TMI Blog1963 (8) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... 1954, were in order? 2. In case the answer to the first question is in the negative, whether the assessment for the year 1948-49, as made on March 24, 1955, was in order regard being had to all the terms of sub-section (3) of section 34? In order to arrive at a correct decision with regard to the questions referred for our opinion, it will be proper to set out the facts with regard to the assessment in question which had led to the present reference. The assessee is a lady. She was a partner in a firm styled as National Stores, New Delhi, during the relevant year of account. She had a seven annas share in a rupee in this firm. The assessment year in question is 1948-49, the previous year being the financial year 1947-48. No no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of the lady for the first time in the books of the firm in which she is a partner. Notice under section 34 to be issued for 1948-49 estimating the income at ₹ 50,548. However, no compliance was made with this direction and no notice under section 34 was issued. Nearly three years after the service of notice under section 23(2), the Income-tax Officer issued a notice under section 34(1)(a) with the prior approval of the Commissioner of Income-tax to the assessee. The assessee in response to this notice filed another return in which she declared a net loss of ₹ 952 for the year. In Part D of the return it was stated that the sum of ₹ 50,000 had been borrowed by her from one Manohar Singh of Jaipur for investment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion that the return filed by the assessee on 3rd September, 1951, was not an invalid return, then in view of the Supreme Court decision in Commissioner of Income-tax v. Ranchhoddas Karsondas [1959] 36 I.T.R. 569; [1960] 1 S.C.R. 114, the first question must be answered in favour of the assessee. Therefore, all that we are required to examine is: Whether the return filed by the assessee on the 3rd September, 1951, was a valid return. The objection of the department is that no amount of profit was specified and, therefore, there is no valid return. To this argument, the reply of the counsel for the assessee is three-fold: (1) That the usual practice of the department while assessing the partners in a partnership firm is that a retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 52, on the return in question. Moreover, the Income-tax Officer not only entertained the return but also acted on the same. There is ample provision in the Act to ask for full details of the income of the assessee, in case the return filed is an incomplete return. At no stage up to the date of the order on the return which was passed on January 11, 1952, any objection on the score that the return was invalid was ever taken. As a matter of fact, the order dated the 11th January, 1952, clearly indicates that the sum of ₹ 50,000 had come to the knowledge of the Income-tax Officer along with another sum of ₹ 548 because by this order he was of the view that notice under section 34 of the Act should be issued with regard to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, repel the contention of the learned counsel for the department that the return filed by the assessee on 3rd September is an invalid return. As already stated, it is conceded by the learned counsel for the department that if the return is held to be a valid return, the first question must be answered in the negative and in favour of the assessee in view of the Supreme Court decision in Ranchhoddas's case [1959] 36 I.T.R. 569; [1960] 1 S.C.R. 114. Therefore, in view of our decision that the return dated 3rd September, 1951, is a valid return, we answer the first question in the negative. Coming to the second question, it appears to us that in the circumstances of this case, it does not arise. No proceedings were taken in furth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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