D.K. Mahajan, J.
1. The Income-tax Appellate Tribunal has referred the following question of law for the opinion of this court:
'Whether the Tribunal was justified in refusing to consider the validity of notice under Section 148 even though the ground challenging the same had not been pressed before the Appellate Assistant Commissioner ?'
2. The assessee is an individual. The assessment year in question is 1965-66. The assessee obviously did not file the return of income within the time allowed by Sections 139(1) and 139(2) of the Income-tax Act, 1961. He filed his return of income on 28th March, 1969, and this return would be a valid return in view of Section 139 (4) and (8). However, the Income-tax Officer who was oblivious of this provision treated the return dated 28th March, 1969, as invalid as it was, according to him, outside the period prescribed by Section 139(3). No order was passed by him on the said return. He proceeded to issue a notice under Section 148 on 9th March, 1970, in response to which the assessee filed a return on the same day declaring the loss of Rs. 4/128 as per the original return. It may be mentioned that in the original return dated 28th March, 1969, the same amount of loss had been declared. The Income-tax Officer completed the assessment on 24th March, 1970, and assessed him on a total income of Rs. 32,431 on the basis of the return filed on 9th March, 1970. The assessee, being dissatisfied, preferred an appeal to the Appellate Assistant Commissioner of Income-tax. In the grounds of appeal to the Appellate Assistant Commissioner, the following five grounds were raised :
'(1) The learned Income-tax Officer has erred in assessing interest received from the firms twice. Account version may please be accepted;
(2) The learned Income-tax Officer has erred in issuing the notice under Section 148 of the Act;
(3) The learned Income-tax Officer has erred in levying penal interest ;
(4) The assessment order is against law and facts of the case ; and
(5) The status of the assessee is Hindu undivided family and not individual as held by the Income-tax Officer.'
3. The Appellate Assistant Commissioner dealt with ground No. 1 and with regard to grounds Nos. 2 to 5 observed as follows :
'These contentions have not specifically been pressed before me. Hence rejected.'
4. Again dissatisfied, the assessee preferred an appeal to the Income-tax Appellate Tribunal, Chandigarh Bench. The Tribunal dealt with the first ground which had been dealt with by the Appellate Assistant Commissioner, but refused to deal with grounds Nos. 2 to 5 for the reason that they were specifically given up by the assessee before the Appellate Assistant Commissioner. The assessee then moved an application under Section 254(2) for rectification of its order dated 6th April, 1972, rejecting its appeal with regard to grounds Nos. 2 to 5. This application was rejected by the Tribunal on 6th September, 1972. The assessee then moved an application before the Income-tax Appellate Tribunal under Section 256(1) requiring it to state the question of law already referred to for our opinion. This application was allowed by the Tribunal and that is how the matter has been placed before us.
5. The contention of the learned counsel for the assessee is that the notice under Section 148 was invalid. The argument proceeds thus: The assessees had not filed his return as required by Section 139, Sub-sections (1) and (2), within the time specified therein. No notice under Section 139(3) was served on the assessee. The assessee took advantage of Sub-section (4) of Section 139, which is in the following terms :
'139. (4)(a) Any person who has not furnished a return within the time allowed to him under Sub-section (1) or Sub-section (2) may, before the assessment is made, furnish the return for any previous year at any time before the end of the period specified in Clause (b), and the provisions of Clause (iii) of the proviso to Sub-section (1) shall apply in every such case.
(b) The period referred to in Clause (a) shall be-
(i) where the return relates to a previous year relevant to any assessment year commencing on or before the 1st day of April, 1967, four years from the end of such assessment year;
(ii) where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1968, three years from the end of 'the assessment year ;
(iii) where the return relates to a previous year relevant to any other assessment year, two years from the end of such assessment year',
and filed the return dated 28th March, 1969. This return could not be treated as invalid. However, the Income-tax Officer treated the said return as invalid and proceeded to issue a notice under Section 148. Notice under Section 148 can only be issued after the Income-tax Officer decides to proceed under Section 147. Section 147 is in the following terms :
(a) the Income-tax Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under Section 139 for any assessment year to the Income-tax Officer, or to disclosefully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or
(b) notwithstanding that there has been no omission or failure as mentioned in Clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year,
he may, subject to the provisions of Sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in Sections 148 to 153 referred to as the relevant assessment year).'
