Assessee already assessed for 1945-46 and 1946-47 challenged two reassessment notices, contending his voluntarily filed return had to be disposed of first. The Court held a voluntary return after completed assessment does not bar reassessment notices and dismissed the appeal.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
704
A
BALCHAND
V.
INCOME-TAX OFFICER, SAGAR
All/?USt 19. 1968
LJ .. c. SHAii AN"D v. RAMASWAMI, JI.]
8
lncome../ax Act (II of 1922), s. 34 and Income.tax Act (43 of 1961), 148-Assessment n1ade by lncon1e-Tax Ofjicer-t·11rrher return rlie.reafter by assessee-Whether such return should be disposed of before .taking action under s. 34 of the 1922-Act or s. 148 of the 1961- Act. The appellant \'as assessed to pay tax on his income for the assessment years 1945-46 and 1946-47 under s. 23(3) of the Income-tax Act. 1922. Thereafter, on June 24, 1959, the Income-Tax Officer issued a notice of reassessment under s. 34 requiring the appellant to submit a return of his income assessable for the year ending March 31. 1946 ou the ground that the income of the appellant had escaped as<essment. The preamble to the notice hoy..·cver, referred to the assessment years 1946-47 and 1945-46. The appellant filed a return for the a'5essment year 1946-47. and \'hen his attention y.·as drawn to the bcxiy of the notice. he file-.d a fresh return for the asses-sment year 1945-46 admitling that he had misunderstood the notice. On ?<.-larch 14, 1963 the Income-Tax ()ffi.ccr issued another notice under s. 148 of the Income-tax Act, 1961, calling upon the appellant to suh1nit a return of his income for the assessment year 1946-47, on the ground that his income for that year also had escaped asscs.~mcnt. The appellant, thereupon filed a writ petition in the High Coun for quashing the two notices dated June 24, 1959 and March 14, 1963 but the petition \V:t.S dismissed.
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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 reasse~smcnt proceedings for the assessment year 1945-46 1,i,·ere incompetent; and (2) since the appellant had suhmitled another retu'rn for the assessment year 1946-47 the notice dated 1arch 14, 1963, was incompetent, because a notiee under F .<. J4 of the Income-tax Act, 1922, or s. 148 of the Incometa:x Act 1961. could not be isc;ued so Jong 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 asses.<ment year 1945-46. The appellant was clearly informed that he had to file a return of his income as.abJe for the year ending March G 11, 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 asses.sec af1er assessment of income for the year of assessment was c.omplctcd. When the income of the aC"Sec had been assessed ro tax, it \Vas not open to him. to file another voluntary retu'rn and avoid the i"ue of a notice either under s. 34 of the 1922 Act or H s. 148 of the 1961-Act. The cases, Com1nissioner of Jticomc-ta.x v. Ranchhoddas Kar.rondas, 36 J.T.R. 569 (S.C.) and Co1n1nissioner of Income-tax v. S. Raman Che!tiar. 55 l.T.R. 630 (S.C.) on which the ap itant relied arc cases where there was no order of assessment fo'r the rete-
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BALCHAND V, i,T.O, (Shah, J.)
705
A 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 asses.see 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-0]
CIVIL APPELLATE JURISDICTION : Civil 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.
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D. Narsaraju and R. N. Sachthey, for the respondent.
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The Judgment of the Court was delivered by Shah, J. The Income-tax Officer, Sagar, asse>sed the appellant to pay under s. 23 ( 3) of the Income-tax Act, 1922, tax on his income coniputed for the assessment years 1945-46 and 1946-47. On June 24, 1959, the Income-tax Officer issued a D notice of reassessment under s. 34 of the Income-tax Act, 1922, !.tciting 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 1946-4 7. The appellant was informed E by the Income-tax Officer that he was called upon to submit a return of bis income for the assessment year 1945-46 and not for the assessment year 1946-4 7. 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 F "Sheoprasad Shobharam". On March 14, 1963, 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 1946-4 7 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 G ·of mandamus or prohibition restraining the Income-tax Officer from continuing the proceedings of !lSsessment 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.
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E
The appellant contended that by the notice dated June 24, 1959, he .was called upon to file a return for the assessment year l 9~6-4 7 and initiation of proceedings on that notice for reassessment of income for the assessment year 1945-46 was incompetent.
