JUDGMENT - Chagla, C.J.

1. The answer which we have to give to the questions submitted to us on this reference is both simple and obvious. A public notice was issued Under Section 22(1) and the period fixed under that section was 65 days. The notice was issued in respect of the assessment year 1945-46 and that was on 1-5-1945. The assesses made a return on 5-1-1950, and in the return he showed his assessable income as Rs. 1,935. He added a foot-note to his return to the following effect: "My wife has sold her old ornaments and deposited the sum of Rs. 59,026 in the firm of Assar Syndicate in which I am a partner." On 27-2-1950, the Income-tax Officer issued a notice upon the assessee Under Section 34 and he made an assessment order on 26-2-1951, holding that the sum of Rs. 59,026 constituted the income of the assessee and assessing him to tax on that income. Now, it is this assessment order that was challenged before the Tribunal by the assessee and the Tribunal upheld that order.

2. Now, the order is challenged, firstly, on the ground that the proceedings which were initiated under Section 34 were not valid proceedings, and inasmuch as the proceedings were not valid, the order was an invalid order. The scheme of Section 22 is fairly clear.

Sub-section (1) of Section 22 provides for a public notice, Sub-section (2) provides for a notice by the Income-tax Officer upon individual assessees, and Sub-section (3), which is the material Sub-section, provides that if any person has not furnished a return within the time allowed by or under Sub-section (1) or Sub-section (2), to quote the material words, "he may furnish a return at any time before the assessment is made." Therefore, there is a time limit under Sub-section (1) of Section 22 to make a return, there is a time limit also under Sub-section (2) to make a return, but notwithstanding the fact that the time so limited has passed, a person is entitled to make a return, provided before he makes a return no assessment is made.

Now, this is exactly what the assessee did in this case. Although the time limited by the public notice under Sub-section (1) of Section 22 had long passed, no assessment was made upon him. Therefore, availing himself of the provisions of Sub-section (3) of Section 22, he made a voluntary return on 5-1-1950.

3. Now, the question is, whether it is open to the Taxing Department to avail itself of Section 34 once a return is made under Sub-section (3) of Section 22. Section 34 can be availed of in one of two eventualities. If no return is made by the assessee, the Department can proceed under Section 34, or if a return is made and the return results in an assessment and it is found that certain income has escaped assessment or has been under-assessed, then proceedings can be taken under Section 34. But it is clear on a plain reading of Section 34 that action cannot be taken under Section 34 once a return has been made. Then the Department must proceed to assess the assessee on the return made by him.

4. Mr. Joshi contends that in this case the return was made by the assessee on 5-1-1950, and within the period of limitation laid down under Section 34(3) the assessment had to be made by 31-3-1950. It seems that the Department was not in a position to complete the assessment of the assessee within the period of limitation, and by resorting to Section 34 it wanted the period of limitation to be extended by one year because Section 34 extends the period by one year if notice is issued under that section.

Mr. Joshi says that it is not open to the assessee to wait for any length of time and then to make a return practically towards the end of the period of limitation and thereby prevent a proper assessment. Now, it is entirely the fault of the Department if there is delay in the making of the return. Two clear options are open to the Department. It is open to the Department to issue a notice under Sub-section (2) of Section 22, and if no return is made within the time fixe

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