In a proceeding under section 34, the relief contemplated by section 24(2)(iii) can only be granted in the course of the assessment of the total income of the assessee and not in a proceeding under section 34.

( 1 ) BY these applications under section 66 (1), the assessee requires the Tribunal to draw up a statement and to refer certain questions of law which are said to arise out of the said order. In our opinion, a question of law arises out of the aforesaid Tribunal's order, we draw up a statement of the case, agreed to by both the parties, and refer it to the High Court. As the facts are common a consolidated statement of the case is drawn.

( 2 ) THE assessee started a film distribution business under the name and style of M/s. Zenith movies on October 27, 1951. Books of account in respect of the above business were closed on 31st October of every year.

( 3 ) IN the belief that the assessee would have earned a taxable income in respect of the assessment years 1953-54, 11954-55 and 1955-56, proceedings were initiated by the Income-tax Officer under section 34 in respect of these years by issue of notice dated May 30, 1957, and served on june 3, 1957. These notices were accompanied by forms of return.

( 4 ) IN the returns made in response to the notices, the assessee claimed losses of Rs. 17,266, Rs. 36,012 and Rs. 43,702 for the assessment years 1953-54, 1954-55 and 1955-56 respectively. The income-tax Officer on receipt of the said returns, issued notices under section 23 (2) of the income-tax Act to the assessee for the three assessment years and examined the evidence adduced by the assessee in support of the returns filed. The Income-tax Officer by his orders dated August 10, 1959, August 8, 1959, August 8, 1959, passed respectively for the assessment years 1953-54, 1954-55 and 1955-56 under section 23 (3) read with section 34 of the Income-tax act held that the losses returned were fully substantiated and held further that the assessee was not entitled to have this loss assessed for purposes of carry-forward and set-off against future assessments, observing that section 34 cannot be brought into play in this case; and that if the assessee really intended that his loss should be assessed and carried forward he should have filed returns declaring the losses under section 22 (2a) of the Act. . . . .

( 5 ) BEFORE the Tribunal it was contended that section 22 (2a) of the Income-tax Act was applicable to a case where an assessee was served with a notice under sub-section (2) of section 22 of the Act and the notices issued to the assessee under section 34 of the Income-tax Act for the three assessment years along with the return forms were notices under section 22 (2) of the act.

( 6 ) THE Tribunal for the reasons stated in its order dated May 16, 1961, passed I. T. A. Nos. 8790, 8791 and 8792 of 1959-60 negatived the assessee's contentions and dismissed the appeals. . . .

( 7 ) THOUGH the assessee has raised four questions, we consider that the following question is comprehensive enough to bring out the point in issu :

"whether in the circumstances of the case, the assessee was entitled to carry forward the losses substantiated by the Income-tax Officer for the assessment years 1953-54 to 1955-56 under section 24 (2) (iii) of the Act?"

K. S. Hegde, J.

( 8 ) THE short point for consideration is whether in a proceeding under section 34, initiated for the purpose of assessing an income alleged to have escaped assessment, or which was considered to have been under-assessed, or assessed at too low a rate or subject of excessive relief, the income-tax Officer could grant relief to the assessee under section 24 (2) (iii) of the Income-tax act, 1922 (to be referred to hereinafter as the "act") if he comes to the conclusion that in the relevant years the assessee had suffered losses.

( 9 ) IN order to answer the above question, it is necessary to refer to the material portions of sections 22 and 34 of the "act". Only sub-sections (1), (2) and (2a) of section 22 are relevant for our present purpose. They read as follow :

"22. (1) The Income-tax Officer shall, on or before the 1st day of May in each year, give notice, b