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(1969] I S.C.R.
SUPREME COT..:RT REPORTS
706
D •'
In the preamble of the notice it is recited : "Whereas I have reason to believe that your income assessable to mcome-cax for the assessment year 1946-47, 1945-46 has-(a) escaped assessment .... , I chcrefore propose to assess the said income", but in the body of !he notice it is clearly rcClted that the appellant was called upon co 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 b.:: for the assessnlcnt year 1945-46 and not for 194647. By his letter dated March 22, I 960, 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 1946-4 7. 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.
TI1e 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 Income-tax v. Ranchhoddas Karsondas(') and Commissioner of Income-tax v. S. Raman Chettiar(').
Under s. 22 (I ) 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. Suh-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, requirin~ him to furnish within such period, not heing 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 tim~ allowed by or under sub-section (I) or sub-section ~~. (l) 36 1.T.R. 569. (2) 55 l.T.R 630.
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B
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F
G
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BALCHAND v. I.T.O. (Shah,/.)
707
•
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(2) or having furnished a return under either of those sub-tions, discovers any omission or wrong ste ment therein he may furnish a return or a reVJSed return, as th~ case may be, at any time before the assessment is made."
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This Court has held in Ranchhoddas's case(') that 'where no return has been filed by ihe assessee within the period prescribed H bys. 22(1) of the Income-tax Act, 1922, the assessee.is entitled in law to submit a voluntary return in answer, to the general notice unJler s. 22 ( 1) before assessment is completed, for a return in (l) 36 I.T.R. 569. Ll3Sup.Cl/68'--l4
[1969] J S.C.R.
SUPREME COURT REPORTS
70S
A
answer to the general notice can under s. 22 (3) be filed at any 11me 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 s. 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 asscssec on coming to learn or apprehnding that proceedings under s. 34 of the Act will be taken against him to lile a voluntary return and avoid the issue of a notice under s. 34 against him. In S. 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 s. 34 of the Indian Income-tax Act, 1922, in April 1948 calling upon the a'iSessec to file a return of income, and the asscssce complied with the notice and filed a return on September 4, 1948. In the course of the proceeding, it wa discovered that the notice under s. 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 I 944-45 and passed an order of assessment in respect of the income which had not been assessed. Thi.~ Court held that the return submitted on September 4, 1948, by the asses.o;ee in response to the invalid notice under s. 34 was a return within the meaning of s. 22 ( 3) of the Act, and the Income-tax Officer could not ignore it and issue a notice under s. 34 on the ao;sumption that there had been omission or failure by the assessee to make a return of his income under s. 22, and on that account the assessment under s. 34 was invalid. In that case also no return had been filed by the asses.<;ee pur.mant to s. 22 and no order of asses.sment of the income of the assessee for the year 1944-45 was recorded. The principle of _Ranchhoddas's case(1)_ and _S. Raman Chettlar's case(')_ has, in our judgment, no application to cases where a return has been filed by the asses.see and assessment made and thereafter apprehending proceedings under s. 34 of the Indian Incorru>-tax Act, 1922, the a'>SCSseo files another return. Unless a notice of reass=ent is issued by the Income-tax Officer, the assesSee cannot after an order of =sment 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 s. 34 is also a notice of asse.'iSment, but relying upon s. 22(3) the asscssee 111ay furnish a evised return to rectify an omission or wrong statement. or furnish a return pr-
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(2) 55 1.T.R. 630.
(I) 361.T.R. 569.
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BALCHAND v. I.T.O. (Shah,!.)
709
....
The appeal fails and is dismissed with costs.
Appeal dismissed.
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2 issues framed by the court
Was reassessment for assessment year 1945-46 competent despite the preamble to the June 24, 1959 notice referring to 1946-47?
Could a notice under s. 34 of the 1922 Act or s. 148 of the 1961 Act issue while an assessee's voluntarily filed return for 1946-47 remained undisposed of?
Colour shows how this judgement treated each authority
Commissioner of Income-tax v. Ranchhoddas KarsondasDistinguished
36 I.T.R. 569
Commissioner of Income-tax v. S. Raman ChettiarDistinguished
55 I.T.R. 630
5 provisions across 2 enactments
Balchand
Income-Tax Officer, Sagar
Shah
Ramaswami
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
