Valid return despite incomplete particulars defeats reassessment founded on defective jurisdiction

A return is not invalid merely because it omits a precise profit figure if the assessing authority entertains it, acts on it, and issues a notice on that basis; the statute's machinery for seeking further particulars preserves its validity. On that footing, reassessment proceedings could not be sustained where jurisdiction was assumed on an invalid premise, and the assessment made under those proceedings was held unsustainable. The stated principle is that a return remains legally effective when accepted and acted upon, even if incomplete in detail, and reassessment cannot rest on jurisdiction that was not properly attracted.

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Issues: (i) Whether the return filed by the assessee on 3 September 1951 was a valid return in law; (ii) Whether proceedings initiated under section 34 of the Income-tax Act, 1922, and the assessment made thereunder were in order.

Issue (i): Whether the return filed by the assessee on 3 September 1951 was a valid return in law.

Analysis: The return was not rejected by the Income-tax Officer as a nullity. It was entertained and acted upon, and a notice under section 23(2) was issued on its basis. The omission to specify the precise amount of profit in the relevant column did not make the return invalid, because the Act provided machinery for calling for further particulars under section 23(3). The same assessee's similar returns for later years had also been accepted and assessed on that basis.

Conclusion: The return dated 3 September 1951 was a valid return, in favour of the assessee.

Issue (ii): Whether proceedings initiated under section 34 of the Income-tax Act, 1922, and the assessment made thereunder were in order.

Analysis: Once the return was held to be valid, the proceedings under section 34(1)(a) could not be sustained. The second question did not independently arise on the facts, because no proceedings had been taken to complete assessment on the basis of the valid return under section 23, and an assessment under section 34(3) could not rest on proceedings which were themselves without jurisdiction.

Conclusion: The proceedings under section 34 and the assessment made thereunder were not in order, in favour of the assessee.

Final Conclusion: Both referred questions were answered against the revenue, and the assessment based on the reassessment proceedings was held unsustainable.

Ratio Decidendi: A return, though incomplete in particulars, remains valid if it is entertained and acted upon by the assessing authority, and reassessment cannot be founded on invalidly assumed jurisdiction where the statute provides a mechanism to call for further details on the existing return.

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