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  • Sarkar, J.
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Smart Summary

Structured Summary of the Opinion — Chakravartti, C.J. (with Sarkar, J. concurring)

Factual and Procedural Background

The Reference arises from an assessment of a firm (the assessee) that keeps calendar year accounts. For the year 1945 the assessee had taxable income but did not file a return in response to the general notice under Section 22(1) of the Income-tax Act, and the Income-tax Officer (ITO) did not issue a notice under Section 22(2).

By the time the omission was discovered the assessment year 1946–1947 had expired. The ITO issued a notice under Section 34 on 23-8-1948 (at that time no Commissioner’s sanction was required under the then-existing text of S.34). The assessee did not file a return in response; a partner sought an extension on 8-11-1948 but the ITO fixed 23-11-1948 as the filing date and warned of summary assessment under S.23(4) and penalty under S.28. No return was filed by 23-11-1948; a return was filed later on 24-2-1949 showing income of Rs. 69,738.

The ITO made a provisional assessment under S.23B on 28-2-1949 and initiated realisation. Meanwhile S.34 had been amended by Act 48 of 1948 (with deemed effect from 30-3-1948) to require recorded reasons and Commissioner’s satisfaction before issuing a notice under S.34. Because that amendment was deemed effective from 30-3-1948, the ITO considered the 23-8-1948 notice to be invalid, obtained the Commissioner’s sanction, and issued a fresh S.34 notice on 30-3-1951, followed by an S.22(4) notice on 9-4-1951.

The assessee in a letter of 7-5-1951 asked that the return of 24-2-1949 be treated as complying with the 30-3-1951 notice. The ITO proceeded on the return and completed an assessment on 29-6-1951 fixing income at Rs. 1,36,468. The assessee appealed to the Assistant Commissioner on limitation and merits; the Assistant Commissioner overruled the limitation plea but upheld the merits plea and directed a fresh assessment. The assessee then appealed to the Appellate Tribunal which rejected the assessee's contention that any assessment after four years was time-barred; the Tribunal held the return of 24-2-1949 was not voluntary but in response to the first S.34 notice and could not be treated as a voluntary return for S.22(3) purposes.

The assessee required the Tribunal to refer two questions to this Court: (1) whether the 24-2-1949 return could be regarded as a voluntary return under S.22(3); and (2) whether the assessment of 29-6-1951 or any future assessment for 1946–1947 was barred by limitation.

Legal Issues Presented

  1. Whether on the facts and circumstances the return filed on 24-2-1949 can be regarded as a voluntary return under Section 22(3) on the basis of which an assessment could have been validly made.
  2. Whether, on the facts and circumstances of this case, the assessment for 1946–1947 made on 29-6-1951 or to be made hereafter was or would be barred by limitation.

Arguments of the Parties

Appellant (the assessee) — principal arguments

  • The return filed on 24-2-1949 was a voluntary return within the meaning of S.22(3), and therefore the ITO was required to complete assessment within the normal four-year period from the end of the year of assessment.
  • Because a voluntary return existed on the file before expiry of the limitation period, the assessment made on 29-6-1951 (and any subsequent assessment) was time-barred.
  • It was argued (or at least suggested before the Court) that retrospective operation of the amended S.34 might not invalidate the first S.34 notice; however, that contention was not open to the assessee in the Reference because the parties below proceeded on the assumption that the first notice was invalid.
  • Counsel for the assessee (Mr. Sinha) argued that once the time fixed by the ITO (23-11-1948) had expired without the return being filed, any later filing should be treated as independent (voluntary) and not linked to the earlier S.34 notice.

