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1963 (8) TMI 55 - PUNJAB HIGH COURT

1963 (8) TMI 55 - PUNJAB HIGH COURT - [1964] 51 ITR 1 - Income-Tax Reference No. 2-D of 1957 - Dated:- 2-8-1963 - D. K. Mahajan And Shamsher Bahadur, JJ. For the Assessee : Kirpa Ram Bajaj, Prem Nath Monga and J. L. Bhatia For the Commissioner : H. Hardy and D. K. Kapur JUDGMENT D. K. Mahajan, J. The Income-tax Appellate Tribunal, Delhi Bench, has referred the following two questions of law for our opinion under section 66(1) of the Income-tax Act, hereinafter referred to as the Act: "1. Wh .....

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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 notice under sub-section (2) of section 22 of the Act was issued to her to furnish a 'return of income during the previous year. However, o .....

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is to be specified. The assessee in the return filed by her in column 2 of the Form merely indicated her share in the partnership, that is, seven annas in a rupee, but did not specify the amount of profits which accrued to her in lieu of that share. She did indicate that this seven annas share was in the National Stores, New Delhi. It may be mentioned that at the time when this return was filed, the assessment for the year in question had not been completed. A notice under section 23(2) of the A .....

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or 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 re .....

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ld that the suo motu return filed by the assessee on September 3, 1951, was an invalid return and, therefore, a nullity and thus he could proceed under section 34(1)(a) of the Act. The assessee went up in appeal to the Appellate Assistant Commissioner of Income-tax, but without success. She came up in second appeal to the Appellate Tribunal of Income-tax. The Appellate Tribunal affirmed the decision of the Appellate Assistant Commissioner of Income-tax and rejected her appeal. She then moved the .....

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not a valid return is erroneous in law. It is conceded by the learned counsel for the department that if we come to the conclusion 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 .....

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ing to the said partner; (2) That the return filed by the assessee on 3rd September, 1951, was entertained by the department, and, therefore, it cannot be urged that that return was invalid; and (3) That after hearing the assessee in response to the notice under section 23(2) on the basis of the return in question, it was incumbent on the Income-tax Officer in view of the provisions of section 23(3) to ask the assessee to supply further details as to the actual amount of profit, if there was any .....

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on their basis had been completed under section 23(3). There seems to be no reason why a different standard should have been applied to the return in question, unless, of course, this device had been adopted to cover up the negligence on the part of the Income-tax Officer in not pursuing the matter further after he had passed the order dated January 11, 1952, on the return in question. Moreover, the Income-tax Officer not only entertained the return but also acted on the same. There is ample pro .....

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s order he was of the view that notice under section 34 of the Act should be issued with regard to the assessment year in question in respect of the total amount of undisclosed profits amounting to ₹ 50,548. It will, therefore, be apparent that the Income-tax Officer did act on the return and did not reject it on the ground that it was an invalid return. Moreover, the lacuna in column No. 2, if it were a lacuna, could have been got removed by the Income-tax Officer by resort to section 23( .....

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Commissioner of Income-tax [1934] 2 I.T.R. 358, Abhey Ram Chunni Lal, In re [1933] 1 I.T.R. 126 and Bir Bhan v. Commissioner of Income-tax A.I.R. 1933 Lah. 290. None of these cases is of any assistance to the learned counsel for the department because in these cases there was a fundamental omission in the returns, and in none of these cases, the returns had been acted upon by the income-tax authorities or otherwise accepted. These cases are distinguishable on their own facts. Not a single case h .....

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