Law: Income Tax Act, 1922

Section: 22(1),34

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34, read with section 22(1) of the Indian Income-tax Act, 1922] - Income escaping assessment - Position prior to 1-4-1989 - Assessment year 1945-46 - A public notice under section 22(1) of 1922 Act was issued requiring every person to furnish a return of income - Assessee did not file any return - ITO while completing assessment of a firm in which assessee was a partner, found certain cash credits in name of assessee's wife - However, before ITO could take any action, assessee filed a voluntary return - ITO did not act on this return and issued a notice under section 34 of 1922 Act upon assessee - Whether return filed by assessee in response to public notice was a valid return - Held, yes - Whether, therefore, ITO could not issue a notice under section 34 of 1922 Act after a return was already made before it - Held, yes - Whether, consequently, notice issued under section 34 of 1922 Act and, assessment made in pursuance of said notice were invalid - Held, yes FACTS For the assessment year 1945-46, a public notice under section 22(1) of 1922 Act was issued requiring every person whose total income during the previous year exceeded the maximum amount which was not chargeable to income-tax to furnish, within such period not being less than sixty days as might be specified in the notice, a return of his income in the prescribed form and verified in the prescribed manner. The ITO while examining the books of account of the firm in which assessee was a partner found that in the account year corresponding to the assessment year 1945-46, there were six cash credits in the name of the assessee's wife. However, before the ITO could take any action, the assessee submitted a "voluntary" return. The ITO did not act on this return but he issued a notice purporting to be under section 34 of 1922 Act calling upon the assessee to submit his return. In response to it, the assessee submitted a similar return. The ITO then issued and served upon the assessee notices under sections 22(4) and 23(2) of 1922 Act asking him to produce his books of account and to tender any evidence he cared to lead The notices were…

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