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Commissioner of Agricultural Income-tax Vs. Sultan Ali Gharami. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 71 of 1950
Reported in[1951]20ITR432(Cal)
AppellantCommissioner of Agricultural Income-tax
RespondentSultan Ali Gharami.
Cases ReferredGeneral v. Aramgyo and Others
Excerpt:
- chakravartti, j. - this is a reference under section 63(1) of the bengal agricultural income-tax act and concerns a somewhat tricky point of procedure, arising out of the following facts.on the 8th february, 1945, a general notice under section 24(1) of the bengal agricultural income of the 'pervious year', relative to the assessment year 1944-45. the respondent assessee did not file any return in compliance with that notice nor was any individual notice under section 24(2) served on him at any time during the assessment year. about three years later, on the 16th march, 1948, he received a notice under section 24(2), requiring him to file a return for the assessment year 1944-45. he complied with that notice and on the 15th june, 1948, filed a return in which he showed an income of rs......
Judgment:

CHAKRAVARTTI, J. - This is a reference under Section 63(1) of the Bengal Agricultural Income-tax Act and concerns a somewhat tricky point of procedure, arising out of the following facts.

On the 8th February, 1945, a general notice under Section 24(1) of the Bengal Agricultural income of the 'pervious year', relative to the assessment year 1944-45. The respondent assessee did not file any return in compliance with that notice nor was any individual notice under Section 24(2) served on him at any time during the assessment year. About three years later, on the 16th March, 1948, he received a notice under Section 24(2), requiring him to file a return for the assessment year 1944-45. He complied with that notice and on the 15th June, 1948, filed a return in which he showed an income of Rs. 1,242-6-3 for 1350 B. S., which was the 'previous' or accounting year in his case. the Income-tax Officer was not satisfied that the return was correct and so on the 9th July, 1948, he served two further notices on the assessee one under Section 24(4) of the Act requiring him to produce his accounts and another under Section 25(2) requiring him to produce any evidence on which he himself might which to rely. The hearing was fixed for the 20th July, 1948. The assessee did not comply with either of the two notices nor did he appear on the date of hearing. In fact he paid no further attention to the assessment proceedings at all. In those circumstances, the Income-tax Officer made a best judgment assessment under Section 25(5) of the Act on the 20th August, 1948. He determined the income at Rs. 8,687, assessed on it a tax of 394-14-0 and added a penalty or Rs. 250.

It may be stated here that the best judgment assessment was made on the ground of failure to comply with the notice under Sections 24(4) and 25(2) and the penalty was imposed under Section 32 (1)(b) which contemplates the same defaults.

The assessee appealed against the assessment to the Appellate Assistant Commissioner and the ground urged by him was that no notice under Section 24(2) having been served during the assessment year the assessment made in 1948 without the issue of a notice under Section 38 was wholly invalid. The contention was accepted by the Appellate Assistant Commissioner who set aside the assessment together with the order imposing a penalty and directed the Income-tax Officer to make a fresh assessment in accordance with law. On appeal by the Department the Appellate Tribunal upheld the order of the Appellate Assistant Commissioner.

In order that the question that has been referred may be understood it is necessary to state at this stage bow the case for the Department was put before the Tribunal. It was contended that the return filed by the assessee could rightly be taken as a return filed in compliance with the notice under Section 24(1), for the obligation to file a return under that notice was subsisting and if the return could be so regarded no question of issuing a notice under Section 38 arose. The notice actually issued under Section 24(2) could be ignored for the issue of a notice under that section was optional and if the primary notice under Section 24(1) was still in force the invalidity of an optional notice was immaterial. It was contended further that in any event the assessee having filed a return the Income-tax Officer was entitled to proceed upon it and it was not necessary for him to issue a notice under Section 38. It was also contended that the validity of an assessment was not dependent on the validity of the notices and the invalidity of the notice under Section 24(2) did not affect the validity of the assessment in the present case. These contentions did not find favour with the Tribunal.

