TMI Blog1965 (9) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... made similar returns for the assessment years here in question in response to notices under section 22(2) of the Act. For the first of the years the return which was dated August 29, 1954, was filed on September 5, 1955, and for the second year it was filed on February 1, 1957. The Income-tax Officer found that the income returned by Sivalingam Chettiar as an individual in fact belonged to the joint family and assessed the joint family accordingly. On the returns filed as an individual, he noted N.A. apparently signifying nil assessment. This he did on January 27, 1956, in respect of the return for the assessment year 1955-56, and on February 27, 1957, in the other case. From the supplemental statement, which we called for from the Tribunal, we find that notices were served on Sivalingam Chettiar in respect of both the years under sections 22(4) and 23(2). The assessee produced his books, which were examined, and also appeared by his representative. In the file relating to the first of the two years, the Income-tax Officer stated that, as the income from the properties belonging to the estate of Chettiappa Chettiar would be added to the family of V.S. Sivalingam Chettiar, there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to orders passed under section 23 and that, therefore, the returns must be considered to be pending, with the result the proceedings under section 34 would be wholly without jurisdiction. If there were no orders passed on the returns and they should be considered as pending returns, the proceedings under section 34(1)(b) would undoubtedly be illegal. When this reference came up before us in the first instance, we considered that a supplemental statement of the case was required, since neither the statement of the case as originally made nor the order of the Tribunal in the appeal made it clear what orders were passed on the returns, and whether they were pending, when proceedings under section 34 were taken. In fact, the Tribunal in its order in the appeal had stated that no assessments were made on the assessee as an individual. From the facts mentioned in the supplemental statement since submitted to this court, it is clear that the Income-tax Officer did make certain orders, which we have already adverted to. The question is whether they can be regarded as orders made under section 23(3). The contention for the assessee is that, since in his returns as an individual he had di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he determination of the quantum of income either way. We do not think that in that respect there is any difference between sub-sections (1) and (3) of section 23. But what is argued by Mr. Srinivasan is that an order under section 23 is a quasi-judicial order and that, when the Income-tax Officer makes an order under sub-section (3) of section 23 after considering the pros and cons of the evidence produced before him, it has to be a speaking order giving reasons for his conclusion. Learned counsel says that the requirement in section 23(3) that the Income-tax Officer shall make an order in writing implies that his power under the section is to make a reasoned order and not an order merely stating nil assessment or nil income. We do not think that the contention is of any substance. That an order made under section 23 is of a quasi-judicial character is obvious, and for this purpose there is no difference, as we already mentioned, between section 23(1) and section 23(3). It is true that sub-section (3) of section 23 requires the order made thereunder to be in writing. But we do not fancy that an order under section 23(1) can be in anywise different. In our opinion, no particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court pointed out that the order 'no proceeding' terminated the assessment proceedings, and that it should be construed as meaning that the assessee had no assessable income...The assessment proceedings that commenced with the returns filed by the assessee were lawfully terminated when they were closed with the entry 'N.A.' Thereafter, the finality of the termination of those assessment proceedings could be vacated only be recourse to section 34, as this was not a case for the application of section 35. With respect, we concur with the view except that we would add that such an order of termination of the returns, as in that case, would well be within the purview of section 23. It should be remembered that the power of the Income-tax Officer to assess is only under that section, and, when a return is filed, he is called upon to dispose of it by making an assessment which means by determining the quantum of chargeable income, which may be nil or anything and fix the tax payable on that basis. Mr. Srinivasan, however, contends that this court in that case was not right in applying Esthuri Aswathiah v. Income-tax Officer, Mysore State [1961] 41 I.T.R. 539, 543; [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the orders on his individual returns being prejudicial to him, it is but necessary in order to invest them with validity that they should have been communicated to him. The question is not free from difficulty; but, having regard to the scheme of the Act, we are of the view that failure to serve notices of the orders had not the effect of rendering them invalid. That such a failure does not affect the validity of the orders was the view expressed by this court in M.CT. Muthuraman v. Commissioner of Income-tax 1963] 50 I.T.R. 656, 660. The learned judges observed: That the orders terminating the assessment proceedings were not apparently communicated to the assessee did not affect the legality of those orders or their finality. It is true, as contended by learned counsel for the assessee, no reasons were given for that conclusion. But we are satisfied, if we may say so with respect, that that is the correct view to take. Wherever orders are made under the Act, which affect the assessee in some form or other, it has provided for service of notice and the remedy there against. Section 29 requires notice of demand to be served on an assessee; but the section makes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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