1954 (9) TMI 22 - HC - Income Tax

Invalid Notice Under Section 34 Deemed Void Due to Lack of Compliance

Commissioner of Income-tax Versus Ramsukh Motilal

Commissioner of Income-tax Versus Ramsukh Motilal - [1955] 27 ITR 54 Issues Involved:1. Validity of the notice issued under section 34 dated 19th March 1949.2. Legal consequences of the proceedings and assessment made in pursuance of such notice without any objection from the assessee.3. Whether the Tribunal could hold the proceedings to be void ab initio after finding that the conditions for the issue of notice under section 34 were satisfied.Issue-wise Detailed Analysis:1. Validity of the Notice Issued Under Section 34 Dated 19th March 1949:The primary issue was whether the notice issued under section 34 on 19th March 1949, requiring the assessee to file a return by 25th March 1949, was valid. The Tribunal held that the notice was invalid because it did not comply with the statutory requirement of giving the assessee a minimum of 30 days to file the return as stipulated under section 22(2) of the Indian Income-tax Act, 1922. The Tribunal emphasized that the notice must contain the requirements of section 22(2), which includes the period of not less than 30 days for the assessee to furnish the return. Since the notice only provided six days, it was deemed invalid.2. Legal Consequences of the Proceedings and Assessment Made in Pursuance of Such Notice Without Any Objection from the Assessee:The second issue was whether the proceedings and assessment made in pursuance of the invalid notice were void, even though the assessee did not object to the notice and complied by filing a return. The Tribunal held that the proceedings initiated under an invalid notice were ab initio void. The Tribunal referenced the Federal Court's decision in Chatturam & Others v. Commissioner of Income-tax, Bihar, which held that the assessment on a person who submits his return would be valid notwithstanding the invalidity of the notice. However, the Tribunal distinguished this case by noting that section 34 requires a notice as a condition precedent for the Income-tax Officer to assume jurisdiction. Therefore, failure to comply with this requirement renders the proceedings void, and such a defect cannot be waived by the assessee's compliance.3. Whether the Tribunal Could Hold the Proceedings to be Void Ab Initio After Finding that the Conditions for the Issue of Notice Under Section 34 Were Satisfied:The Departmental Representative sought to raise an additional question regarding whether the Tribunal could hold the proceedings to be void ab initio after finding that the conditions for issuing the notice under section 34 were satisfied. The Tribunal opined that this question was already covered by the second issue. The Tribunal maintained that even if the conditions for issuing the notice under section 34 were met, the notice itself must still comply with the statutory requirements, including the 30-day period for filing the return. Since the notice did not meet this requirement, the proceedings were void ab initio.Judgment:The High Court upheld the Tribunal's decision, agreeing that the notice issued under section 34 was invalid due to non-compliance with the statutory requirement of providing a minimum of 30 days for the assessee to file the return. The High Court further held that the failure to issue a valid notice under section 34 is not a mere procedural defect but a failure to comply with a condition precedent to the assumption of jurisdiction by the Income-tax Officer. Consequently, the proceedings and the assessment made in pursuance of such an invalid notice were void. The High Court rejected the argument that the defect could be waived by the assessee's compliance and participation in the assessment process.Conclusion:The High Court answered the questions as follows:1. The notice issued under section 34 dated 19th March 1949, was invalid in law.2. The proceedings taken in pursuance of such notice were void in law, and the assessment made in consequence thereof was also null and void.The Commissioner was ordered to pay the costs, and the reference was answered accordingly.