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TMI Blog1969 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1943, under the Jaipur Companies Act. Its registered office was originally at Pilani, but it was transferred to Jaipur on 24th July, 1943. After some time it was again re-transferred to Pilani and finally it was transferred back to Jaipur on 5th February, 1953. The company had issued 5,000 ordinary shares of Rs. 10 each, which were mainly subscribed by the two parties. The company took large amounts of loan from various banks and invested the borrowed moneys mostly in shares of joint stock companies in India. The main banker of the company was Gwalior Industrial Bank Ltd., but it had dealings also with the Imperial Bank of India, Jaipur, United Commercial Bank Ltd., Jaipur, and Bank of Jaipur Ltd., Jaipur. The company carried income from dividends, properties and also from the transactions of purchase and sale of shares and other speculative transactions. In these four cases, we are concerned with the income realised by the company from dividends. There is no dispute that, under the provisions of the Act, the company was a "non-resident person". The Income-tax Officer, Ajmer, after obtaining the sanction of the Commissioner of Income-tax, issued notices under section 34 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Income-tax v. Ranchhoddas Karsondas and the decision of the Madras High Court in S. Raman Chettiar v. Commissioner of Income-tax. On applications made by the Commissioner of Income-tax, the Tribunal referred to this court the following question relating to the assessment year 1946-47 : " Whether, on the facts and in the circumstances of the case, a fresh action under section 34(1A) could be initiated on 26th February, 1955, and an assessment made thereon (24th March, 1956) when a return dated 11th August, 1953, was already pending before the Income-tax Officer ? " It appears that the date 26th February, 1955, is wrongly mentioned in the reference and the correct date is 10th March, 1955, as the original notice has been produced before us by the company in the writ application and it shows that it was issued on 10th March, 1955, but this discrepancy is immaterial. Similar questions have been referred with regard to the assessment years 1947-48 and 1949-50 except that in the questions framed the dates were not correctly given and in one reference instead of section 34(1)(a), section 34(1A) has been inadvertently mentioned. We first take up the Income-tax Reference No. 27 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice issued by him could not be ignored. We first take up the contention whether the Income-tax Officer, Ajmer, had jurisdiction to issue the notice to the company under section 34 of the Act on 21st February, 1953, on which date he had issued notice to it. The Central Board of Revenue in exercise of the power conferred by sub-section (6) of section 5 of the Act and in supersession of its Notification No. 13/I.T. dated the 12th February, 1949, issued Notification No. S.R.O. 1214 dated the 1st July, 1952, appointing officers under the Act in respect of persons specified in the corresponding entry in the second column of that notification. At Serial No. 77 is the entry, the relevant part of which is as follows : -------------------------------------------------------------------------------------------------------------------------------------------- Serial Persons Income-tax Inspecting Appellate Commissioner No. Officer Assistant of Income-tax Commissioner of Income-tax -------------------------------------------------------------------------------------------------------------------------------------------- 1 2 3 4 5 6 ----------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also pointed out that it was difficult to understand how the existence of a return could be ignored once it had been filed. It was also pointed out that if the Income-tax Officer had acted on these returns and assessed the assessee before March 31, 1950, that is, within four years of the end of the assessment year, the assessment would have been valid. But, as he chose to ignore the return and served on the assessee a notice under section 34(1), it was held that " this notice was improper, because with the return already filed, there was neither an omission nor a failure on the part of the assessee, nor was there any question of assessment 'escaping'. The notice under section 34(1) was, therefore, invalid and the consequent assessment, equally so. " The Tribunal further relied on the judgment of the Madras High Court in S. Raman Chettiar v. Commissioner of Income-tax. The assessee in that case was a Hindu undivided family. The Income-tax Officer issued notices under section 34 for the two assessment years 1944-45 and 1945-46 on April 3, 1948. The returns were filed by the assessee on September 4, 1948, declaring its income for the respective previous years. The assessee had earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rst return filed by the assessee, though filed in response to a notice under section 34, could have been filed by him without a notice under section 34 for the four years prescribed by section 34(3) had not expired, and that such return could not be ignored or discarded by the department. Their Lordships of the Supreme Court further pointed out that, though section 22(3) permitted an assessee to furnish a return at any time before the assessment is made, yet if it was to be a valid return, it must be filed before the time limit of four years fixed under section 34(3) as it stood in 1949 expired. Their Lordships approved the law laid down in S. Santosha Nadar v. First Additional Income-tax Officer and Commissioner of Income-tax v. Bhagwandas Amersey in which it had been held that a return must be filed within the time limit mentioned in a notice under section 34(3). The cases relied on by the Tribunal, no doubt, lay down the law that if there is already a return filed by an assessee under section 22(3) of the Act, then in the presence of such a return the proceedings under section 34 cannot be taken because it cannot be said that by virtue of not filing of the return the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 22(3) at any time before the assessment is made, but of course subject to the time limit laid down in section 34(3) of the Act. It is necessary for a valid assessment that the return be filed before the competent Income-tax Officer and not before any other unconnected person. "Income-tax Officer" has been defined under the Act as meaning a person appointed to be an Income-tax Officer under section 5 of the Act. Thus, it is only before such an Income-tax Officer who has been appointed under section 5 that a return should be filed, otherwise the return is not valid. For example, if an Income-tax Officer for a particular area is the Income-tax Officer of Jaipur, return cannot be filed before the Income-tax Officer of Bombay because the Income-tax Officer of Bombay has no jurisdiction to make an assessment on such a return. It cannot be successfully contended by a person who had filed a return before an Income-tax Officer who had no jurisdiction that that return should have been taken notice of by the competent Income-tax Officer when taking proceedings under section 34 of the Act. The opening words of section 34(1)(a) are that, if the Income-tax Officer has reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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