In due course the Commissioner of Agricultural Income-tax applied to the Tribunal for a reference to this Court of a question of law formulated by him. The assessee on his part suggested a question in a slightly different form. The Tribunal however preferred to frame a question for itself and drew up and referred the following question :-

'Whether on the facts and circumstances of the case the duty imposed on the assessee under Section 24(1) of the Bengal Agricultural Income-tax Act, 1944, for furnishing the return of his agricultural income of the previous year (1943-44), relative to the assessment year 1944-45, could endure beyond that assessment year so as to be effective for the assessment initiated later (1947-48) without the aid and operation of Section 38(1) of the Act ?'

It appeared to us that the question framed by the Tribunal besides being somewhat ponderous was inadequate because an answer to it one way or the other would leave the validity of the assessment still undecided. The questions framed by the parties were direct in form and as the Tribunal itself has observed put the validity of the assessment in issue by reference to the grounds of defence and attack on which they respectively relied. The Tribunal did not refuse to refer any part of the questions proposed, but framed a question on its own account which it thought would 'cover the view points of the contending parties.' It appeared to us that in that attempt the Tribunal had not been very successful. The question it had framed covered only a fraction of the controversy and the contentions of the parties, would in no way be disposed of nor the validity of the assessment determined merely by a finding that the assessees duty under Section 24(1) to file a return of his income was continuing up to the date of the return or that it was not.

In view of the unsatisfactory character of the question referred, we decided to reframe it so as to clarify its meaning and bring up to the surface the real points of controversy between the parties. An agreed from was placed before us by the parties themselves and we accepted it. The question was reframed in the following form :-

(a) Whether in the facts and circumstances of the case the return was one under Section 24(1) or 24(2) or 24(3) or a return within the meaning of the Act on which an assessment could be made ?

(b) In any of the above events or if there was no return was the assessment for the year 1944-45 valid,

(i) without service of a notice under Section 38 (1); and

(ii) as a best judgment assessment ?

Before proceeding further, I may point out that Section 38 (1) is so far as material in the same terms as Section 34 (1) of the Indian Income-tax Act, as it stood before the amendment of 1948. Sections 24 and 25, the return and assessment sections, are in all material respects in precisely the same terms as Sections 22 and 23 of the Central Act. Indeed the schemes of the two Acts as regards the charging and the recovery of the tax are identical. The principles laid down as to the application and administration of the Central Act will therefore apply to the Bengal Act as well.

Under the Indian Income-tax Act it is well settled that a notice under Section 22(2) cannot be issued after the expiry of the year of assessment and if no notice under the section has been issued during the assessment year, nor has the assessee filed a return assessment proceedings can be initiated thereafter only by the issue of a notice under Section 34. At the same time it has been held that if the assessee himself files a return after the expiry of the assessment year, although during that year no notice under Section 22(2) was served on him, assessment proceedings can be started on that return and the issue of a notice under Section 34 is no longer necessary. It has also been held that the jurisdiction to assess is not dependent on the validity of the notice under Section 22(2). These principles will explain why in the question framed in the present case so many enquiries are directed to the nature of the return. Since the notice under Section 24(2) was issued after the expiry of the assessment year and no notice under Section 38 was issued the assessment could be saved only if it could be established that the return had come in independently of the notice under Section 24(2) or that in any event a return having come in such return could be a valid basis for the assessment proceeding. A valid return is also necessary for supporting the best judgment assessment made in the case because such assessment was made for non-compliance with notices under Sections 24(4) and 25(2) the former of which pre-supposes a return under 24 (1) or a notice for a return under Section 24 (2) and the latter of which pre-supposes a return under Section 24.

