Case ID: 2458

Judgment:
Appeal No. 640 of 1966. Appeal by special leave from. ' the judgment and order dated September 2	 1965 of the Madhya Pradesh High Court in Misc. Petition No. 92 of 1964. N.D. Karkhanis	 and A.G. Ratnaparkhi	 for the appellant. D. Narsaraju and R.N. Sachthey	 for the respondent. The Judgment of the Court was delivered by Shah	 J. The Income tax Officer	 Sagar	 assessed the appellant to pay under section 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 section 34 of the/ncome 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	 1963	 the Income tax Officer issued another notice under section 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. 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. 706 In the preamble of the notice it is recited: "Whereas I have reason to believe that your income assessable to mcome 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 194647. By his letter dated March 22	 1960	 the appellant admitted that he was called upon to file a return for the assessment year 1945 46 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. 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 section 34 of the Income tax Act	 1922	 or under section 148 of the Income tax Act	 1961	 was incomp.etent 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 Income tax vs Ranchhoddas Karsondas(1) and Commissioner of Income tax vs section Raman Chettiar(2). Under section 22( 1 ) of the Income tax Act	 1922	 the Income tax Officer was required before the 1st day of May in each year to give notice	 by publication in the press and by 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 any person whose total income was in the opinion of the Income tax Officer of such an amount as to render such person liable to income tax	 requiring him to furnish 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. Sub section ( 3 ) provided: "If any person has not furnished a return within the time allowed by or under sub section (1 ) or sub section (1) (2) 55 I.T.R. 630. 707 (2 ) or having furnished a return under either of those sub sections	 discovers any omission or wrong statement therein	 he may furnish a return or a revised return	 as the case may be	 at any time before the assessment is made. " Section 34 of the Act authorised the Income tax Officer to serve a notice on the assessee for assessment or reassessment if (a) the Income tax Officer had reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year	 income	 profits or gains chargeable to income tax have escaped assessment for that year	 or have been under assessed	 or assessed at too low a rate	 or have been made the subject of excessive relief under the Act	 or excessive loss or depreciation allowance has been computed	 or if (b) in cases not mentioned in cl. (a) the Income tax Officer had in consequence of information in his possession reason to believe that income	 profits or gains chargeable to income tax had escaped assessment for any year	 or had been under assessed	 or assessed at too low a rate	 or had been made the subject of excessive relief under the Act or that excessive loss or depreciation allowance had been computed	 and to proceed to reassess the income of the assessee. 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 and so long as he did not do so	 he was incompetent to issue a notice of reassessment either under section 34 of the Income tax Act of 1922	 or section 148 of the 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 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 reassessment. This Court has held in Ranchhoddas 's case(1) that 'where no return has been filed by the assessee within the period prescribed by section 22(1) of the Income tax Act	 2922	 the assessee is entitled in law to submit a voluntary return in answer	 to the general notice under section 22(1 ) before assessment is completed	 for a return (1) 135up. CI/68 14 708 answer to the general notice can under section 22 (3) be/lied at any time before assessment and for filing such a return there is no limit of time	 and when such a voluntary return is filed	 the Income tax Officer cannot ignore that return voluntarily filed and issue a notice of reassessment under section 34 of the Income tax Act	 1922. A notice of reassessment before the voluntary return is disposed of is therefore invalid. But the principle of Ranchhoddas 's case(1) only applies to cases where no assessment of the income of the assessee has been made. 