1. This reference under S. 66(1) of the Indian income tax Act has clearly to be answered against the assessee and in favour of the department.

2. The assessee was a tanning expert. For the previous year ended 31st March 1947 (the assessment year 1947-48) he filed a return on 21-2-1951 estimating his profits from business at Rs. 550. This return was filed admittedly without a notice under S. 22(2) having been issued to the assesses. The income as set out in the return was scrutinised after enquiry and the income tax Officer rejected the return and estimated the assessees income at Rs. 30,000.

We are not now concerned with the correctness of the quantum of the assessment but only with its legality. From the order of assessment the assessee filed an appeal to the Appellate Assistant Commissioner and there urged that the assessment was illegal and invalid. The ground for this contention was that as the return that he had filed declared an income below the taxable limit it was not a "return" within the meaning of the income tax Act, and that proceedings could have been taken against him only by invoking the provisions of S. 22(2) read with S. 34 and that as this was not done the assessment was illegal.

This contention was rejected by the Appellate Assistant Commissioner who held that when an assessee had filed voluntarily a return there was no necessity for the income tax Officer to call in aid S. 34 and that the assessment was therefore valid. This view was upheld and the appeal of the assessee was dismissed by the Appellate Tribunal on further appeal by the assessee. They however referred to this court the following question of law for its decision : "Whether the aforesaid assessment (i.e. of Rs. 30,000) for the assessment year 1947-48 is valid

3. Before we deal with the legal contentions urged on behalf of the assessee, it is necessary to mention, one fact about which there is no dispute, that there was no notice issued to the assessee under S. 22(2) and that the return was filed in pursuance of the public notice under S. 22(1). In that sense the action of the assessee in filing the return was voluntary and not in compliance with any requisition by the income tax Officer.

The only question therefore for our consideration is whether the statement, which he filed before the income tax Officer setting out the details of the income which he said he had received during the account year ended 31-3-1947, does or does not amount to a "return" within the meaning of the income tax Act, It was urged by learned counsel for the assessee that in order that the statement of his income filed by the assessee might be a "return" it ought to disclose the receipt of taxable income.

We are wholly unable to accept this interpretation of S. 22. To a question by us during arguments as to whether a return filed by a person on whom a notice had been issued under S. 22(2) was a return where such 9. return did not disclose taxable income, learned counsel answered in the affirmative but sought to distinguish returns under S. 22(1) from those filed under S. 22(2). We are unable to follow this argument which seeks to attribute different meanings to the same word "return" used in the several sub-sections of S. 22.

This differentiation was however sought to be sustained by the difference in the language employed in S. 22(1) and (2) giving rise to the obligation to file a return. It was pointed out that whereas under sub-s. (1) the public notification called for a return only when the income tax "exceeded the maximum amount which is not chargeable to income tax" the decision whether this is so or not being at that stage left to the person filing the return, whereas under sub-s. (2) it is the opinion of the income tax Officer regarding the person toeing in receipt of income above the taxable minimum that determined the calling for the return.

It was, therefore, urged that unless the assessee thought that his income was above the taxable limit he would not send a "return" and that consequently what he sent in would not be "a return" where the income disclosed was less. In our opinion this argument is unsound and has to be rejected. It is one thing to say that where there is a doubt or dispute as to whether a return filed was a voluntary one under S. 22(1) or not, the fact that the income disclosed is less than the minimum might be an important or even a crucial factor for proving that it was really one under S. 22(2).

We might add that this was precisely the scope of the decisions of the Calcutta High Court on which learned counsel for the assessee relied and to which we shall advert a little later. But this is far from saying that a return which admittedly was not preceded by any auction on the part of the income tax Officer under S. 22(2) and which was a voluntary return ceased to be a "return" because of the quantum of the income it disclosed.

If this argument were right it would follow that where an assessee filed such a return under S. 22(1) even within the assessment year the income tax Officer would be obliged to proceed as if no return had been filed and be enabled to levy penalties under S. 28 for failure to furnish "a return" on the ground that what was filed was not "a return." There would be other anomalous consequences like the inapplicability of S. 22 (3) and (4) in the case of such persons but as the point is clear we consider it unnecessary to detail the necessary consequences of such a construction.

It is sufficient to say that the acceptance of such a construction would make the entire Act unworkable, lay upon assessees the burden of penal provisions and enable the income tax Officers to complete assessments on basis of estimates, all because the statement filed by the assessee is net "a return" within the meaning of the Act.

4. For the position that on the, submission of such a return the income tax Officer was entitled to proceed with the assessment applying the other provisions of the enactment including that for ignoring the return and estimating the income it is sufficient to refer to HARAKCHAND MAKANJI and CO. Vs. COMMISSIONER OF Income Tax, BOMBAY CITY., where Chagla C.J., held that once a public notice was given under S. 22(1) assessment proceedings commenced and there was no obligation upon the income tax Officer to serve notice on an assessee individually under S. 22(2) and that if a return were voluntarily made in respond to this public notice, there was no question of any income escaping assessment, to attract the provisions of S. 34. The learned Chief Justice said,

Notice under S. 34 is only necessary if at the end of the assessment year no return has been made by the assessee and the income tax authorities wish to proceed under S. 22(2) by Serving a notice, individually. It may then be slated that as the assessment year had come to an end and as no return had been furnished and as the authorities wished to proceed under S. 22(2) they should not do so without a notice under S. 34. But in this case the assessees themselves "chose voluntarily to make a return no question of notice either under S. 22(2) or S. 34 arises".

