1973 (2) TMI 14

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..... (hereinafter referred to as the " Act "). The assessee is a firm registered under the Act. For the assessment year 1962-63 it did not file a return of its income as required by section 139(1) of the Act. Under that provision the return should have been filed by 30th November, 1962. Later on, in May 12, 1964, the assessee did file a voluntary return disclosing a net loss of Rs. 9,214. The Income-tax Officer did not accept the return and assessed the assessee at a total income of Rs. 64,922, which included a sum of Rs. 40,000 as income from undisclosed sources, being the aggregate amount of three cash credits, the source and nature of which the assessee was unable to prove and which it ultimately surrendered for assessment. The Income-tax O .....

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..... 9(1) a duty is cast upon every person to file a voluntary return if his income exceeds the maximum amount which is not chargeable to income-tax. The question arises as to which income is contemplated by this provision, the income which the assessee believes to be his income or which is finally assessed by the Income-tax Officer. It is clear that at the time when a person is required to file a voluntary return, no assessment has yet been made against him. He is thus to be guided by what he himself believes to be his income. It is possible and it happens very frequently that an assessee may not consider a particular item to be his income and yet the Income-tax Officer may hold otherwise. In such a case, if what he considers to be his income i .....

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..... tax. Now, after deducting Rs. 40,000 the balance is less than Rs. 25,000 which is the maximum amount not chargeable to income-tax in the case of a registered firm. Clearly, the assessee was under no obligation to file any voluntary return under section 139(1) of the Act, and, as such, was not liable to any penalty under section 271(1)(a). In the alternative the learned counsel for the department argued that even if the assessee's income was below Rs. 25,000 yet it was under an obligation to file a voluntary return, if it had some income. He says because the income assessed in the hands of a firm is ultimately to be included in the assessment of the partners, there is no amount which is not chargeable to income-tax in the case of a registe .....

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