-tax Officer issue any notice to the assessee under section 22(2). By the time he discovered the omission, the assessment year which was the year 1946-47 had already expired. At that stage, therefore, he could issue a notice only under section 34 of the Act and he did so on the 23rd August, 1948. As section 34 stood at that time, no sanction of the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already issued on the 23rd August, 1948, had ceased to be valid and could no longer be proceeded upon for the purposes of making an assessment. In that view, he applied for and obtained the sanction of the Commissioner and issued fresh notice under section 34 on the 30th March, 1951. The notice under section 34 was followed up by the usual notice under section 22(4) of the Act which was issued on the 9th April, 1951. On the 16th April, 1951, the assessee sent a letter to the Income-tax Officer, asking for a clarification of the notice. That letter has not been referred to either in the statement of the case or in the appellate order, but we have referred to it for ourselves and do not find that the assessee was saying anything very particular or intelligible. Be that as it may, on the 7th May, 1951, which, we are informed, was not a date fixed for the hearing of the case, the assessee addressed a letter to the Income-tax Officer by which it informed him that the return already filed on the 24th February, 1949, might be treated as a return filed in compliance with the second notice under section 34. The actual language of the letter appears from the order of the Assistant Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly filed before any assessment had been made, it was neither a case of no return having been filed, nor a case where in spite of a return having been filed, income had escaped assessment and therefore the Income-tax Officer could and indeed should, have completed the assessment on the basis of that return and he was also required to complete it within the normal period of four years from the end of the year of assessment. Since he had not done so and had made the first assessment only on the 29th June, 1951, that assessment was clearly barred by time. Necessarily, any further assessment made in pursuance of the Appellate Assistant Commissioner's order would be equally barred. The Tribunal repelled both branches of the assessee's contention. It held that the return filed on the 24th February, 1949, was not a voluntary return. On the facts above stated, observed the Tribunal, it is quite clear that the return was made not voluntarily, but in response to a notice issued and then a warning administered by the Income-tax Officer on the assessee. Having found as a fact that the return had not actually been filed voluntarily but had been filed in compliance with the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voluntarily. Mr. Sinha, who appears on behalf of the assessee, advanced his argument before us on those two lines. A word is necessary in explanation of the phrase under section 22 (3). That sub-section says, to quote only the material part, If any person has not furnished a return within the time allowed by or under sub-section (1) or sub-section (2), . . . . . . . he may furnish a return . . . . . . . at any time before the assessment is made. What the sub-section contemplates or provides for is the belated filing of a return required to be filed in compliance with either the general notice issued under subsection (1) or the individual notice issued under sub-section (2). In the present case, no notice under section 22(2) was issued to the assessee. What the expression under section 22(3) means in the context of the facts in the present case is, a return filed in compliance with the general notice under section 22(1) and filed not within the time limited thereby but subsequently in exercise of the liberty given by sub-section (3) of section 22. In terms of the facts of the present case, therefore, the question asks whether, when the assessee filed a return on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing by a particular date and he does not do it within that date but does it subsequently, he can no longer be treated as having complied with that direction, but must be treated as having acted independently. In any event, the narrow question which we have to decide on the first branch of the first question is whether the Tribunal had any evidence before them on which they could properly come to their conclusion of fact. To that question only an affirmative answer is possible. Proceeding now to the second branch of the first question, I am clearly of opinion that the view taken by the Tribunal is right. Once it is held that the return was in fact not filed voluntarily but was filed in compliance with a notice under section 34, it seems to me impossible to hold that, nevertheless, in law it must be treated as having had no connection with the notice, because the notice was invalid. It was the common case of the parties before the Appellate Assistant Commissioner and the Tribunal that the first notice under section 34 was invalid. Before us Mr. Sinha wanted to contend that the retrospective operation given to the new section 34 would not have the effect of invalidating the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh proceedings only upon and after giving a certain notice of a certain kind, he cannot, in my view, make a valid assessment at all, unless he issues the prescribed notice and issues it in a valid form. If he has issued any invalid notice and that notice has brought in a return, he cannot then shake off his own irregularity and seize the return and proceed to make an assessment on it in contravention of law to the disadvantage of the assessee. Conversely, he cannot be held to be bound to proceed on such a return or entitled to treat such a return as a good return for purposes of a valid assessment. In the case of Commissioner of Agricultural Income-tax v. Sultan Ali Gharami ([1951] 20 I. T. R. 432), one of the reasons given for holding that the return filed by the assessee in the absence of a notice under section 38 of the Bengal Agricultural Income-tax Act (corresponding to section 34 of the Indian Act) could not be treated as a return under section 24(1) (corresponding to section 22(1) of the Indian Act) belatedly filed under section 24(3) (corresponding to section 22(3) of the Indian Act), was that the return showed an income below the taxable limit. In the present case the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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