The learned Advocate-General contended that the return filed in the case could be taken either as a return under Section 24 (1) or as a return under Section 24 (3). A return under Section 24(1) is a return filed in response to the publics notice and a return under section 24 (3) is a return which a person not having filed a return within the time allowed under Section 24 (1) or Section 24(2) files at a subsequent stage. The argument was that the assessment proceeding had commenced with the issue of the general notice under Section 24 (1) and had not come to an end, nor had the limitation for making an assessment expired. If the assessment proceeding was so pending the assessee who was under an obligation under Section 24 (1) to the a return and could do so under Section 24(3) 'at any time before the assessment', could be treated as having filed the return in discharge of that obligation. If so the fact that the notice under Section 24 (2), which might or might not have been served, was invalid, having been served after the expiry of the assessment year, was immaterial for the return could be treated as having come in otherwise than in compliance with that notice and so formed a good foundation for the assessment.

In my opinion it is not possible to treat the return as filed either under Section 24(1) or under Section 24(3). It was certainly not so filed in fact. It was filed in 1948 more that years after the notice under Section 24(1) and only after the receipt of a notice under Section 24(2). In those circumstances it is not possible to hold that although the assessee filed the return in 1948 on receipt of the individual notice under Section 24(2), he still filed it not in compliance with that notice but in compliance with the general notice of 1945 or that having suddenly realised that the time for filing the return called for by the general notice under Section 24(1) had expired he filed that return in exercise of the liberty provided for in Section 24(3). Such a finding would be utterly perverse. Nor can the return be 'treated' as a return filed under Section 24 (1) or Section 24 (3). The former section can be ruled out at once for the notice under Section 24 (1) fixed a date for the submission of the return which had long expired and a return not filed by that date or within any extension of time granted could be not be treated a return filed under the section. As regards Section 24(3) which covers returns under both Sections 24 (1) and 24 (2), it should be remembered that the return in the present case is being sought to be treated as a return under Section 24 (1), belatedly filed. But in order that the return may be treated as the return called for under Section 24 (1) it must be capable of being so treated which clearly it is not. A return under Section 24(1) is a return filed by a person who decided for himself that he had an assessable income in the previous year and by filing the return he offers that income for assessment. A person who had no assessable income in the previous year is placed under no duty by a notice under Section 24(1) to furnish a return and a person who thinks, rightly or wrongly, that he had no assessable income will furnish none. A return under Section 24 (1), whether filed within the time allowed under the section or filed subsequently under the provisions of Section 24 (3), will therefore show an assessable income. The return in the present case showed an income of only Rs. 1,242-5-0, whereas the exemption limit for the assessment year 1944-45, we were informed, was Rs. 3,500. A return, which showed no assessable income, could not possibly be 'treated' as a return filed under Section 24(1) or a return called for under that section but filed under Section 24 (3), when in fact it was filed in response to a notice under Section 24 (2). It is true that there is noting to prevent a person from filing a return showing an income below the assessable limit, in response to a notice under Section 24(1), but the question we are considering is whether a particular return, not filed in fact under Section 24(1) or Section 24 (3), is yet having regard to its contents capable of being treated as a return under the one or the other section. In my opinion the return in the present case is not so capable.

