TMI Blog1962 (4) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee wrote to the Income-tax Officer stating that the returns filed by him on 12th March, 1959, might be treated as returns which he was called upon to file under section 34 of the Act. An assessment in respect of these two years was in due course made on 18th September, 1959. For the next three succeeding years 1952-53, 1953-54 and 1954-55, notices under section 34 of the Act were served upon the assessee on 21st March, 1960. In respect of these years, the petitioner submitted returns which were identical with those which he had submitted earlier on 12th March, 1959. On the basis of these returns, he was assessed on 3rd March, 1961, for these three years. No proceeding relating to 1955-56 is concerned in any of these writ petitions. For the years 1956-57 and 1957-58, no action under section 34 was taken and on the basis of the returns which the petitioner had filed on 12th March, 1959, assessments were made upon him under section 23(3). Notices of demand appear to have been issued to the petitioner in due course and, on his failure to comply therewith, penalties were imposed under section 46(1) the Act. As a result of action under section 28 of the Act as well, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding his letter to the department requesting that the returns filed by him on 12th March, 1959, might be treated as the returns called for under section 34. These contentions have to be examined. The returns relevant to these two years were admittedly filed beyond the period of four years from the close of the relevant assessment years. Under section 34(3) of the Act, no assessment shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable. It is not open to the department to make an assessment without calling for the submission of a return under section 22 of the Act or under section 34 of the Act, as the case may be. If a return had been called for by the special notice under section 22(2) of the Act, the department could proceed to make an assessment, even a best of judgment assessment, if the return was not filed. Such assessment could be made within four years from the close of the assessment year. It is also a well accepted position that it is open to the assessee to submit a return at any time before the assessment is actually made. This is permitted under section 22(3) of the Act. Reading this provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the return made by the assessee was no return at all, then the conditions under the first sub-section of section 34 obtained, and the assessment could be completed within one year of the date of service of the notice...In that event the assessment would be valid... Their Lordships observed finally that, since the return in the instant case was filed before the assessment was made and the return itself was filed within the period of four years, the return was a valid one and that the department could not proceed under section 34. Their Lordships were not called upon to consider specifically whether the character of the return as a valid return could still attach to it if the return had been filed beyond the period of four years after the close of the assessment year. But, from their observations, it is quite clear that the locus penitentiae afforded to the assessee to file the return under section 22(3) of the Act at any time before an assessment has been made is obviously linked up with the limitation of four years provided under section 34(3) of the Act. It should follow, therefore, that a return filed beyond the period of four years after the close of the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department was justified in resorting to section 34 of the Act. It has next been contended that if these returns were not valid returns, they could not be acted on by the department. It seems to me that this argument has to be rejected. It is true that the returns filed on 12th March, 1959, were not valid returns in the sense that they could not be brought within the scope of section 22(3) of the Act. But what is claimed is that when the notices under section 34 were issued and the petitioner was called upon to submit returns for these two years, he did not submit any fresh returns but requested that the earlier returns might be deemed to be returns relevant to the section 34 proceedings. It is contended that the invalid returns submitted on 12th March, 1959, by the assessee petitioner could not be vaildated by a letter of this description and reliance is placed upon a decision of the Nagpur High Court in Vaman Padmanabh Dande v. Commissioner of Income-tax [1952] 22 I.T.R. 339. That was a case where an assessee had submitted a return. Later, before any action could be taken by the department against him for concealment of particulars of income, he wrote a letter to the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, such returns being within the period of four years; and the assessments were not made under section 34 of the Act. It follows, therefore, that the validity of these assessments is not open to question. The attack in regard to these years is only against the subsequent orders imposing penalty made under section 46(1) of the which we shall deal with later. W.P. No. 366 of 1962 is directed against the order of assessment in respect of the year 1954-55. It seems to us that on the principles we have endeavoured to extract from the decision we have cited earlier, the department was incompetent to resort to proceedings under section 34 of the Act. To restate the facts in this connection, in respect of this year, the assessee had filed his return on 12th March, 1959, that is, on a date before the expiry of the four-year period from the end of the assessment year which would be on 31st March, 1959. By the date on which this return was filed, no assessment had been made, so that the case clearly falls within the scope of section 22(3) of the Act. If therefore, the return that was filed by the assessee on 12th March, 1959, was a valid return in so far as the assessment year 1954-55 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition of the penalties is improper can be accepted. The assessments have been validly made and the notices of demand have been properly issued under section 29 of the Act; section 45 of the Act provides that on failure to comply with the notice of demand, it is open to the Income-tax Officer to deem the assessee to be in default. He has no doubt discretion to treat the assessee as not being in default where an appeal has been filed under section 30, of the Act. There is the further proviso that if any part of the tax due is in respect of income arising outside the taxable territories in a country, where prohibitions or restrictions against the remittance of money to the taxable territories is in force, the Income-tax Officer shall not treat the assessee as in default. What is contended by Mr. Kareem is that the income that is brought under assessment arose outside the taxable territories and that the Income-tax Officer has not applied the relevant proviso of section 45 before treating the assessee petitioner as in default and before imposing the penalties upon him under section 46(1) of the Act. In the counter-affidavit of the department, it is pointed out that the assessee had b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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