Respondent / Revenue & Appellate findings — principal arguments and positions

  • The Tribunal and revenue contended that the return of 24-2-1949 was filed in response to the earlier S.34 notice and the sequence of events (issue of S.34, meeting on 8-11-1948, warning, and eventual filing) supported a factual finding that the return was not voluntary.
  • Because the first S.34 notice was treated as invalid (in view of the retrospective amendment requiring recorded reasons and Commissioner’s sanction), a return filed in compliance with that invalid notice could not be treated in law as a voluntary return under S.22(3) for the purpose of a valid normal assessment.
  • The Tribunal relied on a prior decision (Commissioner of Agricultural Income-Tax v. Sultan Ali Gharami (1951) 20 ITR 432 (Cal) (A)) to support the legal proposition that a return brought in consequence of an invalid notice cannot be treated as a belated voluntary return under the corresponding statutory provision.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Commissioner Of Agricultural Income-Tax v. Sultan Ali Gharami, (1951) 20 ITR 432 (Cal) (A) That a return filed in the absence of the prescribed notice (under the corresponding Bengal statute) could not be treated as a belated voluntary return under the corresponding provision; in effect, a return elicited by an invalid notice cannot be treated as a valid voluntary return for normal assessment purposes. The Tribunal relied on this decision to support its conclusion that the return of 24-2-1949 (filed after a S.34 notice that was held invalid) could not be treated as a voluntary return under S.22(3); the Court endorsed the Tribunal's reliance and reasoning.
Ranchhoddas Karsondas v. The Commissioner Of Income-Tax, Bombay City, AIR 1954 Bom 543 (Bombay High Court) Discussed in relation to the proposition that returns showing income below taxable limit cannot be treated as returns under a provision that presupposes a taxable income; the Court notes a qualification to the Bombay Court's comment in that earlier context. The Court observed that the Bombay High Court had overlooked a qualification and used the discussion to clarify that the present case's reasoning does not rest on the return showing income below or above the taxable limit; the case is cited for comment rather than as the foundation of the decision.

Court's Reasoning and Analysis

The Court's reasoning proceeds in clear stages: factual appraisal, legal characterisation of the return, and the consequence for limitation.

  1. Factual sufficiency for the Tribunal's finding: The Court found there was ample evidence to support the Tribunal's factual conclusion that the return filed on 24-2-1949 was not voluntarily filed in response to the general notice under S.22(1), but was filed in pursuance of the first notice under S.34. Relevant facts included: no return within the time allowed under S.22(1); a S.34 notice served on 23-8-1948; a meeting with a partner on 8-11-1948 where the ITO fixed 23-11-1948 as the filing date and warned of consequences; the return was nevertheless filed only on 24-2-1949, shortly after those events. On the narrow question whether the Tribunal had evidence to justify the finding, the Court answered affirmatively.
  2. Legal characterisation of the return: The Court addressed whether, even if the first S.34 notice was invalid (the parties and the authorities below proceeded on that premise), the return could nevertheless be treated in law as a voluntary return under S.22(3). The Court rejected that proposition for two linked reasons:
    • A return that was brought into existence as a consequence of a notice that was a condition precedent to assessment proceedings cannot be treated as voluntary if it was in fact filed in compliance with that notice; the invalidity of the notice does not magically turn a compelled or prompted filing into a voluntary one for legal effect.
    • The Court emphasised the principle that where statute requires a prescribed notice as a condition precedent to the exercise of jurisdiction to assess (for example, in the circumstances where time has run or income has escaped assessment), the notice must be issued in the prescribed form; an invalid notice cannot be used to validate assessment proceedings nor can the ITO treat the return arising from it as a lawful basis for a normal assessment.
  3. Application of precedent and statutory structure: The Court accepted and applied the reasoning in Commissioner of Agricultural Income-Tax v. Sultan Ali Gharami (1951) 20 ITR 432 (Cal) (A) as supporting the legal conclusion that a return elicited by an invalid notice could not be treated as a voluntary return under the corresponding belated-filing provision. The Court also distinguished and commented on the precedential material concerning returns showing income below the taxable limit, noting that the present case did not turn on that circumstance.
  4. Consequences for limitation: Because the return was not a voluntary return for S.22(3) purposes and could not serve as a proper basis for a normal assessment, the Court treated the facts as constituting a case where no valid return had been filed and where income had escaped assessment. On this footing cl. (a) of S.34(1) applied and the second S.34 notice (the 30-3-1951 notice with Commissioner’s sanction) was given within the period allowed by law. Consequently the assessment made on 29-6-1951 was not time-barred; and re-assessments ordered thereafter were likewise not barred by limitation (the Court referred to the operation of the second proviso to S.34(3) and S.31(3)(c) relied on by the Appellate Assistant Commissioner).

