TMI Blog1979 (8) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... s having taxable income. On receipt of that information the ITO issued a notice under s. 148 of the I.T. Act, 1961 (hereinafter referred to as " the Act "), for the assessment years 1963-64 to 1966-67. In the present reference we are concerned with the assessment year 1963-64 only. For this year the notice was addressed to Sri Arjun Singh Johar, proprietor of M/s. Ishwar Singh and Sons. It was served on one Sri Maheshwar Singh on September 11, 1967. Pursuant to that notice Sardar Sampuran Singh, younger brother of Arjun Singh, filed a return in the name of M/s. Ishwar Singh and Sons, proprietor, Sardar Sampuran Singh. The assessment was made on the respondent-assessee taking his status as that of an HUF. The assessee appealed to the AAC a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, for 1957-58, had been made on Arjun Singh in the status of an individual. In these circumstances, it could not be believed that the ITO intended to issue the notice to the assessee in the status of HUF and in any case there was no evidence to support that contention. It may be noted that, the Appellate Tribunal placed reliance on the decision of the Supreme Court in CIT v. K. Adinarayana Murthy [1967] 65 ITR 607. In the result, the order of the AAC was confirmed. Now, at the instance of Commissioner of Income-tax in this reference under s. 256(1) of the Act, the following question has been referred to this court for its opinion; " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the return filed by Sardar Sampuran Singh, karta of the HUF, when the notice under s. 148(1) had been issued to Sardar Arjun Singh, proprietor of M/s. Ishwar Singh and Sons, was valid in law ? It was submitted before us on behalf of the revenue by Sri R. K. Gulati that since for the year under consideration the assessment could have been made by March 31, 1968, the return filed by the assessee on September 29, 1967, should be treated as a return filed under s. 139(4) of the Act and the assessment made on its basis was perfectly valid in law. Reliance was placed in support of this contention on the decision of the Supreme Court in CIT v. S. Raman Chettiar [1965] 55 ITR 630. In that case, the assessee, an HUF, had not filed any return fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department and the department could not issue a further notice under s. 34(1)(a) on the assumption that there had been an omission or failure on the part of the assessee to make a return of his income under s. 22. There was an appeal by special leave filed before the Supreme Court which confirmed the view taken by the High Court. The ratio laid down by the Supreme Court was (p. 636): " We think that some confusion has crept into this branch of the income-tax law by the use of the words 'voluntary return' and a 'non-voluntary return'. Section 23(3) does not use this expression and whatever the impelling cause or motive, if a return otherwise valid is filed by an assessee before the receipt of a valid notice under section 34, it is to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee in the status of an individual. Before the assessment could be made, in the proceedings taken under this notice, the AAC, in the appeal for the assessment year 1954-55, accepted the assessee's contention and held that the status of the assessee was that of an HUF and not of an individual. Thereafter, the ITO issued a fresh notice under s. 34 on February 20, 1958, and a return was filed in pursuance of the same and the assessment was ultimately made on the assessee in the status of HUF. On appeal the AAC held that no notice could be issued after the expiry of eight years from the close of the previous year and the proceedings were hence invalid. On further appeal by the department, the Appellate Tribunal overruled that view. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 'individual' and sanction of the Commissioner for the issue of notice under section 34 was also obtained on that basis. We, therefore, consider that the Income-tax Officer was entitled to ignore the return filed by the assessee as non est in law. " Ultimately the view taken was that the proceeding taken under the first notice was invalid and ultra vires and the ITO was legally justified in ignoring the first notice and the return filed by the assessee in response to that notice and consequently the assessment made in pursuance of the second notice was a valid assessment. It would be seen that there is an apparent conflict in these two decisions. We do not think that we should go into the question as to which of these two decisions we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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