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High Court Of Calcutta
Sankar Prasad Mitra, S. K. Datta
INCOME-TAX OFFICER - Appellant
Versus
AZIZUL HAQUE - Respondent
Matter 420 Of 1964
Decided On : 07/20/1979
INCOME TAX - Assessment - Reassessment - Return - Validity - Section 34 (1) (a) and Section 34 (1a) of the Indian Income Tax Act, 1922 - Held, a return filed under Section 34 (1a) is not a return under Section 22 and, therefore, even if a valid return has been filed under Section 34 (1a) such a return is not a bar to the issue of a notice under Section 34 (1) (a) of the Act.
Fact of the Case:
The assessee, the legal representative of the deceased, filed a return under Section 34 (1a) of the Indian Income Tax Act, 1922. The Income Tax Officer (ITO) issued notices under Section 34 (1) (a) of the Act for the same period. The assessee challenged the validity of the notices on the ground that a return had already been filed under Section 34 (1a) and that no further notice could be issued under Section 34 (1) (a).
Finding of the Court:
The court held that a return filed under Section 34 (1a) is not a return under Section 22 and, therefore, even if a valid return has been filed under Section 34 (1a) such a return is not a bar to the issue of a notice under Section 34 (1) (a) of the Act.
Issues: Whether a return filed under Section 34 (1a) of the Indian Income Tax Act, 1922, is a bar to the issue of a notice under Section 34 (1) (a) of the Act.
Ratio Decidendi: The court held that a return filed under Section 34 (1a) is not a return under Section 22 and, therefore, even if a valid return has been filed under Section 34 (1a) such a return is not a bar to the issue of a notice under Section 34 (1) (a) of the Act. The court observed that Section 34 (1a) was enacted to rope in the income, profits or gains of the war years when action under Section 34 (1) (a) was barred by limitation. The court also noted that Section 34 (1a) excludes the words "and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice under that sub-section". This omission, the court held, is significant in disposing of the appeal.
Final Decision: The court allowed the appeal, set aside the judgment and order under appeal, and discharged the rule. The court also refused the assessee's oral application for leave to appeal to the Supreme Court.
( 1 ) THIS is an appeal from a judgment which Mr. Justice B. C. Mitra had delivered on the 14th March, 1966, on an application under Article 226 of the Constitution seeking appropriate writs for cancelling, rescinding, withdrawing and commanding the revenue authorities concerned to forbear from giving effect to certain notices dated February 20, I960, issued under Section 34 (1) (a) of the Indian I. T. Act, 1922.
( 2 ) THE respondents are the legal representatives of one Md. Safiulla who died on March 23, 1953. The deceased owned several houses and other properties at Tinsukia in Assam and was assessed under the Indian I. T. Act, 1922, at Dibrugarh.
( 3 ) ON December 24, 1954, the ITO, Dibrugarh, issued several notices under Section 34 (1a) of the Act on some of the heirs and legal representatives of the deceased on the ground that there was reason to believe that incomes for the years 1940-41 to 1947-48 had escaped assessment. The persons who were served with these notices made an application under Article 226 of the Constitution on February 18, 1957, challenging the legality of the proceedings proposed to be initiated under Section 34 (1a) of the Act on the ground that these notices had not been served upon all the legal representatives of the deceased. They obtained a rule nisi from this court in Civil Rule No. 609 of 1957. The rule was disposed of by Mr. Justice Bachawat by his Lordship's judgment delivered on the 9th June, 1959. The rule was made absolute to the extent that the ITO was directed to forbear from proceeding to assess or reassess the deceased's income for the relevant years without serving notices on the other legal representatives of the deceased in accordance with law. Mr. Justice Bachawat made it clear that it would be open to the ITO to proceed to assess 'or reassess the income, profits or gains in accordance with Section 34 (1 A) of the Act, after two of the deceased's representatives, namely, Hakima Khatoon and Gulabi Bibi, had been served in accordance with law. The two notices on Hakima Khatoon and Gulabi Bibi were not served. But the ITO, Central Circle XV, the appellant No. 2 herein, issued several notices under Section 34 of the Act for the years 1940-41 to 1947-48.
( 4 ) UPON receipt of these notices, the advocate for some of the legal representatives wrote to the ITO enquiring as to the particular clause of Section 34 of the Act under which these notices were issued.
( 5 ) THE allegation in the petition before Mr. Justice B. C- Mitra was that the said ITO without replying to the said advocate's letter completed the assessment under Section 23 (4) of the Act and assessed the total income for the several years. The assessment order was followed by an application under Section 27 of the Act for cancellation of the ex parte assessment. The ground shown for cancellation was that the petitioners were prevented by sufficient cause from not complying with the said notices.
( 6 ) ON January 30, 1962, the ITO, Central Circle VI, the appellant No. 1 herein, rejected the application under Section 27 of the Act.
( 7 ) AN appeal was preferred to the AAC. By his order dated October 26, 1962, the AAC confirmed the ITO's order under Section 27 of the Act.
( 8 ) THERE was a further appeal to the Income-tax Appellate Tribunal. The Tribunal allowed the appeal on August 12,. 1963. The Tribunal directed the ITO to reopen the assessment and to proceed from the stage after the service of the notice under Section 34 of the Act.
( 9 ) ON January 30, 1964, the ITO, Central Circle VI, issued several notices under Section 22 (4) of the Act calling upon the said legal representatives of the deceased to produce various documents specified in the said notices. These notices were preceded by a letter dated December 11, 1963, from the appellant No. 1 informing the said legal representatives that the proceedings had been initiated under Section 34 (1) (a) of the Act.
( 10 ) BEFORE Mr. Justice B
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