Holding and Implications

Holding: The Court answered the two referred questions as follows:

  • Question (1): No. The return filed on 24-2-1949 cannot be regarded as a voluntary return under S.22(3) for the purposes of a valid assessment.
  • Question (2): No, as to both parts. The assessment made on 29-6-1951, and any assessment to be made thereafter for 1946–1947, were not barred by limitation.

Implications and immediate consequences:

  • The assessment made on 29-6-1951 was not time-barred under the statutory scheme as interpreted by the Court, although the Assistant Commissioner had set it aside on merits; the Court's decision concerns limitation and jurisdictional validity rather than the correctness of the tax computation.
  • Any reassessment ordered by the Appellate Assistant Commissioner pursuant to S.31(3)(c) and the proviso to S.34(3) would not be barred by limitation.
  • The Court emphasised that a return which is unusable as a basis for assessment because it was elicited by an invalid notice cannot be treated as benefiting the assessee by being converted into a lawful voluntary return; the invalidity of a notice cannot be used by the revenue to cure its own irregularity, nor can the assessee convert the products of an invalid process into a unilateral advantage.
  • Costs: The Commissioner of Income-tax, West Bengal, was awarded the costs of the Reference.
  • No broader novel precedent was framed beyond application and affirmation of existing principles (in particular, the reasoning in the Sultan Ali Gharami case and the statutory interpretation of conditions precedent to the exercise of assessment jurisdiction).

Answer as delivered by Chakravartti, C.J.; Sarkar, J. agreed. The precise statutory provisions and procedural dates relied on in this summary are drawn directly from the opinion.

Show full summary ...

    R.K. Das And Co. v. Commissioner Of Income-Tax

    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 S. 22(1) of the Act, nor did the Income-tax Officer issue any notice to the assessee under S. 22(2).

    2. By the time he discovered the omission, the assessment year which was the year 1946-1947 had already expired. At that stage, therefore, he could issue a notice only under S. 34 of the Act and he did so on 23-8-1948. As S. 34 stood at that time no sanction of the Commissioner for the issue of a notice under the section was required and consequently none was obtained.

    3. It appears that the assessee did not file a return in compliance with the notice. Instead, a partner appeared before the Income-tax Officer on 8-11-1948, & asked for time till the end of January, 1949, on the ground that the books of the business for the relevant year had not yet been closed. The Income-tax Officer was not prepared to allow the time prayed for and informed the partner that the return would have to be filed by the 23rd of November following & that if it was not filed on or before that date not only would there be a summary assessment under S. 23(4) of the Act, but a penalty under S. 28 would also be imposed. Even what happened on 8-11-1948, did not elicit a return from the assessee on the 23rd of November and a return was not filed till 24-2-1949.

    4. The return showed an income of Rs. 69,738/-. The Income-tax Officer proceeded to make a provisional assessment on the return under S. 23B of the Act and made such an assessment on 28-2-1949. We are informed that thereafter proceedings for realisation of the tax under the provisional assessment were commenced.

    5. In the meantime, Section 34 of the Income-tax Act had been amended by Act 48 of 1948. Section 8 of the amending Act replaced the whole of the old S. 34 by a new section and directed by S. 1(2) that the amendment “shall be deemed to have come into force on the 30th day of March, 1948.” One of the new provisions incorporated in the new S. 34 was that a notice under the section was not to be issued unless the Income-tax Officer had recorded his reasons for doing so and unless the Commissioner was satisfied on such reasons recorded that it was a fit case for the issue of such a notice.

    6. As this provision was to be deemed to have been the law on and since 30-3-1948, it was necessarily the law on the 23rd of August of that year when the notice under S. 34 in the present case had been issued. Quite naturally, therefore, the Income-tax Officer thought that since the new section, speaking as on 30-3-1948, and at all subsequent times, unless it was again amended, required that before a notice thereunder could be issued, the Commissioner's sanction was to be obtained, the notice already issued on 23-8-1948, had ceased to be valid and could no longer be proceeded upon for the purposes of making an assessment.