I must say however that in my opinion the Tribunal was not right in holding that the duty to a file a return under Section 24(1) subsisted only up to the end of the assessment year concerned. There is nothing in the section to indicate any such limitation. The reason given by the Tribunal is that the return must relate to the agricultural income of the previous year and I suppose what is meant is that at the time the return is filed the accounting year to which it relates must still be 'the previous year', i.e., the year immediately preceding, and consequently the return is required to be filed within the assessment year. This reason will not bear examination. 'Previous year' is defined in Section 2(11) of the Act as the twelve months ending on the 31st day of March next preceding the year for which the assessment is to be made or ending on any other day within the said twelve months upto which the accounts of the assessee have been made up. The notice under Section 24(1) given in a particular year calls for a return of the income of the 'previous year' is for which a return is required. The duty case upon him by the notice is to furnish a return for that year within the time specified in the notice or such extension as may be granted. The section does not provide nor does it imply that at the time the assessee filed his return the accounting year to which the return relates must still be 'the pervious year' in the sense of being immediately antecedent to the year in which he is filing the return. On the other hand, the section provides that extensions of time for filing the return may be granted and there is nothing to show that the Income-tax officer cannot grant extension going beyond the assessment year or that with the expiry of the assessment year the duty to file a return under the section lapses. Authority for the view I am taking will be found in the decision in C. V. Govindarajulu v. Commissioner of Income-tax Madras. Again section 24(3) provides that a return under Section 24(1) can be filed at any time before the assessment. It may be said that the section only gives a liberty but does not imply a duty but even apart from that section there is nothing in section 24(1) itself which makes the duty of filing a return conditional on the subsistence of the accounting year as 'previous' in the sense of being immediately antecedent in relation to the year in which the return is filed. In any event, even if the assessee had only a liberty to file a return under Section 24(1) at the time he filed it, the date on which he did so cannot by itself be a circumstances against the return being treated as a return under Section 24(1). But it cannot be so treated for other reasons which I have already stated.

The other three alternatives envisaged by the question framed are whether the return was a return under Section 24(2) or in any event a return within the meaning of the Act or no return at all. I do not think that it can be said that it was no return at all, because even if the notice calling for a return be invalid it does not follow that the return that may be filed in response to such a notice will also be invalid. I further think that the return was a return within the meaning of the Act, at least to the extent that it conformed to the statutory form of a return. But it is not necessary to consider these alternatives for the return was clearly a return under Section 24(2). Whether having regard to the time when the return was filed and the manner in which it was procured an assessment could be made upon it is a further problem which really takes us to the second part of the question.

As regards the absence of a notice under Section 38(1) the learned Advocate-General first contended that a notice under Section 24(2), such as was given in the present case, could be given at any time but he soon abandoned that contention. The argument next advanced was that there was no question of a notice under Section 38(1) or even under section 24(2) for an assessment proceeding had been commended by the notice under Section 24(1) and was still subsisting. I am entirely unable to accept that contention. Unlike a notice under Section 24(2) which is addressed to a particular person and requires him to furnish a return of his income whatever the amount of the income may be a notice under Section 24(1) is addressed to no one in particular but merely asks such persons as had an assessable income in the previous year to furnish returns of that income. By that notice no assessment proceeding is started against any on at all. If assessment proceedings commenced with the publication of a notice under Section 24(1) they would commence against all persons resident in the locality covered by the notice for the persons having an assessable income (sic) not yet been ascertained and the Income-tax Officer would be entitled to make a best judgment assessment of a person who had not filed a return in compliance with the notice, but who the Income-tax Officer thinks had an assessable income in the previous year. That he cannot do so is clear from the terms of Section 25(5) which only mentions failure to makes a return called for by a notice under Section 24(3), but does not mention failure to make a return called for by a notice under Section 24(1). It further appears from Section 24(4) which provides for the first notice for the production of accounts that while a notice under the section can be issued to a person who has been served with a notice under Section 24(2), in the case of Section 24(1) it can be issued only to a person who has made a return under the Section. The implication clearly is that in one case the assessment proceedings commence with the service of the notice and in the other case they commence with the submission of the return. The learned Advocate-General referred to the terms of Section 24(3) which provides inter alia that a person who has not furnished a return within the time allowed under Section 24(1) may furnish it 'at any time before the assessment is made' and he contended that the section clearly contemplated the possibility that even in a case where there had been only a notice under Section 24(1) an assessment could be made. The inference suggested was that assessment proceeding commence with the notice under section 24(1). But if assessment proceeding commence with the notice under Section 24(1), it should be possible to make an assessment without any return under the section being filed. Such assessment can only be a best judgment assessment on account but as I have already pointed out a best judgment assessment on account of failure to furnish a return called for by notice under Section 24(1) is not authorised by Section 25(5). The learned Advocate-General next referred to the terms of the latter section and contended that since they covered the case of a failure to make a returns under Section 24(3) and since Section 24 (3) covered retuns due under section 24(1), failure to furnish a return called for by a notice under Section 24(1) could also be a ground for a best judgment assessment. A reference to Section 24(1), it was argued that was comprised in the reference to Section 24(3). In my opinion this contention is not tenable. The language of the relevant part of Section 25(5) is : 'If any person fail to make the return required by any notice given under sub-section (2) of the section 24 and has not made a return.... under sub-section (3) of the same section'. The use of the conjunction 'and' to connect the two parts of the clause clearly indicates that what it has on contemplation is the case of a person who has not filed the return called for by the notice under section 24(2) in compliance with that notice and has not also field it since under Section 24(3). It is the same return, the return under Section 24(2), that is contemplated by both parts of the clause. It is therefore not possible to say that a failure to furnish a return under section 24(1) can be ground for a best judgment assessment and, I think, what Section 24(3) really means musty be that if a person has not filed a return under Section 24(1) and the Income-tax Officer having commenced assessment proceedings against him by the issue of a notice under Section 24(2) he has not filed a return in compliance with that notice either he may still file a return before the assessment is made an prevent a best judgment assessment on the ground of non-submission of a return.

