TMI Blog1963 (5) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 (annexure C ), the petitioner-firm represented to the Income-tax Officer that sub-section (2A) of section 22 of the Act, which had been inserted by the amending Act of 1953, relates to the case of a person who wants to claim benefit of the loss sustained under the head business being carried forward under section 24(2), and no such consideration arose in the present case because the returns submitted were of a registered firm and its partners had already been served under section 22(2) and had duly declared in their individual returns their respective shares in the partnership. The returns were sent once again for consideration and decision. The Income-tax Officer wrote a letter dated 9th February, 1956 (annexure C-1 ), saying that it was not possible for him to accept the position taken up by the petitioner-firm. It was further stated that there was no information on the records of the department to show as to when the firm had been registered and even the constitution of the partnership was not known. The petitioner firm addressed another letter dated nth February, 1956 (annexure C-2 ), reiterating the position previously taken up with regard to the applicability of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure E ) saying that the above notice was illegal and invalid, inter alia, because it had not been served within the statutory period and also because there was no case of escaped assessment . A return was submitted voluntarily to the Income-tax Officer on 3rd October, 1955, declaring a net loss of ₹ 4,430 and in spite of repeated requests no orders had been made with regard to the same. It was not open to the department to issue any notice under section 34 of the Act in view of the various decisions of High Courts and the Supreme Court set out on page 2 of annexure E . In the heading of this letter it was clearly mentioned, Assessment for the year 1951-52. Notice under section 34 . When this petition came up for arguments before me, the learned counsel for the petitioners pointed out that what he was really challenging was the validity of the notice under section 34 in so far as it related to the year ending 31st March, 1952, which, according to him, would be the assessment year 1952-53. It was stated in categorical terms that the firm was not raising the question of any notice or proceedings which may be pending under section 34 with regard to the year ending 31st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As neither petitioner No. 4 nor any other person or representative of petitioner No. 1 attended on 24th March, 1956, the case was filed and the petitioners were informed accordingly on March 24/29, 1956. A true copy of the letter addressed by the Income-tax Officer to the assessee-firm is attached as annexure 'RD'. It is clear from this letter that the returns made by the assessee, which were never entertained by the Income-tax Officer, were finally refused by him under advice to the assessee. Paragraph 5 may also be set out : That the order sheets relating to the cases contained common entries in both the years up to December 24, 1955. Thereafter the only entries are in the order sheet relating to the year 1951-52. It appears that the case for both the years was disposed of together in the file relating to assessment year 1951-52 on March 24, 1956, by a single order. In the letter dated March 24/29, 1956 (annexure RD ), which related to the years 1951-52 and 1952-53, it was stated : ... I am of the view that you are not entitled under the provisions of income-tax law to have your returns entertained by this office. I have therefore to inform you that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent considered and still consider that an assessee cannot file a return which does not show income and if such a return is filed showing loss beyond the prescribed period, it can be ignored. If that were so, there can be no doubt that it was open to the department to decline to entertain or completely ignore the return which had been filed by the petitioner-firm with regard to both the years 1951-52 and 1952-53 but, as in the present case we are confined to the latter year, it will henceforth be not necessary to refer to the earlier year. Reliance has been placed on behalf of the respondents on Commissioner of Income-tax v. Govindalal Dutta [1958] 33 ITR 630 , in which it was held that voluntary returns, which showed a loss, were no returns in the eye of law and the Income-tax Officer was not required to make any assessment on them. This view was overruled by the Supreme Court in Commissioner of Income-tax v. Ranchhoddas Karsondsa [1959] 36 ITR 569 ; [1960] 1 SCR 114, in which the Bombay decisions were accepted as laying down the law correctly. After referring to the above decision of the Calcutta High Court, their Lordships observed at page 575 : It is a little diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the meaning of section 34(1) on which alone reliance has been placed on behalf of the respondents for justifying the issue of the impugned notice. Counsel for the respondents has also urged that the question, whether any order was made with regard to the assessment year 1952-53 in the same terms as it was made with regard to the assessment year 1951-52, was a matter which had to be decided on evidence and, therefore, there should be no interference in a writ petition when the facts were not clear and were in dispute. There can be no doubt that if the facts had not been cogently established, this court would have declined to interfere in exercise of the extraordinary jurisdiction conferred by article 226 of the Constitution, but the entire records have been placed before me as also the correspondence of which copies have been produced, apart from the material orders, and I am satisfied that no order was made whatsoever with regard to the return relating to the assessment year 1952-53, and that the return was simply ignored. In these circumstances, the notice in so far as it relates to and is maintained to relate to the year ending 31st March, 1952 (assessment year 1952-53), iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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