Law:

Section:

Section 147, read with section 139, of the Income-tax Act, 1961 [Corresponding to section 34(1)(a), read with section 22(3), of Indian Income-tax Act, 1922] - Income escaping assessment - General - Assessment year 1946-47 - Whether where a voluntary return of income is filed by an assessee before the time limited under section 34(3) of 1922 Act for making an assessment under section 23 of 1922 Act has expired, ITO can proceed to make an assessment under section 23 without having recourse to section 34(1)(a) but where voluntary return is filed subsequently, ITO cannot make an assessment under section 23, but must proceed under section 34(1)(a) if he wants to bring to tax such income and subsequent filing of the voluntary return would not avail to preclude initiation of proceedings under section 34(1)(a) - Held, yes FACTS For the assessment year 1946-47, the assessee filed a voluntary return under section 22(3) in December 1954. The ITO did not act on it and ignoring it, issued notice under section 34(1)(a), obtained a return, though under protest, and completed the assessment, by making addition of income from undisclosed sources. On appeal, the AAC rejected the assessee's plea that the view of the voluntary return filed by him, the assessment under section 34(1)(a) was invalid. He, however, granted some relief on the quantum of addition made. On second appeal, the Tribunal set aside the assessment on the ground that the submission of voluntary return by the assessee precluded action under section 34(1)(a), and did not go into the question whether the addition made was justified. On reference : HELD Section 22(3) provides that if an assessee has not furnished a return within the time allowed by or under sub-section (1) or sub-section (2), he may furnish a return at any time before the assessment is made. This provision postulates that the return must be filed at a point of time when the assessment can be lawfully made and therefore it must follow that the return to be a valid return under section 22(3) must be filed before the expiration of the time limited for making an assessment under section 23. Now under section 34(3), the normal period of limitation for…

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