Indeed fit appears that from mere non-submission of a returns under Section 24(1), not consequence of any kind follows, unless assessment proceedings are started by the Income-tax Officer by the issue of a notice under Section 24(2). If a return is filed under Section 24(1) assessment proceedings commence and there can be either an assessment in accordance with the return or an assessment on evidence or best judgment assessment for some subsequent default. But if no return under section 24(1) is filed and the Income-tax Officer does not issue a notice under Section 24(2), there can be no assessment at all. Nor can any penalty be imposed for although section 32(1) (a) includes the case of non-submission of a return under section 24(1) the quantum of the penalty is made dependent on the amount of tax payable which pre-supposes that there must first be an assessment. It therefore appear that so far as Section 24(1) is concerned no assessment proceeding is started by the more notice under the section is filed if any such return is filed at all. If no such return is filed an assessment proceeding commences only when a notice under Section 24(2) is served. In so far as it was held in C. V. Govindarajulu Iyer v. Commissioner of Income-tax, Madras and Harakchand Makanji v. Commissioner of Income-tax, Bombay City, with reference to the Indian Income-tax Act, that assessment proceeding commenced with the general notice under Section 22(1), I am with respect unable to agree with the decision. If the Madras and Bombay view be correct there can be no occasion in any case, where no return has been filed within the assessment year in compliance with the notice under section 22(1), to issue a notice under Section 34 up to the end of the period of limitation for an assessment, for income cannot be said to have escaped assessment while assessment proceedings are pending. In my opinion, that is not the correct view. The argument of the learned Advocate General that no notice under Section 38(1) was necessary in the present case, because an assessment proceedings had started with the notice under Section 24(1) and was pending, must therefore fail.

The last argument of the learned Advocate-General was that in any even a return had come in and a valid assessment could be made on it is and that because of the subsequent defaults, a best judgment assessment was also justified. In view of the state of the authorities this is the more difficult part of the case. The authorities are decisions on the Indian Income-tax Act but as the provisions of the Bengal Act are precisely the same they would apply mutatis mutandis.

