1963 (12) TMI 32 - HC - Income Tax

Summary

Issues Involved:
1. Validity of notices issued under Section 34(1)(a) of the Income-tax Act, 1922.
2. Interpretation of Section 34(1)(a) and Section 34(1A) of the Income-tax Act, 1922.
3. Applicability of the maxim "generalia specialibus non derogant."
4. Effect of amendments made by the Finance Act, 1956.
5. Validity of notices for the assessment year 1950-51.

Detailed Analysis:

1. Validity of Notices Issued Under Section 34(1)(a) of the Income-tax Act, 1922:
The petitioners challenged the validity of notices issued by the Income-tax Officer under Section 34(1)(a) of the Income-tax Act, 1922, for the assessment years 1943-44, 1946-47, and 1950-51. The main ground for the challenge was that the Income-tax Officer had no jurisdiction to issue these notices due to the provisions of Section 34(1A).

2. Interpretation of Section 34(1)(a) and Section 34(1A) of the Income-tax Act, 1922:
The court had to determine the true scope and ambit of Section 34(1)(a) and Section 34(1A) as they stood at the material time. Section 34(1)(a) was a general provision applicable to all assessment years, while Section 34(1A) was a special provision applicable only to those assessment years in respect of which the relevant previous years fell wholly or partly within the period from 1st September 1939 to 31st March 1946 and where the escaped income amounted to Rs. 1 lakh or more.

3. Applicability of the Maxim "Generalia Specialibus Non Derogant":
The court applied the maxim "generalia specialibus non derogant," which means that a general provision does not derogate from a special provision. The court concluded that Section 34(1A) was a special provision that excluded the applicability of Section 34(1)(a) to cases covered by Section 34(1A). Therefore, the general provision in Section 34(1)(a) could not be invoked to reopen assessments for the war years when Section 34(1A) was applicable.

4. Effect of Amendments Made by the Finance Act, 1956:
The Finance Act, 1956, removed the time-limit of eight years in Section 34(1)(a) for cases involving escapement of income exceeding Rs. 1 lakh. However, the court held that this amendment did not affect the special provision in Section 34(1A). The court reasoned that if the legislature intended to abrogate Section 34(1A), it would have repealed it explicitly. Since Section 34(1A) continued to operate, it excluded the applicability of the amended Section 34(1)(a) to cases covered by it.

5. Validity of Notices for the Assessment Year 1950-51:
For the assessment year 1950-51, the court noted that the relevant previous year did not fall within the war period, and thus, Section 34(1A) was not applicable. The court examined whether the condition in clause (ii) of the proviso to Section 34(1) was satisfied, which required that the escaped income should amount to Rs. 1 lakh or more. The court held that the escaped income of the assessment years 1943-44 and 1946-47 should be taken into account for this purpose, even though notices for these years could not be issued under Section 34(1)(a). Since the aggregate escaped income amounted to Rs. 1 lakh or more, the condition was satisfied, and the notices for the assessment year 1950-51 were valid.

Conclusion:
The court quashed the notices for the assessment years 1943-44 and 1946-47 as illegal and invalid but upheld the notices for the assessment year 1950-51. The respondent was ordered to pay the costs of the petition to each petitioner.