INCOME TAX OFFICER Vs. ADARSH CONSTRUCTION COMPANY

JUDGEMENT

(1.) THIS special appeal arises out of assessment process under the Income-tax Act, 1922 (hereafter referred to as the Act). Adarsh Construction Company is a firm consisting of three partners. On October 13, 1961, the firm furnished a statement under sub-section (3) of section 22 of the Act with respect to income for the assessment years 1959-60 and 1960-61. The same day the Income-tax Officer was informed that the firm not in a position to file all the documents mentioned in the notice section 22(4). The Income-tax Officer took up the position the firm had failed to comply with the notice served upon it under 22(4). On November 30, 1961, an assessment order was passed section 23(4) of the Act on the footing that the firm had failed to comply with the notice under section 22(4) of the Act. A notice of demand was also issued on that basis. The firm filed in this court a writ petition challenging the assessment order dated November 30, 1961, and the demand notice. The writ petition was allowed by a learned single judge of this court on May 7, 1962. He quashed the assessment order dated November 30, 1961, with respect to the assessment years 1959-60 and 1960-61 and the demand notice. THIS special appeal by the Income-tax Officer, Kanpur, is directed against the order dated May 7, 1962.

(2.) THE questions raised in this appeal are whether the notice under section 22(4) is valid, and whether action could be taken under section 23(4). In order to decide these questions it is necessary to examine the provisions of sections 22 and 23 of the Act in detail.

(3.) AS pointed out above, the question for consideration is whether a return filed under section 22(3) can be treated as a return under section 22(1) for purposes of section 22(4) of the Act. We have already outline the plan of section 22. Under sub-section (1), a person has to furnish a return about income within a certain period in pursuance of the general notice. Under sub-section (2), an individual assessee has to furnish a return within the prescribed period in pursuance of a separate notice issued to him. If a person fails to take action under either of these two provisions, he may furnish a return as provided under sub-section (3). One of the situations mentioned in sub-section (3) is where a return has been filed under sub-section (1) it is found that that return is incomplete. In such a case the person may furnish a supplementary return. It is difficult to accept the contention that a supplementary return is also under sub-section (1). The supplementary return is clearly under sub-section (3) of section 22. The plan of section 12 suggests that returns may be filled under three separate provisions contained under section 22 of the Act. There should be no difficulty in treating returns filed under sub-section (3) as a distinct class.