Balchand vs Income-tax Officer, Sagar

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1968 Supreme(SC) 214

SUPREME COURT OF INDIA
J.C. SHAH AND V. RAMASWAMI, JJ.
Balchand, Appellant
Versus
Income-tax Officer, Sagar, Respondent.
Civil Appeal No. 640 of 1966,
D/-19-8-1968.
Advocates appeared
Mr. N. D. Karkhanis, Senior Advocate, (Mr. A. G. Ramaparkhi, Advocate with him), for Appellant; Mr. D. Natsaraja, Senior Advocate, (Mr. R. N. Sachthey, Advocate, with him, for Respondent.

Advocates:
A.G.Ratnaparkhi, D.NARASARAJU, N.D.Karkhanis, R.N.SACH

Headnote:(1) Income Tax Act, 1922 - S. 34 - voluntary return after completion of assessment of income- Income Tax Officer can still issue notice of reassessment.
       The Income Tax Act, 1922 does not provide for any machinery for dealing with voluntary returns filed by an assessee after assessment of income for the year of assessment is completed. Such a voluntary return does not operate as a bar to the Income-tax Officer issuing a notice of re-assessment.
       Where the-income of the assessee has been assessed to tax, it is not open to the assessee on coming to learn or apprehending that proceedings under section 34 of the Act will be taken against hIm to tile a voluntary return and avoid the issue of a notice under section 34 against him. [Para 5]
       (2) Income Tax Act, 1922 - Ss. 22 (3) and 34-notice under section 34 is notice of assessment-assessee under section 22 (3) may furnish revised return to rectify an omission or wrong statement or furnish return pursuant to requisition under section 34 -assessee cannot seek to rectify his return on which assessment has already been made.
       Unless a notice of reassessment is issued by the Income-tax Officer, the assessee cannot after an order of assessment is made submit a return of his income for the year for which he is already assessed and call upon the Income-tax Officer to asssess his income. Such a proceeding would be futile. It is true that a notice under section 34 is also a notice of assessment, but relying upon section 22 (3) the assessee may furnish a revised return to rectify an omission or wrong statement, or furnish a return pursuant to a requisition under section 34; he cannot seek to rectify his return on which assessment has already been made. [Para 6]

Judgment

SHAH, J.: The lncome-tax Officer, Sagar, assessed the appellant to pay under S. 23(3) of the Income-tax Act, 1922, tax on his income computed for the assessment years 1945-46 and 1946-47. On June 24, 1959, the Income-tax Officer issued a notice of reassessment under S. 34 of the Income-tax Act, 1922, reciting that the income of the appellant had escaped assessment and requiring the appellant to submit a return of his total world income assessable for the year ending March 31, 1946. On August 17, 1959, the appellant filed a return for the assessment of his income for the year 1946-47. The appellant was informed by the income tax Officer that he was called upon to submit a return of his income for the assessment year 1945-46 and not for the assessment year 1946-47. The appellant on March 22, 1960, filed a fresh return for the assessment year 1945-46 admitting that he had "misunderstood the notice" served upon him. In his return he admitted that he had a third share in a firm styled "Sheoprasad Shobharam." On March 14, 1967 the Income-tax officer issued another notice under S. 148 of the Income-tax Act, 1961, calling upon the appellant to submit a return of his income for the assessment year 1946-47 on the ground that income of the appellant had escaped assessment. The appellant then moved the High Court of Madhya Pradesh for an order quashing the notices dated June 24, 1959 and March 14, 1963, and for a writ of mandamus or prohibition restraining the Income-tax Officer from continuing the proceedings of assessment under the two notices. The High Court rejected the writ petition. Against the order of the High Court, the appellant has appealed to this Court with special leave.

2. The appellant contended that by the notice dated June 24, 1959, he was called upon to file a return for the assessment year 1946-47 and initiation of proceedings on that notice for reassessment of income for the assessment year 1945-46 was incompetent. In the preamble of the notice it is recited: "Whereas I have reason to believe that your income assessable to income-tax for the assessment year 1946-47, 1945-46 has - (a) escaped assessment * * * , I therefore propose to assess the said income", but in the body of the notice it is clearly recited that the appellant was called upon to deliver a return of his total world income assessable for the year ending March 31, 1946. A demand for return of income assessable for the year ending March 31, 1946 could obviously be for the assessment year 1945-46 and not for 1946-47. By his letter dated March 22, 1960, the appellant admitted that he was called upon to file a return for the assessment year 1945-48 and he had "misunderstood" the notice and had filed a return for the assessment year 1946-47. There was apparently some negligence in drawing up the preamble to the notice, but that does not affect the validity of the notice, for the appellant was clearly informed that he had to file a return for the year ending March 31, 1946.

3. The appellant then contended that in any event on August, 17, 1959, the appellant had submitted a return for the assessment year 1946-47 and even if no notice for assessment year 1946-47 calling upon him to submit a return for that year was issued, a notice under S. 34 of the Income-tax Act, 1922, or under S. 148 of the Income-tax Act, 1961, was incompetent so long as the return submitted by the appellant in August 1959 for the assessment year 1946-47 was not considered and disposed of Reliance in support of this contention was placed upon two decisions of this Court: Commissioner of Incometax v. Ranchhoddas Karsondas, 1959-36 ITR 569 and Commissioner of Income-tax v. S. Raman Chettiar, 1965-55 ITR 630.

4. Under S. 22 (1) of the Income-tax Act, 1922, the Income-tax Officer was required before the 1st day of May in each year to five notice, by publication in the press and calling publication in the prescribed manner, calling upon every person whose total income during the previous ye

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