    7. In that view, he applied for and obtained the sanction of the Commissioner and issued a fresh notice under S. 34 on 30-3-1951.

    8. The notice under S. 34 was followed up by the usual notice under S. 22(4) of the Act which was issued on 9-4-1951. On 16-4-1951, 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.

    9. Be that as it may, on 7-5-1951, 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 24-2-1949, might be treated as a return filed in compliance with the second notice under S. 34. The actual language of the letter appears from the order of the Assistant Commissioner who set it out in full. It reads as follows:

    “We stand by the return already submitted and there is no reason to alter it. In the circumstances please proceed on the footing that the original return is in order and represents compliance with your above notice and may be deemed to have been filed in compliance with the above notice dated 30-3-51.”

    Thereafter the Income-tax Officer proceeded on that return and completed the assessment on 29-6-1951. It appears that he determined the assessee's income at Rs. 1,36,468/-.

    10. Against that assessment the asses see appealed to the Assistant Commissioner. It was contended that the assessment had been made after the period of limitation for a valid assessment had already expired and that, on the merits too, the assessment was bad, inasmuch as certain deductions had not been allowed.

    11. The Appellate Assistant Commissioner overruled the plea of limitation, but gave effect to the plea on the merits. He set aside the assessment and directed the Income-tax Officer to make a fresh assessment in accordance with law.

    12. Thereafter the assessee preferred a further appeal before the Appellate Tribunal. It will be noticed that there was no longer any subsisting assessment, but only a direction for re-assessment given by the Appellate Assistant Commissioner. The only argument before the Appellate Tribunal appears to have been that since the assessment had been completed more than four years after the expiry of the assessment year, any assessment made thereafter would be time-barred.

    13. It is true that the Tribunal refers to the assessee as contending that any assessment made thereafter would be “equally time-barred”, which obviously means that the assessment previously made and since set aside was also time-barred, but the Tribunal does not seem to have dealt with that question separately.

    14. The reason adduced in support of the plea of limitation, as far as it can be understood, was that there was in fact on the file a return filed by the assessee. The first notice under S. 34, it was said, was an invalid notice and the return filed after the issue of that notice could not be treated as filed in compliance therewith, nor had it been filed in compliance with the first notice under S. 34 in fact.

    15. It was a return voluntarily filed. If so, and if there was a return voluntarily 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.

    16. Since he had not done so and had made the first assessment only on 29-6-1951, 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.

    17. The Tribunal repelled both branches of the assessee's contention. It held that the return filed on 24-2-1949, 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 men 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 first notice under S. 34, the Tribunal proceeded to consider whether, nevertheless, it could be held that the return was to be treated in law as a return voluntarily filed and thus a good return for a normal assessment within the normal period.

    18. The Tribunal answered the question in the negative and in doing so relied on a decision of S.R Das Gupta, J., and myself in the case of — ‘Commissioner Of Agricultural Income-Tax v. Sultan Ali Gharami’, (1951) 20 ITR 432 (Cal) (A). The substance of the view taken by the Tribunal was that the initial notice under S. 34 having been an invalid notice, the Income-tax Officer could not possibly have proceeded upon the return filed in compliance therewith simply on the ground that somehow a return had come in and indeed if he had done so, the consequent assessment would have been clearly invalid.

    19. If the Income-tax Officer could not make a valid assessment on the basis of that return, the assessee on its part could not be heard to contend that he could have done so and indeed was bound to proceed on that return if he wanted to make an assessment at all. In the result, the Tribunal dismissed the assessee's appeal.

    20. Thereafter the assessee required the Tribunal to refer the disputed questions to this Court. In compliance with that requisition, the two following questions have been referred:

    (1) “Whether on the facts and in the circumstances of this case the return filed on 24-2-1949 can be regarded as a voluntary one under S. 22(3) on the basis of which an assessment could have been validly made?”

