Case: Balchand Vs. Income-Tax Officer, Sagar

1. 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 ofthe 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.

Reasoning: 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 year exceeded the maximum amount not chargeable to income-tax to furnish, within such period not being less than sixty days as may be specified in the notice, a return in the prescribed form. Sub-section (2) authorised the Income-tax Officer to serve a notice upon my person whose total income was in the opinion of the Income-tax Officer of such an amount as to render such person liable to incame-tax, requiring him to furnishing within such period, not being less than thirty days, as may be specified in the notice, a return of his total income during the previous year.The appellant was already assessed to income-tax for the years 1945-46 and 1946-47 under the Act of 1922. Counsel for the appellant concedes that the appellant did not comply with the notice dated June 24, 1959, and filed first a return for the assessment year 1946-47 and thereafter a return for the assessment year 1945-46. He, however, submits that even if the return was not demanded, since the return for 1946-47 was filed by the appellant the Income-tax Officer was bound to consider that return according to law and to pass appropriate Orders of assessment thereon an so long as he did not do so, he was incompetent to issue a notice of reassement either under Section 34 of the Income-tax Act of 1922 or Section 148 ofthe Income-tax Act, 1961. We are unable to accept that contention. The Act does not provide for any machinery for dealing with voluntary returns filed by an assessee after assessment of in-come 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 assessment.The return filed on August 17, 1959, therefore did not deprive theOfficer of his jurisdiction to start proceedings under Section 34 of the IndianAct, 1922, against the assessee. there is no dispute that after the repeal of the Act of 1922, it was competent to theOfficer to issue a notice under Section 148 ofx Act, 1961, for assessment of the income of the assessee if no proceeding for assessment had been commenced prior to April 1, 1962.