Judgment

MUDHOLKAR, J. : This is an appeal by special leave against the judgment of the Bombay High Court in a writ petition challenging the notice issued under S. 34(1) of the Indian Income-tax Act, 1922 by the First Income-tax Officer, Bombay, who is the appellant before us. In the writ petition various grounds were urged by the respondent in support of the contention that the notice was bad in law. The High Court, however, dealt with only one of those contentions, accepted it and did not permit the respondents counsel Mr. Mehta to put forward the other contentions urged in the writ petition by the respondents.

2. The appellant had issued notice to the respondents under S. 34 (1) (A) of the Income-tax Act in respect of an escaped income of Rs. 47,595/- for the assessment year 1944-45. This notice was issued by him on March 27, 1957. On behalf of the respondents, it is contended that the notice was bad because, though it was in respect of an amount of less than Rs. 1 lakh it was issued after the expiry of the assessment year and that the sanction of the Central Board of revenue for issuing that notice had not been obtained by the Income-tax Officer as required by cl. (iii) of the proviso to S. 34(1) of the Act. It is not disputed before us that the case falls under Section 34(1)(a). That provision reads thus :

"(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 S. 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 ....

he may in cases falling under cl. (a) at any time x x x x x x serve on the assessee x x x x x x a notice containing all or any of the requirements which may be included in a notice under sub-sec. (2) of S. 22 and may proceed to assess or reassess such income, profit or gains or recompute the loss or depreciation allowance; and the provision of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section :"

We have quoted only the relevant portion. Then follows the first proviso which runs thus :

"provided that the Income-tax Officer shall not issue a notice under cl. (a) of sub-sec. (1)

(i) for any year prior to the year ending on the 31st day of March 1941;

(ii) for any year, if eight years have elapsed after the expiry of that year, unless the income, profits or gains chargeable to income-tax which have escaped assessment or have been under-assessed or assessed at too law a rate or have been made the subject of excessive relief under this Act, or the loss or depreciation allowance which has been computed in excess, amount to, or are likely to amount to, one lakh of rupees or more in the aggregate, either for that year, or for that year and any other year or years after which or after each of which eight years have elapsed, not being a year or years ending before the 31st day of March 1941;

(iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under cl. (ii), unless the Central Board of Revenue, and, in any other case, the Commissioner, is satisfied on such reasons recorded that it is a fit case for the issue of such notice :"

It will thus be seen that where the Income-tax Officer has reason to believe that due to any act of the assessee a full and accurate declaration was not made by the assessee for any year, with the result that part of his income has escaped for that year, the Income-tax Officer may issue a notice under cl. (a) at any time.

3. The respondents contention before the High Court was that the notice was bad because it had not complied with the two conditions laid down i