    (2) “Whether on the facts and in the circumstances of this case, the assessment for 1946-1947, made on 29-6-1951 or to be made hereafter was or would be barred by limitation?”

    21. The first question asks whether the return filed on 24-2-1949, could be regarded as a voluntary return filed under S. 22(3). It seems to comprise two enquiries, namely, (1) whether there was evidence before the Tribunal on which they could properly hold that the return had in fact been filed not voluntarily, but in compliance with the first notice under; S. 34, and (2) whether assuming that the Tribunal's finding on the question of fact was correct, they were yet right in law in treating the return as a return filed in compliance with the first notice under S. 34 and not voluntarily. Mr. Sinha, who appears on behalf of the assessee, advanced his argument before us on those two lines.

    22. A word is necessary in explanation of the phrase “under S. 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-s. (1) or sub-s. (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 sub-s. (1) or the individual notice issued under sub-s. (2).

    23. In the present case, no notice under S. 22(2) was issued to the assessee. What the expression “under S. 22(3)” means in the context of the facts in the present case is, a return filed in compliance with the general notice under S. 22(1) and filed not within the time limited thereby but subsequently in exercise of the liberty given by sub-s. (3) of S. 22.

    24. In terms of the facts of the present case, therefore, the question asks whether, when the assessee filed a return on 24-2-1949, it could properly be held to have filed it of to own free will in compliance with the general notice issued under S. 22(1) and not in compliance with the notice under S. 34.

    25. As to the first branch of the first question, the answer appears to me to be plain. I have already read the language in which the Tribunal expressed their finding. I find it wholly impossible to say that they had no evidence before them on which they could rightly arrive at that conclusion of fact.

    26. The assessee did not file any return within the time limited by the general notice under S. 22(1), nor did it make any attempt to file any return within the assessment yean. It filed a return about two years after the assessment year had expired and after a notice under S. 34 had been served on it.

    27. After the issue of such a notice, a representative of the assessee had seen the Income-tax Officer and applied for time fou filing the return and the return was actually filed thereafter. I do not see how it can be said that the Tribunal were not entided in law to conclude from those facts that the return, when it was filed, was filed not voluntarily in compliance with the general notice under S. 22(1), but in pursuance of the notice under S. 34.

    28. There is also the further fact that when a representative of the assessee saw the Income-tax Officer on 8-2-1948, he was given a warning that if no return was filed on or before the 23rd of November, certain harsh and unpleasant consequences would follow.

    29. The learned Advocate for the assessee himself admitted that the sequence of events was against his client, but his contention was that since the return had not been filed even on 23-11-1948, which was the last date fixed by the Income-tax Officer but it was filed subsequently, it should be treated as having had no reference to the notice under S. 34 and as having been filed by the assessee of its own free will.

    30. The learned Advocate seemed to think that once the time fixed for filing the return was allowed to expire without any return being filed, no link or connection could be found between the notice under S. 34 and the subsequent filing of the return. I am not prepared to assent to that proposition.

    31. I consider it impossible to hold that if a particular order of a tribunal directs a party to do a particular thing 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.

    32. 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.

    33. 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 S. 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.

    34. It was the common case of the parties before the Appellate Assistant Commissioner and the Tribunal that the first notice under S. 34 was invalid. Before us Mr. Sinha wanted to contend that the retrospective operation given to the new S. 34 would not have the effect of invalidating the first notice under S. 34, but it is dearly not open to him to advance any such contention in the present Reference.

    35. The whole basis of the asses see's argument before the authorities below was that the first notice under S. 34 having been invalid, no compulsion proceeding from that notice and operating on the assessee so as to have elicited from it the return filed on 24-2-1949, could be predicated.

    36. It was only on that ground that it was said that the return filed was voluntarily and that if there was already a voluntary return on the file submitted before the expiry of four year's from the end of the year of assessment, the Income-tax Officer was bound to complete the assessment upon that return within the normal period.

    37. But simply because the first notice under S. 34 was invalid or must be taken to have been so, I am unable to see how it can be said that the return actually filed in compliance with that notice, as properly found, cannot in law be treated as so filed. If it was a voluntary return, it would have been a good return for the purpose of a valid assessment, but the Tribunal has rightly pointed out that if the Income-tax Officer had proceeded to make an assessment on that return, such an assessment would not stand a moment's scrutiny.