6. There is no material on the record to show that any decision was made by the Income-tax Officer to issue a notice under Section 148 on the basis that the assessee had failed to disclose fully and truly all material facts necessary for his assessment for that year and that the income chargeable to tax had escaped assessment for that year. The notice was issued on the basis that there was omission or failure on the part of the assessee to make a return under Section 139 for any assessment year. It is maintained that in view of the clear provisions of Section 139(4) there was a valid return before the Income-tax Officer. That return could not be treated as invalid and no ground was made out for taking action under Section 148 read with Section 147. Once it is held that the return dated 28th March, 1969, was a valid return, the mere fact that the assessee gave up grounds Nos. 2 to 5 before the Appellate Assistant Commissioner would be of no consequence. In this connection, reliance is placed on the decision of the Supreme Court in Commissioner of Income-tax v. M.K.K.R. Muthukaruppan Chettiar : 78ITR69(SC) . The following passages from that judgment are relied upon by the learned counsel for the assessee :
'It is not necessary to decide whether the observations made by the Appellate Assistant Commissioner in his order declining to assess the income of the Hindu undivided family operated to lift the bar of limitation as regards the assessment of income of the separated members by the application of the principle of the judgments of this court in Income-tax Officer v. Murlidhar Bhagwan Das : 52ITR355(SC) and N. Kt. Sivalingam Chettiar v. Commissioner of Income-tax : 66ITR586(SC) . In our opinion, the orders passed by the income-tax authorities and confirmed by the Tribunal suffer from a fundamental defect. As we have already stated, Karuppan Chettiar submitted returns of his income in his individual capacity for the years 1950-51, 1951-52 and 1952-53 in response to the notice issued under Section 22(2) of the Act. By his order dated June 18, 1953, the Income-tax Officer closed the assessments as 'no assessments ' and added that since there was no separateincome, the pending proceedings would be closed as N. A. and for income-tax year 1953-54, the file would be removed and clubbed with the family file F. 1005-A. Thereafter, the assessee filed two sets of returns for the aforesaid three years, once on February 23, 1955, and again on March 30, 1956. These returns were submitted by the assessee in response to (sic) the notice issued on March 2, 1957, It is manifest that in these circumstances notice under Section 34 of the Act cannot be issued to Muthukaruppan Chettiar and his minor sons unless the returns which had already been filed by that family were disposed of.
It was held by this court in Commissioner of Income-tax v. Ranchhoddas Karsondas : 36ITR569(SC) that the return in answer to the general notice under Section 22(1) of the Act, can, under Section 22(3), be filed at any time before assessment and for this there is no limit of time. When in respect of any year a return has been voluntarily submitted before assessment, the Income-tax Officer cannot ignore the return and the notice of reassessment and consequent assessment under Section 34 ignoring the return are invalid. In the present case, we are of opinion that the order of the Income-tax Officer dated June 18, 1953, is not an order to terminate the proceedings and the result, therefore, is that the original returns submitted by the assessee under Section 22 (2) and (3) have not been properly and legally proceeded with. In the case before us the order of the Income-tax Officer dated June 18, 1953, should be interpreted in the light of circumstances in which that order was passed. So interpreted, it appears to us that the Income-tax Officer did not intend to conclude the proceedings before him. It follows, therefore, that there is no disposal of the voluntary returns made by the respondent for the assessment years 1950-51, 1951-52 and 1952-53. It is manifest that the assessment proceedings under Section 34(1) of the Act for the aforesaid three years are invalid.'
7. The matter has been put beyond any doubt by the Supreme Court in Commissioner of Income-tax v. Kurban Hussain Ibrahimji Mithiborwala : 82ITR821(SC) wherein it is observed:
'It is well settled that the Income-tax Officer's jurisdiction to reopen an assessment under Section 34 (it is equivalent to Section 147) depends upon the issuance of a valid notice (now Section 148). If the notice issued by him is invalid for any reason the entire proceedings taken by him would become void for want of jurisdiction.'
8. It is axiomatic that what is void is non est. In this situation, theassessee was not precluded from urging the grounds Nos. 2 to 5. By givingthem up the assessee could not confer jurisdiction on the Income-taxOfficer where he had none. Therefore, the Tribunal was bound to hear theassessee and could not reject the appeal on the ground that grounds Nos. 2to 5 were not agitated before the Appellate Assistant Commissioner and thus could not be permitted to be agitated before it.
9. Mr. Awasthy fairly and frankly conceded that, in view of the decision of the Supreme Court in Kurban Hussain's case, the question referred has to be answered in the negative, that is, in favour of the assessee and against the department. We return the said answer to the Tribunal. There will be no order as to costs.
C.G. Suri, J.
10. I agree.