Section 38(1) of the Bengal Act, to quote only the material portion, provides that if in consequences of definite information which has come into his possession the Agricultural Income-tax Officer discovers that income chargeable to tax has escaped assessment in any year, he may within four years of the end of that year, serve on the person liable to pay the tax a notice containing all or any of the requirements which may be included in a notice under Section 24(2) and may proceed to assess such income. Under the corresponding section of the Indian Income-tax Act, section 34(1), it has always been held that when the assessment year has passed without any notice under Section 22(2) being issued and without the assessee making any return assessment proceedings in respect of the year concerned can be initiated only by the issue of a notice under Section 34. A case practically on all fours with the present case was Maharaja of Patiala v. Commissioner of Income-tax, Bombay, decided by the Bombay High Court, where a notice under Section 22(2) was served after the expiry of the assessment year and the assessee having submitted a return an assessment was made. The return showed the income as 'nil' which, in effect made the same representation as the return in the present case which showed an income below the assessable limit. When subsequently the assessment was challenged, it was sought to be made out that the notice given could be treated as a notice under Section 34 but Beaumont, C.J., and Kania, J., as he then was, held that the return could not be taken to be something which it was not and that the assessment made on the basis of the a notice under Section 22(2) was invalid. But a notice under Section 34 may be rendered after the expiry of the assessment year. In the case of Harakchand Makanji v. Commissioner of Income-tax, Bombay City, also decided by the Bombay High Court, a public notice under Section 22(1) was issued but no notice under Section 22(2) was served and although the assessee filed no return during the assessment year he voluntarily filed one after the expiry of the year and thereupon an assessment was made. Objection being taken to the assessment on the ground that no notice under Section 34 had been served it was held by Chagla, C.J., and Tendolkar, J., that since a return had been made there was no question of income having escaped assessment and consequently no question of a notice under Section 34. It was however added that if before the return had come in the Income-tax Officer, himself wished to proceed under Section 22(2) he could not have done so without a notice under Section 34. In the present case, no return had come in and the Income-tax Officer proceeded under Section 24(2) without a notice under Section 38.

The reason why in cases where no notices under Section 22(2) has been served and no return has been filed during the assessment year a notice under Section 34 has been held to be imperative is that the Act so provides and further that on the expiry of the assessment year the assessee acquires a kind of immunity of which he can be deprived only if certain preliminary conditions laid down in Section 34 are fulfilled. Most of the decisions were given before Section 22(1) was made applicable to all assessees by the amendment of 1939, it having been limited, previously only to companies but since the effect of a general notice under Section 22(1) is not to commence assessment proceeding against any particular person, income, even under the Act as it stands at present, escapes assessment if no notice under Section 22(2) is served during the assessment year and no return is filed by the assessee and consequently the necessity of serving a notice under Section 34 in such a case still remains. The same must obviously be the position under the Bengal Act as well.

The question in the present case is however complicated by the fact that the assessee did actually file a return in response to the notice under Section 24(2), though no notice under Section 38(1) was given and the question is whether by filing such return he himself cured the defect on which he might otherwise have successfully relied. It was contended that he had done so and before the Tribunal reference was made to the decision of the Federal Court in the case of Chatturam and Others v. Commissioner of Income-tax, Bihar. On the authority of that decision it was argued that the jurisdiction to assess did not depend on the validity of the notices and since a return had come in, a valid assessment could be made on it, although the notice under Section 24(2) might have been invalid in the absence of a notice under Section 38(1). The judgment of the Federal Court was delivered by Kania, J., as he then was, and if the decision really warranted the proposition contented for it would be directly opposed to the decision in the Maharaja of Patialas case, to which his Lordships was a party and in which he delivered a concurring judgment. It appears to me however from a close examination of the decision of the Federal court that it does not warrant the proposition sought to be extracted from it. I must add that before us the learned Advocate-General did not base any part of his argument on that decision though his attention was drawn to it but since it is referred to in the order of the Tribunal, I may deal with it in passing. The facts of the case were that the assessee were residents of a 'partially excluded area' in Bihar to which the Income-tax Act applied but to which the Income-tax (Amendment) Act of 1939 and 1940, the Excess Profits Tax Act and the Finance Act of 1940 had not been extended at the dates of the notices under Section 22(1) and 22(2). Subsequently before the assessment were made the Act were extended to the agreed by the Governor of Bihar with effect from dates prior to the dates of the notices and the Federal Court held that the extension had been valid made. It was then argued that at the dates of the notices the Finance Act of 1940 was not operative in the areas in question and since notices were the foundation of the jurisdiction of the Income-tax Officer, the Governor could not by his Notification give jurisdiction to the Officer in respect of his ultra vires notices. It was in repelling that contention that it was observed that the liability to tax and the jurisdiction to assess were created by the charging section of the Act and that the provision as to assessment were machinery and therefore the jurisdiction to assess did not depend on the validity of the notices as contended. I read that decision as meaning that the provisions relating to notices being merely procedural they could be made applicable with retrospective effect and that acts done under the sections being procedural acts they could be retrospectively validated. It is true that the decision speak of the charging section creating the jurisdiction to assess, but it does not say that any provisions contained in the Act itself, as regards the method of enforcing the charge can be disregarded. Section 3 of the Bengal Act, like section 3 of the Central Act provides that the tax 'shall be charged.... in accordance with and subject to the provision of the Act' and clearly, though the liability to be charged to tax may be there the charge can be brought home only by the officer whom the Act authorises acting in the manner that the Act enjoins. Neither in the case before the Federal Court nor in any of the English cases relied on in the judgment was there any departure from the provisions of the relevant Act. Besides it may be that when any particular notice in fact issued a defect in it or an irregularity concerning it will not affect the validity of the assessment. But the question in the present case is not so much the invalidity of the notice under Section 24(2), as the validity of the proceedings which were commenced without complying with the statutory requirement of a notice under section 38. The decision of the Federal Court does not cover an omission of a step which the statute regards as a condition precedent to the commencement of proceedings in exercise of jurisdiction. The absence of a notice under Section 38 in the present case and the invalidity of the notice under Section 24(2) cannot therefore be brushed aside as inconsequential.

