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1966 (1) TMI 23 - SC - Income TaxWhether notice can be issued at any time for reassessment under section 34(1)(a), as amended by the Finance Act, 1956, of the Indian Income-tax Act, 1922, in respect of a concealed income to which section 34 (1A) thereof applied? Held that - In this case, both during the period between the amendments of 1954 and 1956 and thereafter, they occupied different fields. By July 17, 1954, when sub-section (1A) was introduced in section 34, no proceedings under section 34(1)(a) could be initiated except for the assessment year 1946-47 in respect of the previous years that fell within the period beginning on September 1, 1939, and ending on March 31, 1946, for they were barred under the unamended section. Sub-section (1A), therefore, practically governed a situation that was not governed by the provisions of section 34(1)(a). It was intended to catch escaped incomes of the war years which were out of the reach of section 34(1)(a). It is not, therefore, appropriate to describe sub-section (1A) as one carved out of sub-section (1)(a) or to call it a species of which sub-section (1)(a) is the genus. Sub-section (1A) operated where sub-section (1)(a) practically ceased to function. Sub-section (1A) does not really prescribe any period of limitation. It enables the Income-tax Officer to take proceedings within a particular time, though the period of limitation had expired. In this view, no question of carving out a species out of a genus arises. It conferred a special power on the Income-tax Officer and the said power expired on April 1, 1956. Appeal allowed.
Issues Involved:
1. Whether notice for reassessment under section 34(1)(a) of the Indian Income-tax Act, 1922, as amended by the Finance Act, 1956, can be issued at any time for concealed income to which section 34(1A) applies. Detailed Analysis: Issue 1: Validity of Notice Issued for Reassessment Under Section 34(1)(a) The primary issue in these appeals was whether a notice for reassessment under section 34(1)(a) of the Indian Income-tax Act, 1922, as amended by the Finance Act, 1956, could be issued at any time for concealed income to which section 34(1A) applies. Facts: - The respondent, an undivided Hindu family firm, was assessed up to the assessment year 1945-46. - The income-tax authorities issued a notice on March 26, 1954, under section 34(1)(a) for the assessment year 1945-46, adding Rs. 3,63,000 to the original assessment. - The Appellate Assistant Commissioner held the notice was barred by time, though he confirmed the order on merits. - The Income-tax Appellate Tribunal also held the notice was barred by time. - Section 34(1)(a) was amended by the Finance Act, 1956, allowing notice to be issued at any time. - On July 25, 1958, a new notice was issued under the amended section 34(1)(a). Arguments: - Revenue's Argument: The amendment allowed notices to be issued at any time for reassessment, including for the war years. The retention of section 34(1A) was necessary for pending proceedings and did not restrict the scope of section 34(1)(a). The amendment aimed to lift the bar of limitation for all periods, including the war years. - Respondent's Argument: Section 34(1A) was a special provision for the war years, and section 34(1)(a) was a general provision. The principle of generalia specialibus non derogant should apply, meaning the special provision (34(1A)) should prevail over the general provision (34(1)(a)). The retention of section 34(1A) indicated that it continued to govern the war years, and no new notice could be issued under section 34(1)(a) for those years. Judgment: - The court held that the terms of section 34(1)(a), as amended in 1956, were clear and unambiguous, allowing notices to be issued "at any time" for reassessment of concealed income, including for the war years. - The legislative history indicated that the amendment aimed to lift the bar of limitation for all periods, including the war years. - The principle of generalia specialibus non derogant did not apply because section 34(1A) ceased to be operative after March 31, 1956, and thus did not conflict with the amended section 34(1)(a). - Sub-section (1A) was retained to handle pending proceedings and did not limit the scope of the amended section 34(1)(a). - The court agreed with the reasoning of the Bombay and Calcutta High Courts over the Madhya Pradesh and Gujarat High Courts, which had conflicting views. Conclusion: - The court set aside the High Court's order and dismissed the petition filed under article 226 of the Constitution. - The appeals were allowed with costs. Appeals Allowed.
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