R.R. Rastogi, J. - (1.) THE Income-tax Appellate Tribunal, Allahabad Bench, Allahabad, has, at the instance of the Commissioner of Income-tax, Kanpur, made this reference under section 66(2) of the Indian. I.T. Act, 1922 (hereinafter called " the Act "). THE questions referred soliciting the opinion of this court are as under : " 1. Whether, on the facts and in the circumstances of the case, the notice dated December 20, 1956, under section 22(2) read with Section 25(1) of the Indian Income-tax Act, 1922, was invalid and, therefore, whether the entire assessment proceeding taken subsequently was also invalid ? 2. Whether, on the facts and in the circumstances of the case, the assessment for the assessment year 1957-58 made on the basis of the return of income filed on April 9, 1958, was invalid ? 3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in upholding the order of the Appellate Assistant ; Commissioner cancelling the order refusing registration under section 26A of the Indian Income-tax Act, 1922 ? "
(2.) THE respondent-assessee was a partnership firm and during its assessment for the assessment year 1956-57, the accounting period ended on June 21, 1955, the ITO found that the assessee-firm had been dissolved on April 18, 1956, and for the period from June 22, 1955, to April 18, 1956, relevant to the assessment year 1957-58, he wanted to make a premature assessment under section 25(1) of the Act and hence gave a notice under section 22(2) on December 20, 1956. In pursuance of that notice the assessee filed a return on March 18, 1957, showing an estimated income of Rs. 1,40,000. On the same day, the ITO made a provisional assessment under section 238 of the Act and determined a sum of Rs. 57,032 as tax payable by the assessee. THE assessee did-pay that amount. Subsequently, on April 9, 1958, the assessee filed a revised return showing an income of Rs. 1,82,249 mentioning in the return that it was for the year 1957-58, the accounting period ending on April 17, 1956. THE ITO completed the assessment on February 28, 1962, determining the total income at Rs. 2,29,609. The assessee filed an appeal before the AAC and contended that the notice issued under section 22(2) was invalid inasmuch as it was issued before the commencement of the assessment year 1957-58 and the assessment made on that basis was invalid. That submission found favour with the AAC and he cancelled the assessment and directed the ITO to start fresh proceedings to assess the income of the broken period for the assessment year 1957-58. From that order the department went up in appeal before the Income-tax Appellate Tribunal. The Appellate Tribunal agreeing with the AAC held that the notice issued under section 22(2) was invalid inasmuch as it was issued before the commencement of the assessment year and the assessment made on the basis of that notice was invalid. In its opinion the fact that the assessee did not object to the validity of the assessment proceedings was not material. About the subsequent return filed on April 9, 1958, the Appellate Tribunal held that " it was a revise'd return which was in continuation of the original return filed by the assessee on March 18, 1957 " and that it was not a voluntary return and the assessment made on its basis was not valid. In the result, the AAC's order was upheld.
(3.) THE assessment was made by the ITO treating the assessee as an unregistered firm. THE AAC on appeal held that since the assessment had been set aside and no proper assessment could be made on the assessee for the assessment year 1957-58, the question of refusing registration did not arise. On further appeal, the Appellate Tribunal agreed with the AAC. The main question that falls for our consideration is as to whether the notice issued under section 22(2) read with Section 25(1) of the Act on December 20, 1956, was a valid and legal notice and the assessment made on the basis thereof was a valid assessment ? Section 22(1) of the Act provided that the ITO shall, on or before the 1st day of May in each year, give notice, by publication in the press and by publication in the prescribed manner, requiring every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income-tax to furnish, within such period not being less than sixty days as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner, setting forth (along with such other particulars as may be required by the notice) his total income and total world income during that year. The proviso gave a discretion to the ITO to extend the date for the delivery of the return in the case of any person or class of persons. Sub-section (2) read as under: " (2) In the case of any person whose total income is, in the Income-tax Officer's opinion, of such an amount as to render such person liable to income-tax, the Income-tax Officer may serve a notice upon him requiring him to furnish within such period not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income and total world income during the previous year." ;