DELHI LAND AND FINANCE PRIVATE LIMITED Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) By this writ petition the petitioner company has prayed writ, order to direction quashing notice dated the 23rd March, 1965, issued by the Income Tax Officer, Companies Circle VI. New Delhi, under section 147 of the Income tax Act, 1961. The said notice is with respect to assessment year 1948-49. The petitioner company field a return showing a loss of Rs. 1, 48, 257.00 on the 18th June, 1948, for the said assessment year. On the 31st ,July, 1953, a press note. was issued by the Government of India calling attention of the public to the Income-tax (Amenendment) Act, 1953, which had introduced sub-section (2A) providing that the assessees, wanting to carry forward their losses, were required to submit returns, declaring such losses, within the time specified in the general notice issued under section 22 (1) of the said Act. IP pursuance of this press note, the petitioner-company field a second loss return for the said assessment year on the 30th December, 1953. It is alleged by the petitioner-company that in spite of the various hearings, no assessment was made on any of the two returns. The proceedings taken in pursuance of the returns have been set out in paregraph 3 of the petition. According to the said paragraph, notices under section 23 (2) of the said Act were issued to the petitioner-company on the 4th September, 1948, the 27th June, 1950, and the 9th January, 1952, and the case was heard, and/or information supplied on 7th March, 1950, 5th November, 1951, 19th November, 1951 , ana 2nd Februery, 1952, 9th February, 1952, and 16th May, 1953. The above information was supplied in pursuance of vorious letters alleged to have been issued by the Income Tax Officer. It is then said in paragraph 5 that in spite of various proceedings, no assessment order was passed by the Income Tax Officer concerned. Similarly, no order for assessment is alleged to have been passed on the second return filed in pursuance of the press note.

(2.) The position taken by the respondents in the reply affidavit is as follows-

(3.) Mr. Vishwanath Shastri, appearing for the petitioner company, has urged two contentions-(i) The notice under section 147 is, on the face of it, without jurisidiction as no income can be said to have escaped assessment unless an assessment had been made on the basis of the loss returns filed by the petitioner-company, and (ii) In any case, even the second return filed in pursuance of the press note was a valid return, and no order having been passed thereon, no action can be taken under section 147. On behelf of the respondents, the principal question raised by Mr, Hardy is that a voluntary loss return is no eturn at all, and, therefore, the action proposed to be taken under cctionl47, is valid. The heart of the problem, therefore, is whether or not the two returns filed by the petitioner-company were valid, and if so, can it besaid that any 'income has esscaped assessment, since, admittedly, no assessment order has been passed on any one of the two returns. In Commissioner of Income-Tax v. Ranchhodas Karsondass it was held by the Supreme Court that (i) A return filed showing income below the taxable limit voluntarily in answer to the general notice under section 22(1) of the Income-tax Act is agood return, (ii) A return in answer to general notice under section 22 (1) of the Income-tax Act can, under section 22 (3), be filed at any time before assessment, and for this there is no time limit, and (iii) Such a return, voluntarily submitted before assessment, cannot be ignored by the Income Tax Officer, and any notice of re-assessment and consequent assessment under section 34 ignoring the return is invalid. Hidayatullah, J. after discussing the decisions on the subject observed "If the Income-Tax Officer had acted on that return and assessed the assessee before March 31, 1950, the assessment would have been valid. He chose to ignore the return, and served on the assessee a notice under section 34 (1). This notice was improper, because with the return already field, there was neither an omission nor a failure on the part of the assessee, nor was there any questions of assessment 'escaping. ' In Radhakrishna Rangta v. Seventh Income Tax Officer, the petitioner made a petition under Article 226 of the Constitution praying, inter alia, for a writ directing the respondent to compute the loss and to notify the petitioner of the said computation on the basis of a voluntary loss return filed by the assessee. A Bench of Bombay High Court held that (i) A voluntary return of loss submitted by an assessee is a good and valid return under sub-section (3) of section 22, even before the amendment of section 22 of the said Act by insertion of sub-section (2A), if it was made at any time before assessment, and the Income Tax Officer was bound to take the necessary action in respect of such a claim, (ii) sub-section (2A) of section 22 does not warrant a conclusion that subsequent to the insertion of the said revision, a voluntary loss return is not capable of being filed by an assessee except a provided in the said sub-section. On the basis of these conclusions, the High Court directed the Income Tax Officer to take up the returns filed by the petitioner before him for the assessment years 1958-59 and 1959-60 and complete the assessment for the said periods.