These observations have been quoted with approval by the learned Chief Justice of this court delivering the judgment of the Bench in C. Vs. GOVINDARAJULU IYER v. COMMISSIONER OF Income Tax, MADRAS., No doubt in the case before the Bombay High Court it does not appear whether the voluntary return furnished by the assessee disclosed less than the taxable income. But subject to the argument regarding the meaning of the expression "return" learned counsel for the assessee does not contend that if the statement submitted by the assessee in this case was a return, the assessment was otherwise invalid.

Learned counsel however relied on the decision of the Calcutta High Court in COMMISSIONER OF AGRICULTURAL Income Tax Vs. SULTAN ALI GHARAMI., The question before the court related to an assessment under the Bengal Agricultural income tax Act the provisions of which were exactly similar to those contained in the Indian income tax Act. After the public notice under the section corresponding to S. 22(1), there had been an individual notice served on the assessee under the provision corresponding to S. 22(2) and subsequently the assessee had submitted a return disclosing an income below the taxable limit.

The main question for the courts consideration was whether this was a voluntary return or not. If it was in pursuance of the requisition of the income tax Officer, it would not be voluntary. It was however contended by the department that as the requisition was issued after the period, when a valid requisition could be made, had expired, it must be treated as non est and that the return filed though actually in compliance there of should be treated as legally attributable to the public notice requiring returns. This latter contention was rejected.

Chakravartti J., (as he then was) who delivered the judgment of the court dissented from the view expressed in HARAKCHAND MAKANJI and CO. Vs. COMMISSIONER OF Income Tax, BOMBAY CITY., in so far as the Bombay High Court had held that the assessment proceedings started with the issue of a public notice and expressed it as his opinion that it started only with the filing of a return. That is one of the points of difference between the two decisions but it is not necessary for us to canvass this question as that is outside the controversy raised by the present reference. What is to the point in the present context is a passage which occurs at page 442 of the report:

In order that the return may be treated as the return called for under S. 24(1) (corresponding to S. 22(1) of the income tax Act) it must be capable of being so treated which clearly it is not. A return under S. 24(1) is a return filed by a person who decides for himself that he had an assessable income in the previous year and by filing the return he offers that income for assessment.

A person who had no assessable income in the previous year is placed under no duty by a notice under S. 24(1) to furnish a return and a person who thinks, rightly or wrongly, that he had no assessable income will furnish none. A return under S. 24(1), whether filed within the time allowed under the section or filed subsequently "...will therefore show an assessable income. A return which showed no assessable income, could not possibly be treated as a return filed under S. 24(1) or a return called for under that section but filed. under S. 24(3), when in fact it was filed in response to a notice under S. 24(2).

The learned Judge further proceeded: "It is true that there is nothing to prevent a person from filing a return showing an income below the assessable limit, in response to a notice under S. 24(1) but the question we are considering is whether a particular return not filed in fact under S. 24(1) or.... - is yet having regard to its contents capable of being treated as a return under the one or the other section.

5. Though this passage is somewhat ambiguous, one thing is clear and that is sufficient for the present purpose that the learned Judge did hold that a voluntary return filed under S. 22(1) was not any the less "a return" within the Act because it disclosed an income below the taxable limit. We are reinforced in this conclusion by the explanation of these observations by Chakravartti C. J., himself in R.K. Das and Co. Vs. Commissioner of Income Tax, West Bengal, to which he shall refer presently.

That the correct view is as above stated has been held by the Bombay High Court in Ranchhoddas Karsondas Vs. Commissioner of Income Tax, Bombay City, where Chagla C. J., delivering the judgment of the Court and after referring to the observations of Chakravartti J., of the Calcutta High Court, said:

It is difficult to understand if it is open to a person to file a return which shows an income below the assessable limit under what other section would such a return be made except under S. 22(3); and it must also be said that this opinion of the learned Judge is obiter because in that particular case after a notice under S. 24(1) was issued there was also a notice under S. 24(2) (corresponding to our S. 22(2).

But to take the view that a voluntary return made is not a return under S. 22(3) merely because the return is of an income which is not assessable is in our opinion, with great respect, unacceptable, and contrary to the scheme of the income tax Act.

6. Chakravartti C.J. had occasion to consider in (1956) R.K. Das and Co. Vs. Commissioner of Income Tax, West Bengal, the decision of the Bombay High Court in Ranchhoddas Karsondas Vs. Commissioner of Income Tax, Bombay City, and the comment it made upon his own decision in COMMISSIONER OF AGRICULTURAL Income Tax Vs. SULTAN ALI GHARAMI., and explained himself thus : After stating the facts of COMMISSIONER OF AGRICULTURAL Income Tax Vs. SULTAN ALI GHARAMI., he said:

... I went on to say that a return under S. 24(1) would only be filed by a person who thought that he had a taxable income and therefore a return showing an income below, the taxable limit could not be held, on a construction thereof, to be a return under S. 24(1) and consequently the return in the case we were then considering could not be treated as such a, return filed under S. 24(3).

To say that was not to say that even a return filed in compliance with a notice under S. 22(2), if filed belatedly under S. 22(3), could not be a return showing an income below the taxable limit.

7. We are therefore clearly of the opinion that the return for the assessment year 1947-48 submitted by the assessee was a return within S. 22(1) on which assessment proceedings could validly be taken. It is for this reason that we answer the question referred to us in the affirmative and against the assessee. As the assessee has failed he grill pay the costs of the reference Rs. 250.