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 file a voluntary return and avoid the issue of a notice under section 34 against him. In section Raman Chettiar 's case(2) also a Hindu undivided family had not filed any return for the assessment year 1944 45. The Income tax Officer issued a notice under section 34 of the Indian Income tax Act	 1922	 in April 1948 calling upon the assessee to file a return of income	 and the assessee complied with the notice and filed a return on September 4	 1948. In the course of the proceeding	 it was discovered that the notice under section 34 was invalid	 because the Commissioner 's sanction was not obtained. The Income tax Officer then issued a fresh notice on February 27	 1953	 in respect of the assessment year 1944 45 and passed an order of assessment in respect of the income which had not been assessed. This Court held that the return submitted on September 4	 1948	 by the assessee in response to the invalid notice under section 34 was a return within the meaning of section 22(3) of the Act	 and the Income tax Officer could not ignore it and issue a notice under section 34 on the assumption that there had been omission or failure by the assessee to make a return of his income under section 22	 and on that ' account the assessment under section 34 was invalid. In that case also no return had been filed by the assessee pursuant to section 22 and no order of assessment of the income of the assessee for the year 1944 45 was recorded. The principle of Ranchhoddas 's case(x) and section Raman Chettiar 's case(2) has	 in our judgment	 no application to cases where a return has been filed by the assessee and assessment made and thereafter apprehending proceedings under section 34 of the Indian Income tax Act	 1922	 the assessee files another return. 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 assess 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 pur (1) (1) 709 suant to a requisition under section 34: he cannot seek to rectify his return on which assessment has already been made. The return filed on August 17	 1959	 therefore	 did not deprive of the Income tax Officer of his jurisdiction to start proceedings under section 34 of the Indian Income tax Act	 1922	 against the assessee. There is no dispute that after the repeal of the Act of 1922	 it was competent to the Income tax Officer to issue a notice under section 148 of the Income tax Act	 1961	 for assessment of the income of the assessee if no proceeding for assessment had been commenced prior to April 1	 1962. The appeal fails and is dismissed with costs. V.P.S. Appeal dismissed.

Summary:
The appellant was assessed to pay tax on his income for the assessment years 1945 46 and 1946 47 under section 23(3) of the Income tax Act	 1922. Thereafter	 on June 24	 1959	 the Income Tax Officer issued a notice of reassessment under section 34 requiring the appellant to submit a return of his income assessable for the year ending March 31	 1946 on the ground that the income of the appellant had escaped assessment. The preamble to the notice however	 referred to the assessment years 1946 4 7 and 1945 46. The appellant filed a return for the assessment year 1946 47	 and when his attention was drawn to the body of the notice	 he flied a fresh return for the assessment year 1945 46 admitting that he had misunderstood the notice. On March 14	 1963 the Income Tax Officer issued another notice under section 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 his income for that year also had escaped assessment. The appellant	 thereupon flied a writ petition in the High Court for quashing the two notices dated June 24	 1959 and March 14	 1963 but the petition was dismissed. In appeal to this Court	 on the questions	 whether; (1 ) by the notice dated June 24	 1959 the appellant was called upon to file a return for the assessment year 1946 47 and therefore the reassessment proceedings for the assessment year 1945 46 were incompetent; and (2) since the appellant had submitted another re.turn for the assessment year 1946 47 the notice dated March 14	 1963. 	 was incompetent	 because a notice under section 34 of the Income tax Act	 1922	 or section 148 of the Income tax Act 1961	 could not be issued so long as the return was not considered and disposed of	 HELD: (1) Though there was some negligence in drawing up the preamble to the notice dated June 24	 1959 it did not affect its validity for the assessment year 1945 46. The appellant was clearly informed that he had to file a return of his income assessable for the year ending March 31	 1946 that is for the assessment year 1945 46	 and the appellant himself had admitted his mistake in construing it. [706 B D] (2) The Act does not provide any machinery for dealing with voluntary returns filed by an assessee after assessment of income for the year of assessment was completed. When the income of the assessee had been assessed to tax	 it was not open to him	 to file another voluntary return and avoid the issue of a notice either under section 34 of the 1922 Act or section 148 of the 1961 Act. The cases	 Commissioner of Income tax vs Ranchhoddas Karsondas	 and Commissioner of Income tax vs section Raman Chettiar	 55 I.T.R. 630 (S.C.) on which the appellant relied are cases where there was no order of assessment for the rele 705 vant year and their principle has no application to the present case. 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 was already assessed and call upon the Income Tax Officer to assess his income. [707 G; 708 C	 F G]