9911796707
TMI Blog1971 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances of the case, the Tribunal was right in holding that the assessment made under section 23(4) of the Income-tax Act, 1922, was illegal and accordingly accepting the assessee's appeal against the order under section 27 of the Income-tax Act, 1922, and further cancelling the penalty imposed under section 271(1)(i) of the Income-tax Act ? " The assessee is a private limited company engaged in transport business. It was incorporated in May, 1959, and closed its account for the first time on December 31, 1960. We are concerned in this reference with the assessment year 1961-62, the relevant year of account being the calendar year 1960. On April 24, 1961, a notice under section 22(1) of the Indian Income-tax Act, 1922, was publish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r extension of time by another two months for filing its return. The application was rejected by the Income-tax Officer, who on the same date completed the assessment ex parte under section 23(4) of the Act of 1922 on an estimated total income of Rs. 30,000. A few days later, on August 21, 1962, the assessee applied under section 27 of the Act of 1922 for cancellation of the assessment on the ground that the account books were not complete and, therefore, the return could not be filed. The application was rejected by the Income-tax Officer on September 28, 1962. Then, on March 25, 1963, the Income-tax Officer made an order under section 271 (1)(i) of the Act of 1961 imposing a penalty of Rs. 3,780 for failure of the assessee to file its ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse to section 23(4) had been made on the ground that the notice under section 22(2) had not been complied with. In the circumstances, the orders under section 27 and section 271(1)(i) were also set aside. The question then is whether the Income-tax Officer had the power to serve the notice under section 22(2) requiring an assessee to file his return of income even before the expiry of the period mentioned under section 22(1). Section 22(1) provides : " 22. (1) Return of Income.- The Income-tax Officer shall, on or before the 1st day of May in each year, give notice by publication in the press and by publication in the prescribed manner, requiring every person whose total income during the previous year exceeded the maximum amount which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the non-taxable limit. It is not contemplated that before publishing the notice the Income-tax Officer should have applied his mind to any or all of the cases falling within his jurisdiction. That pre-requisite is a feature of the notice under section 22(2). Section 22(2) empowers the Income-tax Officer to serve a notice calling for a return where he is of opinion that the total income of the person to whom the notice is directed is such as to render him liable to income-tax. The crucial question in this case is whether the Income-tax Officer can serve the notice under section 22(2) at any time or can he do so only after the expiry of the time specified in the notice under section 22(1) for filing a return. It seems to us that it is open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned in section 22(2), the Income-tax Officer cannot by issuing a notice under section 22(2) require a person to file his return before the end of June of the assessment year. It is a conclusion for which we find no support in the provisions of the Act. We are of opinion that a notice under section 22(2) can be served by the Income-tax Officer even before the expiry of the period mentioned in the notice under section 22(1) for filing a return. In holding to the contrary, the Tribunal has erred. The notice under section 22(2) was a valid notice and, therefore, the assessment made under section 23(4) was also valid. Inasmuch as the order under section 27 and the order cancelling the penalty imposed under section 271(1)(i) proceed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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