1963 (1) TMI 55 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Income-tax Officer under Section 35(10) of the Indian Income-tax Act, 1922.
2. Applicability of Section 6 of the General Clauses Act, 1897.
3. Nature of Section 35(10) as a temporary or permanent provision.
4. Validity of reassessment orders issued after the repeal of Section 35(10).

Issue-wise Detailed Analysis:

1. Jurisdiction of the Income-tax Officer under Section 35(10) of the Indian Income-tax Act, 1922:
The petitioner challenged the jurisdiction of the Income-tax Officer to pass reassessment orders under Section 35(10) after it had been repealed. The contention was that Section 35(10) was a temporary measure and had ceased to be in force when the orders were passed. The respondent argued that the officer had jurisdiction by virtue of Section 6 of the General Clauses Act, which preserves rights and liabilities accrued under repealed statutes unless a contrary intention appears.

2. Applicability of Section 6 of the General Clauses Act, 1897:
The court examined whether Section 6 of the General Clauses Act applied to Section 35(10). The petitioner argued that Section 6 was inapplicable because Section 35(10) was a temporary measure. The respondent contended that Section 6 applied, preserving the officer's jurisdiction to reassess under the repealed provision. The court noted that Section 6 applies to repealed enactments unless a different intention is evident.

3. Nature of Section 35(10) as a temporary or permanent provision:
The court analyzed whether Section 35(10) was a temporary provision. The petitioner argued that the specific mention of years 1948 to 1955 indicated a temporary measure. The court, however, found no indication that Section 35(10) was intended to be temporary. It noted that the provision was incorporated into the Income-tax Act by the Finance Act, 1956, and would have continued to be in force had it not been omitted by the Finance Act, 1959.

4. Validity of reassessment orders issued after the repeal of Section 35(10):
The court held that the omission of Section 35(10) by the Finance Act, 1959, was equivalent to a repeal, and Section 6 of the General Clauses Act preserved the rights and liabilities accrued under it. The court concluded that the Income-tax Officer had jurisdiction to reassess the petitioner, as the liability under Section 35(10) had accrued when the company declared dividends out of undistributed profits in 1958, before the repeal took effect. The reassessment notices and orders issued within the four-year period specified in Section 35(10) were valid.

Conclusion:
The court dismissed the writ petitions, upholding the jurisdiction of the Income-tax Officer to pass reassessment orders under Section 35(10) of the Indian Income-tax Act, 1922, even after its repeal, by virtue of Section 6 of the General Clauses Act. The court found no indication that Section 35(10) was a temporary provision and held that the reassessment orders were validly issued within the prescribed period. The parties were directed to bear their own costs.