The only question which remains is whether there was a waiver of the illegality. It is true that there can be a waiver as to the machinery of taxation which inures against the subject as was held in the case of Attorney-General v. Aramgyo and Others, but I do not think that on the facts of the present case it can be said that there was a waiver. The return was not submitted voluntarily as in the case of Harakchand Makanji, but in compliance with a notice under section 24(2), as in the case of the Maharaja of Patiala, but in compliance with a notice under Section 24(2), as in the case of the Maharaja of Patiala. It was submitted under compulsion in response to a notice which contained various threats. Nor can it be correct in the case of a person like the present assessee to attribute to him knowledge of the right that he was relinquishing. Again by the return that he submitted, the assessee did not officer to be assessed but claimed on the other hand that he was not liable to assessment since he showed an income below the assessable limit. There is also the fact that there was no waiver of anything before the Income-tax Officer issued the notice under Section 24(2) and nothing had been done by the assessee up to and at that point of time which provided jurisdiction to the Income-tax Officer to commence assessment proceedings without issuing a notice under Section 38 which in the circumstances of a case he is required by law to do as a condition precedent to his starting assessment proceedings, but issues a simple notice under Section 24(2) and succeeds a in obtaining a return he cannot in my opinion be allowed to rely on that return as validating which proceedings and to trap the assessee, as it were into doing an act which would have the effect of curing his own irregularity. In my judgment there was no waiver such as could validate the assessment.

If the assessment was basically invalid for the reason that no notice under Section 38 (1) was served the question whether or not it was valid as a best judgment assessment does not arise.

In the result the question as re-framed should be answered as follows :-

(a) The return was not a return under Section 24(1), nor a return under Section 24(3) but a return under section 24(2). It was not a 'no return at all' and was a return within the meaning of the Act in the sense of conforming to the statutory form of a return.

(b) (i) No.

(b) (ii) Does not arise.

No question was raised as to the correctness of the amount assessed either before the Appellate Assistant Commissioner or before the Tribunal. Indeed, the grounds relating to the matter taken in the memorandum of appeal to the Assistant Commissioner were abandoned at the hearing. As the assessee escapes a substantial amount of tax for a technical defect in the proceedings, there will be no order for costs in this reference.

DAS GUPTA, J. - I agree.

Reference answered accordingly.


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