Voluntary return filed before reassessment notice must be treated as operative, even when it discloses a loss.

A voluntary return filed before notice under section 22(2) of the Income-tax Act, 1922 is an operative return, and the Income-tax Officer must deal with it rather than ignore it and invoke section 34 as if no return existed. That principle applies even where the return shows a loss, because a loss return can affect registration, allocation of losses, set-off, and carry forward. The absence of taxable income does not justify bypassing the return, especially where a notice under section 23(2) was issued after the return was filed.

---

---

Issues: Whether a voluntary return filed under section 22(3) of the Income-tax Act, 1922 before the issue of notice under section 34 could render proceedings under section 34 invalid, and whether the principle applies equally where the return discloses a loss instead of taxable income.

Analysis: A return filed before any notice under section 22(2) is a voluntary return. Once such a return is made, the Income-tax Officer may proceed with assessment on the basis of that return, but cannot disregard it and resort to section 34 as though the return were not in existence. The fact that the return disclosed a loss did not change the legal position, because a loss return may have material consequences for registration, allocation of loss to partners, set-off, and carry forward. The absence of assessable income did not justify refusal to deal with the return, especially when a notice under section 23(2) had already been issued after the return was filed.

Conclusion: The questions were answered in the affirmative, holding that the voluntary return barred valid recourse to section 34 and that the same principle applied to a return of loss.

Ratio Decidendi: A voluntary return filed before a notice under section 34 must be treated as an operative return, and the statutory position is not altered merely because the return discloses a loss rather than taxable income.

---