1961-VIL-93-ALH-DT

Equivalent Citation: [1963] 47 ITR 586

ALLAHABAD HIGH COURT

Civil Miscellaneous Writ No. 2207 of 1960

Dated: 13.12.1961

RAM BILAS KEDAR NATH

Vs

INCOME-TAX OFFICER, DISTRICT III (I), KANPUR

For the Petitioner : P. N. Pachauri

For the Respondent : Gopal Behari

Bench

Brijlal Gupta, J.

JUDGMENT

This is a petition under article 226 of the Constitution.

The prayer contained in the petition in that a writ of certiorari may be issued quashing the notice dated March 28, 1960, under section 34(1)(A) the Income-tax Act.

The facts giving rise to the petition are that, for the assessment year 1953-54, a notice under section 22(2) was issued to the petitioner on July 1, 1953. Similarly, for the assessment year 1954-55 a notice under that section was issued to the petitioner on July 5, 1954. Returns of income do not appear to have been filed in consequence of these notices. the cases for the two years were fixed for production of account books under section 22(4) on December 10, 1955. For noncompliance with notices under sections 22(2) and 22(4) assessments for the two years in question were completed under section 23(4) on December 10, 1955. Subsequently, loss returns were filed by the petitioner for the assessment year 1953-54 on December 20, 1955, and for the year 1954-55 on February 21, 1956. In due course the assessment order dated December 10, 1955, under section 23(4) were taken before the Income-tax Appellate Tribunal. The Tribunal by order dated April 13, 1959, cancelled and assessments and allowed the petitioner's applications under section 27 on the ground that notices under section 22(2) had not been served upon the petitioner. Thereafter, on March 28, 1960, the impugned notices were issued against the petitioner.

The short point raised by learned counsel for the petitioner is that in these circumstances and having regard to the fact, that returns for the two years in question were already filed by the petitioner, notices under section 34(1)(a) were invalid. Learned counsel took his stand upon the decision of the Supreme court in Commissioner of Income-tax v. Ranchhoddas Karsondas [1959] 36 I.T.R. 569; [1960] 1 S.C.R. 114.

A preliminary objection was raised before me by the learned counsel for the income-tax department. The objection was that the writ petition has been filed in the name of a dissolved firm through only of the ex-partners of that firm. Learned counsel's contention was that after the dissolution of the firm the petition should have been filed by all the partners of the firm. It appears, however, that notices under the section 34 were served only on Ram Bilas through whom this petition has been filed in the name of the dissolved firm and in any case nonrejoinder is never fatal. In view of this I am of the view that Ram Bilas alone could come up to this court and file this writ petition under article 226. Accordingly, I do not see any force in this preliminary objection.

The other point raised by learned counsel was that, since the returns filed by the petitioner were loss returns, the same must be considered to have been filed under section 22(2A) of the Income-tax Act. Learned counsel went on to argue that the decision of the Supreme Court relied on by learned counsel for the petitioner was a decision in the case of return filed under section 22(3) and accordingly that decision was distinguishable as could not lend support to the case of the petitioner. I do not agree with this contention. The only effect of the provision in section 22(2A) is that if an assessee is minded to take advantage of the carry forward of loss in a subsequent year under section 24(2) then he cannot get that advantage unless he has filed a return under section 22(2A). That is, however, very different from saying that a return voluntarily filed by an assessee, prior to the making of an assessment even though it may be merely a loss return is excluded from the purview of section 22(3). I am clearly of the view that whether the return is an income return or a loss return, so long as it is filed prior to the making of an assessment and even though by reason of the delay in filing the same, it may not be considered to be a return under section 22(1). or section 22(2), it is in every case a return under section 22(3). If a loss return is not filed by an assessee in the manner and within the time as required by section 22(2A) the only result will be that such an assessee would disentitle himself to the benefit of carry forward of loss. In this view I am of the opinion that the decision of the Supreme Court referred to above cannot be distinguished.

The only question which remains to be considered is whether, in the circumstances which have been stated above, the returns filed by the petitioner can be considered to be returns filed before an assessment was made. The assessment having been cancelled by the order of the Tribunal became non-existent and the effect is as if no assessment had ever been made. It follows that returns having been filed and the return no having been acted upon, the provisions of section 34 are excluded by reason of the decision of the Supreme court. The notices under that section were, therefore, invalid.

The result is that the petition must be allowed. A writ of certiorari shall issue rushing the notice under section 34(1)(a) for the two years in question, namely, 1953-54 and 1954-55. The petitioner shall be entitled to the cost of the petition.

Petition allowed.