BIDU BHUSAN SARCAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BIDHU Bhusan Sarcar, since deceased, and hereinafter referred to as the assessee, used to be assessed in the District of 24- Parganas. On December 22, 1947, the assessee filed a voluntary return before the ITO, District 24-Parganas, for the asst. yr. 1947-48 declaring a net loss of Rs. 330. No notice under s. 22(2) of the Indian IT Act was issued to the assessee though a general notice had been issued. Subsequently, on account of the change in the assessee's field of business, the territorial jurisdiction of the assessee fell within the office of the ITO, District I (Calcutta). The file of the assessee was transferred to the ITO, District I(2), where it came within the jurisdiction of the 8th Addl. ITO.

(2.) ON or about January 16, 1949, the 8th Addl. ITO, District I(2), took action under s. 34 of the IT Act, presumably because he considered that the voluntary return declaring a loss of Rs. 330 filed before the ITO, 24-Parganas, was invalid and could not be acted upon. The notice under s. 34 was issued on February 23, 1950, by the Addl. ITO. The 8th Addl. ITO issued a notice under s. 22(4) of the IT Act, perhaps on January 15, 1952. Meanwhile, on March 31, 1949, the assessee had voluntarily filed another return for the same assessment year with the ITO, District I(2), declaring a loss of Rs. 11,33,940. ON receipt of this return a new file was started by the ITO, District I(2). ON February 4, 1952, the 8th Addl. ITO passed an order filing the case as there was already another file of the assessee in the same district.

(3.) THE ITO being aggrieved filed an appeal before the Tribunal. It was contended there on behalf of the Department that there is no bar against the issue of more than one notice under s. 34 and as the assessment dated May 2, 1956, was actually completed within one year from the date of the issue of notice under s. 34 dated 11th February, 1956, the assessment was within time. THE assessee on the other hand contended that once proceedings under s. 34 were initiated by the issue of a valid notice no income could be said to have escaped assessment until that proceeding terminated in an assessment. It was also contended by the assessee that since the proceedings started by the 8th Addl. ITO were based on a valid notice no income escaped assessment until the assessment was completed on the basis of the notice issued by him. THE Tribunal held that the proceedings started by the 8th Addl. ITO were filed and were therefore not alive to be continued by the principal ITO and the income against which proceedings to assess were initiated by a valid notice did escape assessment because the proceedings were not completed by a valid assessment.