First Additional Income Tax Officer, Mysore vs H. N. S. Iyengar

Headnote Court Copy Facts Arguments Court observation Judicial Analysis Case Map Category Hierarchy Table of Content

1961 Supreme(SC) 335

SUPREME COURT OF INDIA
5th October, 196l.
S.K. DAS, J.L. KAPUR AND M. HIDAYATULLAH, JJ.
First Additional Income-tax Officer, Mysore Appellant
Versus
H. N. S. Iyengar, Respondent.
Civil Appeal No. 60 of 1961.
Advocates appeared
Mr. K. N. Rajagopal Sastri, Senior Advocate, (Mr. P. D. Menon, Advocate, with him), for Appellant; M/s. Rameshwar Nath, S. N. Andley, and P. L. Vohra, Advocates of M/s. Rajinder Narain and Co., for Respondent.

Important Points

The words "any year" in S. 34(1)(a) of the Indian Income-tax Act, 1922, refer to the assessment year and not the accounting year.

Subject

Income Tax - Limitation for Assessment

Act Referred

INCOME TAX ACT : S.34(1)(a)

Headnote

INCOME TAX - S. 34(1)(a) - Meaning of "any year" - Whether refers to assessment year or accounting year - Held, refers to assessment year.

Fact of the Case:

The assessee received a notice under S. 34(1)(a) of the Indian Income-tax Act, 1922, on November 29, 1956, for the assessment year 1948-49, the accounting year being 1947-48. The assessee objected that the notice was barred by limitation as it was issued more than eight years from the end of the accounting year. The Income-tax Officer overruled the objection and the assessee filed a petition in the High Court of Mysore under Art. 226 of the Constitution for a writ of certiorari quashing the order of the Income-tax Officer. The High Court held that the words "any year" in S. 34(1)(a) mean the accounting year and not the assessment year.

Finding of the Court:

The Supreme Court held that the words "any year" in S. 34(1)(a) of the Indian Income-tax Act, 1922, refer to the assessment year and not the accounting year. The Court observed that the assessment is for the assessment year although of the income which accrued in the previous year. The Court also noted that the previous year for different heads of income falling under different sections of the Indian Income-tax Act may vary and it could not have been the intention of the Legislature to give different starting points of limitation for different sources of income.

Issues: Whether the words "any year" in S. 34(1)(a) of the Indian Income-tax Act, 1922, refer to the assessment year or the accounting year.

Ratio Decidendi: The Court interpreted the words "any year" in S. 34(1)(a) of the Indian Income-tax Act, 1922, in the context of the other provisions of the Act and the Indian Finance Act, 1948. The Court held that the reference to "any year" in S. 34(1)(a) is to the assessment year and not the accounting year. The Court reasoned that the assessment is for the assessment year although of the income which accrued in the previous year. The Court also noted that the previous year for different heads of income falling under different sections of the Indian Income-tax Act may vary and it could not have been the intention of the Legislature to give different starting points of limitation for different sources of income.

Final Decision: The Supreme Court allowed the appeal, set aside the judgment and order of the High Court, and held that the proceedings taken against the assessee were not barred by limitation.

Advocates:
K.N.RAJAGOPAL SASTRI, P.D.MENON, P.L.VOHRA, RAJINDAR NARAIN, RAMESHWAR NATH ROY, S.N.ANDLEY

Judgment

KAPUR, J. : This is an appeal on a certificate of the High Court under Art.133(1)(c) of the Constitution against the judgment and order of the High Court of Mysore passed in a petition under Art. 226 of the Constitution of India. The appellant before us is the 1st Additional Income-tax Officer and the respondent is the assessee, and the matter relates to the assessment year 1948-49 the accounting year being 1947-48.

2. The facts of this appeal are as follows: On November 27, 1956, a notice was issued to the respondent under S. 34(1) (a) of the Indian Income-tax Act calling upon him to make a return on the ground that his income had escaped assessment for the assessment year ending 31st March, 1949. This notice was served on the respondent on November 29, 1956. The respondent objected that no notice under S. 34 of the Income-tax Act could be issued to him because of the lapse of eight years from the end of the accounting year. This objection was overruled and the respondent filed on June 12,1957 in the High Court of Mysore, a petition under Art. 226 of the Constitution for a writ of certiorari quashing the order made by the Income-tax Officer.

3. The High Court held on a construction of S. 34 of the Indian Income tax Act, that the wards "any year" as used in S. 34(l) (a) mean not the assessment year but the accounting year. It is that question which is required to be decided in this appeal. Section 34 (1) (a) reads :-

S. 34(1) "If-

(a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable: to income-tax have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or

(b) . . . .. . . . .. . .... . . .. :.. .. .. ... he may in cases falling under clause (a) at any time within eight years serve on the assessee, or if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of S. 22 and may proceed to assess or re-assess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall so far as may be, apply accordingly as if the notice were a notice issued under that sub-section;".

4. The argument is that the words "any year" in cl. (a) refer to the assessment year because under the Income-tax Act the income of the previous year is assessed for the assessment year. For this purpose reference was made to some of the other provisions of the Income-tax Act. In S. 3 of that Act, which is the charging section, it is provided :-

S. 3 "Where any (Central Act) enacts that income-tax shall be charged for any year at any rate or rates lax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of (the total income) of the previous year of every (individual, Hindu undivided family, (company and other local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually) )".

This shows that income-tax is charged for "any year" at the rate or rates set out in a Central Act and the reference is to the Indian Finance Act-in this case to that of 1948 (Act XX of 1948).

5. Section 9 of that Act reads as follows:-

S. 9(1) "Subject to the provisions of sub-secs. (3), (4), (5), and (6) for the year beginning on the 1st day of April 1948-,

(a) income-tax shall be charged at the rates specified in Part I of the Second Schedule to this Act, and

(b) . . . . . . . . . . . . . . . . . . . . . . . . . . .

(2) In making any assessment for the year e