The burden of proof is on the department to establish concealment of income, and the Income-tax Officer must record a finding or place material on record within the normal period of limitation to show concealment.

R.L. Gulati, J.

1. This reference under the Income-tax Act raises some important and difficult questions of law. But, unfortunately, the assessee is not represented. We have, therefore, requested Sri Raja Ram Agarwal to assist us as amicus curiae.

2. The assessee is a Hindu undivided family. The assessment year involved is 1961-62. The assessee filed its return on 19th August, 1961. A year later on 1st August, 1962, he filed a revised return including therein income from property which had not been included in the original return. However, no action was taken by the Income-tax Officer either on the original return or on the revised return. It may be mentioned here that the assessee was an old assessee and was being assessed to income-tax for the past several years. His case fell within the jurisdiction of District III(1), Kanpur. Meanwhile on the basis of a survey report, the Income-tax Officer, Special Survey Circle, Kanpur, issued a notice to the assessee under Section 22(2) of the Indian Income-tax Act, 1922, followed by a notice

Rs.

Business income 10,000

Income from other sources 55,000

Property income 1,504

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Total 66,504

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This assessment order was made under Section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the "new Act"). The Income-tax Officer also directed the issue of a notice under Section 271(1)(c) of the new Act as he was of the opinion that the assessee had concealed a part of its income. It may be mentioned here that the assessee had disclosed the following income in its return:

Under Section 22(4). Both these notices remained uncomplied with and the Income-tax Officer made an ex parte assessment order under Section 23(4) of the Act on a total income of Rs. 10,000 including a sum of Rs. 6,000 being income from property. The assessee moved an application under Section 27 of the Act. This application was allowed and the assessment made by the Income-tax Officer, Special Survey Circle, Kanpur, was cancelled, on the ground that the assessee had already filed its return before the Income-tax Officer, District III(I), Kanpur, and as such the assessment made by the Income-tax Officer, Special Survey Circle, was unauthorised. This order was passed on 15th March, 1966. However, no assessment was completed by 31st March, 1966, on which date the normal period of four years' limitation for making an assessment expired. The assessment order was passed as late as 25th of March, 1970, on a total income of Rs. 66,504 made up as under:

3. The assessee had taken an objection before the Income-tax Officer that the assessment was time-barred. The Income-tax Officer repelled this contention on two grounds : (1) that the assessment having been reopened under Section 146 of the new Act there was no period of limitation for the completion of the assessment; and (2) that the case being one to which the provisions of Section 271(1)(c) applied, the assessment could be completed within a period of eight years from the end of the assessment year as laid down in Section 153(1)(b) of the new Act.

4. Before we proceed further it must be stated that the Income-tax Officer was wrong in relying on the provisions of the new Act. The new Act came into force with effect from 1st April, 1962. In Section 297(2)(a) of the new Act a provision is made that where before the commencement of the new Act any proceedings under the old Act were pending, the provisions of the new Act will not apply and the proceedings would continue under the old Act. Now, in the instant case, the proceedings had commenced when the assessee filed its return on 19th of August, 1961. At that time the new Act had not come into force. The revised return, no doubt, was filed after the new Act had come into operation. But the proceedings having commenced by the filing of the original return, Clause (a) of Subsection (2) of Section 297 was attracted and as such the assessment could be completed onl