    38. Conversely, the assessee cannot insist either in law or in common sense that the return it filed in compliance with the invalid notice under S. 34 could and should have been made the basis of a normal assessment. A return which is bad for action to be taken thereon by the Income-tax Officer, must be treated as bar for all purposes. It cannot be bad for the Income-tax Officer but good for the assessee.

    39. I am not forgetting the principle that the validity of an assessment does not depend upon the issue of a notice of a valid notice, but I have already held in the case relied on by the Tribunal that principle would not apply to a case where the issue of a notice, as prescribed by law, is a condition precedent to the commencement of proceedings in exercise of the jurisdiction to assess.

    40. Where the time for making an assessment in the normal way has expired or certain omissions have occurred by reason of which no assessment has taken place or an under assessment has occurred and the statute requires that in such circumstances the Income-tax Officer can assume jurisdiction and commence fresh 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.

    41. 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 and 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 valid assessment.

    42. In the case of ‘(1951) 20 ITR 432 (Cal) (A)’, 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.

    43. In the present case the return showed a taxable income. That circumstance, however, cannot make the return a voluntary return or a return filed in compliance with the notice under S. 22(1), though filed belatedly under the Privilege conferred by S. 22(3) when it is found as a fact that actually it was not so filed and, secondly when it is found that having been filed in compliance with an invalid notice under S. 34, it cannot, nevertheless, be treated in law as a return filed under S. 22(1).

    44. While on that subject I may observe in passing, with great respect, that in commenting on the decision in the case of — ‘Ranchhoddas Karsondas…Applicant; v. The Commissioner Of Income-Tax, Bombay City, Bombay….*, Bombay City’, AIR 1954 Bom 543 (B), the Bombay High Court seems to have overlooked the qualification expressly made. It was not said in general terms that a return, showing an income below the taxable limit, could not be a return filed under S. 24(3). “It should be remembered,” I observed, “that the return in the present case is being sought to be treated as a return under S. 24(1), belatedly filed.”

    45. And then I went on to say that a return under S. 24(1) would only be filed by a person who thought that he had a taxable income and therefore a return snowing an income below the taxable limit could not be held, on a construction thereof, to be a return under S. 24(1) and consequently the return in the case we were then considering could not be treated as such a return filed under S. 24(3). To say that, was not to say that even a return filed in compliance with a notice under S. 22(2), if filed belatedly under S. 22(3), could not be a return showing an income below the taxable limit.

    46. Reverting now to the first question, in, my view, the Tribunal had evidence before them on which they could properly hold as a fact that the return was not a voluntary one and they were also right in law in holding that it could not nevertheless, be treated in law as a voluntary return for the reason that the notice in compliance with which it had been filed was an invalid notice.

    47. If the answer to the first question be in the negative, the second question which is really consequential answers itself. If the return was not a voluntary return and therefore could not he regarded as a return on which a valid assessment could be made, the case was one where no return had been filed. The case was also one where income had escaped assessment.

    48. If so, cl. (a) of S. 34(1) clearly applied and the second notice under S. 34 was given within the period allowed by law.

    49. The assessment originally made on 29-6-1951, was, therefore, not a time-barred assessment, although it might be bad on the merits, as it was in fact held to be; and since the Appellate Assistant Commissioner, after setting aside that assessment, directed a re-assessment to be made under S. 31(3)(c) of the Act, the second proviso to S. 34(3) would apply and, therefore, no reassessment made hereafter would be barred by limitation.

    50. For the reasons given above, the answers to the questions should, in my opinion, be as follows:

    Question (1): “No”.

    Question (2): “No as to both parts.”

    51. The Commissioner of Income-tax, West Bengal, will have his costs of this Reference.

    52. Sarkar, J.:— I agree.

    V.S.B

    53. Answer accordingly.

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    Comments

    R.K. Das And Co. v. Commissioner Of Income-Tax
    (Jan 6, 1956)