1977 (12) TMI 1 - HC - Income Tax

Summary

Issues: Validity of notices under s. 148 of the I.T. Act for assessment years 1953-54 to 1963-64, Bar on limitation for issuing notices, Applicability of Section 150 for assessment years prior to the commencement of the 1961 Act

The judgment addressed the challenge to the validity of notices issued under s. 148 of the I.T. Act for assessment years 1953-54 to 1963-64. The petitioner, being assessed as an HUF, had previously filed returns claiming partition of properties. Following appeals and court decisions, certain income sources were excluded from the HUF's assessment. The petitioner argued that the notices were time-barred and lacked proper sanction. However, the revenue contended that the notices aimed to tax income in the hands of the individual member due to partition. The main issue raised was the bar on limitation for issuing notices under s. 148.

The judgment delved into the application of Section 297(2)(d) of the Act of 1961, which repealed the Indian I.T. Act of 1922. It was highlighted that notices under s. 148 could be issued subject to the provisions of s. 149 or s. 150, with all provisions of the new Act applying accordingly. The petitioner argued that s. 150(1) was not applicable for the years under the repealed Act, emphasizing that it only applied to findings under the Act of 1961. The court analyzed a Supreme Court decision to differentiate the applicability of s. 150(1) based on the Act under which proceedings were conducted.

The judgment elucidated that sub-clause (ii) of cl. (d) to s. 297(2) expressly made provisions of s. 150 applicable to notices issued under s. 148, even for assessment years before the Act of 1961. The interpretation of "all the provisions of this Act shall apply accordingly" was clarified based on a Supreme Court ruling, emphasizing that it referred to the machinery provisions and not substantive ones. The court further cited a Division Bench decision supporting the application of s. 150 to reassessment proceedings for years under the repealed Act, with suitable modifications.

The judgment concluded that s. 150(1) was indeed applicable to the assessment years in question, allowing the ITO to issue notices under s. 148 without limitation. It emphasized that the term "under this Act" in s. 150 encompassed proceedings under the repealed Act as well. Consequently, the petition challenging the notices was dismissed, affirming the competence of the ITO to issue the notices without time constraints for the specified assessment years.