The amended proviso to Section 34 of the Income-tax Act, which was brought into force after the period of limitation had expired, could not revive the remedy which was already lost to the Income-tax Officer.

Headnote:
INCOME TAX - Section 34 - Notice issued by Income-tax Officer - Validity - Limitation - Amended proviso to Section 34 - Retrospective effect - Whether it can revive a remedy already lost - Whether the High Court has jurisdiction to issue a writ under Article 226 of the Constitution in a case where a question arises under the Income-tax Act - Whether a suit would be an adequate remedy - Whether there is a third exception to the rule that the Court will not exercise its discretion in favour of the petitioner when alternative remedy is open to him - Whether the want of jurisdiction pleaded by the petitioner is a patent one - Whether the amended proviso even assuming it applied was void as against him by reason of Article 14 of the Constitution.
Fact of the Case:

The assessee challenged a notice issued by the Income-tax Officer under Section 34, Income-tax Act and prayed for a writ restraining the Income-tax Officer from proceeding further pursuant to that notice. The Income-tax Officer issued the notice on the basis of an opinion expressed by the Income-tax Tribunal that the income of the assessee's firm was the income of another firm. The assessee contended that the notice was issued beyond the period of limitation prescribed in Section 34 and that the amended proviso to Section 34, which was brought into force after the period of limitation had expired, could not revive the remedy which was already lost to the Income-tax Officer. The assessee also contended that the High Court had no jurisdiction to issue a writ under Article 226 of the Constitution in a case where a question arises under the Income-tax Act and that a suit would be an adequate remedy. The assessee further contended that the amended proviso offended against Article 14 of the Constitution as it discriminated between persons who were discovered as evaders of income-tax during an investigation conducted under Section 5(1) and those who were discovered by the Income-tax Officer to have evaded payment of Income-tax.
Finding of the Court:

The Court held that the notice issued by the Income-tax Officer was invalid as it was issued beyond the period of limitation prescribed in Section 34 and that the amended proviso to Section 34 could not revive the remedy which was already lost to the Income-tax Officer. The Court also held that the High Court had jurisdiction to issue a writ under Article 226 of the Constitution in a case where a question arises under the Income-tax Act and that a suit would not be an adequate remedy in the present case. The Court further held that the amended proviso offended against Article 14 of the Constitution as it discriminated between persons who were discovered as evaders of income-tax during an investigation conducted under Section 5(1) and those who were discovered by the Income-tax Officer to have evaded payment of Income-tax.
Issues: 1. Whether the notice issued by the Income-tax Officer was valid? 2. Whether the amended proviso to Section 34 could revive the remedy which was already lost to the Income-tax Officer? 3. Whether the High Court had jurisdiction to issue a writ under Article 226 of the Constitution in a case where a question arises under the Income-tax Act? 4. Whether a suit would be an adequate remedy in the present case? 5. Whether the amended proviso offended against Article 14 of the Constitution?
Ratio Decidendi: 1. The period of limitation for issuing a notice under Section 34 of the Income-tax Act is eight years from the end of the assessment year in case of a notice issued under Clause (a) and four years from the end of the assessment year in case of a notice issued under Clause (b). 2. An amended proviso to Section 34, which was brought into force after the period of limitation had expired, could not revive the remedy which was already lost to the Income-tax Officer. 3. The High Court has jurisdiction to issue a writ under Article 226 of the Constitution in a case where a question arises under the Income-tax Act, except for the territorial limitation placed upon it by the Constitution. 4. A suit would not be an adequate remedy in a case where the assessee is seeking to prevent illegal and unauthorised proceedings being commenced against him and his being subjected to harassment. 5. The amended proviso to Section 34 offended against Article 14 of the Constitution as it discriminated between persons who were discovered as evaders of income-tax during an investigation conducted under Section 5(1) and those who were discovered by the Income-tax Officer to have evaded payment of Income-tax.
Final Decision: The appeal filed by the assessee was dismissed with costs.

Judgment

1. This is appeal arises out of a petition filed challenging a notice issued by the Income-tax Officer under Section 34, Income-tax Act and praying for a writ restraining the Income-tax Officer from proceeding further pursuant to that notice.

2. It appears that the firm of Purshottam Laxmidas, who are the second petitioners, was started on 28-10-1935 and in this firm there were two partners Dwarkadas Vussonji and Parmanand Odhavji. Dwarkadas died on 1-4-1946 and Vasantsen the first petitioner is his son. Another firm by the name of Vasantsen Dwarkadas was started on 28-1-1941 and in that firm there were three partners, Vasantsen the first petitioner, Narandas Shivji and Nanalal Odhavji, and this firm was dissolved on 24-10-1946.

The firm of Vasantsen Dwarkadas filed a return of income for the assessment year 1942-43 and it also claimed registration as a firm. The Income-tax Authorities refused registration and came to the conclusion that the firm of Vasantsen Dwarkadas belonged to Dwarkadas the father of the first petitioner, and it added the income of this firm to the income of Dwarkadas. In the subsequent assessment years Vasantsen Dwarkadas applied for registration but registration was refused.

For the assessment years 1942-1943 to 1943-49 several appeals were filed before the Income-tax Appellate Tribunal by the firm of Vasantsen Dwarkadas both against the quantum of income assessed and against the refusal of the Income-tax Officer to register the firm of Vasantsen Dwarkadas. An appeal was also filed by the firm of Purshottam Laxmidas against its assessment and there was also an appeal for the assessment year 1942-43 by the first petitioner as the heir and legal representative of his father against the decision that the income of Vasantsen Dwarkadas should be included in the income of Dwarkadas.

After the decision in Vasantsens case in the assessment year 1942-43 the income-tax Officer gave a finding that the firm of Vasantsen Dwarkadas was only a branch of the firm of Purshottam Laxmidas and he added the income of Vasantsen Dwarkadas to the income of Purshottam Laxmidas, and this question also came up before the Income-tax Appellate Tribunal in the appeals filed by Purshottam Laxmidas against their assessments and the Income-tax Tribunal by a consolidated order dated 14-8-1951 disposed of all these appeals, and its decision was that there was overwhelming evidence to come to the conclusion that the business done in the name of Vasantsen Dwarkadas belonged to the firm of Purshottam Laxmidas.

With regard to the appeal filed by Vasantsen as the representative of his father for the assessment year 1942-43, the opinion expressed by the Tribunal was that the income of Vasantsen Dwarkadas should be deleted from the assessment, of Dwarkadas. It further expressed the opinion that if the Income-tax Officer could include this sum in the income of Purshottam Laxmidas he was of course at liberty to do so.

Therefore in substance what the Appellate Tribunal decided with regard to the income of Vasantsen Dwarkadas for the assessment year 1942-43 was that it was erroneous to include that income in the assessment of Dwarkadas, that in its opinion the income of Vasantsen Dwarkadas was the income of Purshottam Laxmidas, and that if effect could be given to that expression of opinion by the Income-tax Authorities, the Income-tax Authorities should do so by including this income in the assessment of Purshottam Laxmidas.

Armed with this opinion of the Income-tax Tribunal, the Income-tax officer issued a notice under Section 34. Income-tax Act on the-30-4-1334 and by this notice the firm of Purshottam Laxmidas was called upon to submit a return of its total income for the year ending 31-3-1953. It is this notice which is challenged by the petitioners.

3. Under Section 34, Sub-clause (1)(a) If the Income-tax Officer has reason to believe that income has escaped tax owing to an omission or failure on the part of an assessee to make a return, or un

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