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1961 Supreme(Cal) 133
HIGH COURT OF CALCUTTA
BOSE, G.K.MITTER, JJ.
Belland - Appellant
Versus
Banarasi Debi – Respondent
Appeal No : Appeal from Original Order No. 41 of 1959
Decided on : July 13, 1961
Meyer, Chaudhuri
The word "issued" as used in the proviso to sub-s. (3) of s. 34 of the Indian IT Act, 1922, as it stood before the amendment of 1956, should be equated with the expression "serve" as used in sub-s. (1) of s. 34.
Headnote:
INCOME TAX - REASSESSMENT - LIMITATION - NOTICE ISSUED UNDER S. 34(1)(A) OF THE INDIAN INCOME TAX ACT, 1922, BEYOND THE PERIOD OF LIMITATION PRESCRIBED IN THE SECTION - WHETHER SAVED BY S. 4 OF THE INCOME TAX (AMENDMENT) ACT, 1959 - CONSTRUCTION OF S. 4 - WHETHER THE WORD "ISSUED" AS USED IN THE PROVISO TO SUB-S. (3) OF S. 34 OF THE ACT, AS IT STOOD BEFORE THE AMENDMENT OF 1956, SHOULD BE EQUATED WITH THE EXPRESSION "SERVE" AS USED IN SUB-S. (1) OF S. 34 - WHETHER THE PROVISIONS OF S. 4 OF ACT 1 OF 1959 ARE ATTRACTED TO THE PRESENT CASE.
Fact of the Case:
The respondent filed her return in respect of the assessment year 1947-48 before the ITO, Companies District IV, Calcutta. The assessment was completed in 1948, but no tax was payable by her. On 2nd April, 1956, a notice dt. 19th March, 1956, issued under s. 34(1)(a) of the Indian IT Act, was served on the respondent. The relevant portion of s. 34 may be set out hereunder: "(1) If--(a) the ITO 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 within eight years and in cases falling under cl. (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principle officer thereof, a notice containing all or any of the requirements which may be included in a notice under-sub-s. (2) of s. 22 and may proceed to assess or reassess 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 ; Provided that--(i) the ITO shall not issue a notice under this sub-section, unless he has recorded his reasons for doing so and the CIT is satisfied on such reasons recorded that it is a fit case for the issue of such notice;............. (3) No order of assessment under s. 23 to which cl. (c) of sub-s. (1) of s. 28 applies or of assessment or re-assessment in cases falling within cl. (a) of sub-s. (1) of this section shall be made after the expiry of eight years, and no order of assessment or re-assessment in any other case shall be made after the expiry of four years, from the end of the year in which the income, profits or gains were first assessable : Provided that where a notice under sub-s. (1) has been issued within the time therein limited, the assessment or re-assessment to be made in pursuance of such notice may be made before the expiry of one year from the date of the service of the notice even if such period exceeds the period of eight years or four years, as the case may be." Prior to the date of service of this notice, s. 34 was amended by s. 18 of the Finance Act, 1956.
Finding of the Court:
The Court held that the notice dt. 19th March, 1956, having been served on the assessee on 2nd April, 1956 it must be held that the notice was issued after the expiry of the period of eight years as prescribed in s. 34(1)(a) of the principal Act as it stood before the amendment of 1956 and, consequently, the provisions of s. 4 of Act 1 of 1959 are attracted to the present case and save the notice from the challenge of limitation.
Issues: 1. Whether the notice issued under s. 34(1)(a) of the Indian IT Act, 1922, beyond the period of limitation prescribed in the section is saved by s. 4 of the Income Tax (Amendment) Act, 1959? 2. Whether the word "issued" as used in the proviso to sub-s. (3) of s. 34 of the Act, as it stood before the amendment of 1956, should be equated with the expression "serve" as used in sub-s. (1) of s. 34? 3. Whether the provisions of s. 4 of Act 1 of 1959 are attracted to the present case?
Ratio Decidendi: 1. The Court held that the provisions of s. 4 of Act 1 of 1959 are attracted to the present case and save the notice from the challenge of limitation. 2. The Court held that the word "issued" as used in the proviso to sub-s. (3) of s. 34 of the Act, as it stood before the amendment of 1956, should be equated with the expression "serve" as used in sub-s. (1) of s. 34.
Final Decision: The appeal was allowed, the order and judgment of Sinha J. were set aside and the application under Art. 226 of the Constitution was dismissed.
BOSE, C.J.
1. This is an appeal from an order of Sinha J. directing issue of a writ in the nature of mandamus forbidding the ITO, Companies District IV, Calcutta, the CIT and the Union of India from giving effect to or acting upon a notice of reassessment issued under s. 34(i)(a) of the Indian IT Act and further directing the issue of a writ of certiorari quashing the said notice.
2. The respondent No. 1, who is a Hindu lady, filed her return in respect of the asst. yr. 1947-48 before the ITO, Companies District IV, Calcutta. The assessment was completed in 1948, but it was found that no tax was payable by her. On 2nd April, 1956 a notice dt. 19th March, 1956, issued under s. 34(1)(a) of the Indian IT Act, was served on the respondent. Under s. 34(1)(a), the notice had to be served within eight years from the end of the assessment year, that is, by 31st March, 1956. But it was actually served on 2nd April, 1956 that is, two days later. The relevant portion of s. 34 may be set out hereunder :
"(1) If--(a) the ITO 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 within eight years and in cases falling under cl. (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principle officer thereof, a notice containing all or any of the requirements which may be included in a notice under-sub-s. (2) of s. 22 and may proceed to assess or reassess 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 ; Provided that--(i) the ITO shall not issue a notice under this sub-section, unless he has recorded his reasons for doing so and the CIT is satisfied on such reasons recorded that it is a fit case for the issue of such notice;............. (3) No order of assessment under s. 23 to which cl. (c) of sub-s. (1) of s. 28 applies or of assessment or re-assessment in cases falling within cl. (a) of sub-s. (1) of this section shall be made after the expiry of eight years, and no order of assessment or re-assessment in any other case shall be made after the expiry of four years, from the end of the year in which the income, profits or gains were first assessable : Provided that where a notice under sub-s. (1) has been issued within the time therein limited, the assessment or re-assessment to be made in pursuance of such notice may be made before the expiry of one year from the date of the service of the notice even if such period exceeds the period of eight years or four years, as the case may be."
Prior to the date of service of this notice, s. 34 was amended by s. 18 of the Finance Act, 1956. The relevant portion of such amendment is set out hereunder : "34.(1) If--(a) the ITO 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 case falling under cl. (a) at any time......... serve on the assessee......... a notice
