1971 (9) TMI 22 - SC - Income Tax

Proceedings under s. 34(1)(b) of Indian Income-tax Act 1922 were pending - whether fresh notice could be issued under Income-tax Act 1961 - Officer could not have issued notice under s. 148 - department cannot take any support from section 150(1) - order of the High Court is set aside. The writ petition is allowed and the impugned notices quashed

Summary

Issues:
1. Validity of notices issued under section 148 of the Income-tax Act, 1961.
2. Interpretation of section 150(1) of the 1961 Act.
3. Applicability of proviso (iii) of section 34 of the Indian Income-tax Act, 1922.

Analysis:
The case involved an appeal to the Supreme Court from a decision of the High Court of Punjab. The appellants sought relief after notices were issued to them under section 148 of the Income-tax Act, 1961. The High Court had dismissed their writ petition, citing the availability of alternative remedies under income-tax law. The dispute arose from the assessment of dividend income belonging to the father of one of the appellants, which was initially considered for the assessment year 1956-57 but later sought to be reassessed for 1957-58. The Income-tax Officer issued notices under section 34(1)(b) of the 1922 Act and section 22(2) for fresh returns. Subsequently, under the 1961 Act, notices were issued under section 148, leading to the present appeal.

The Supreme Court held that the notices issued under the 1961 Act were invalid as proceedings had already been initiated under the 1922 Act. The Court referenced a previous decision to support this conclusion. The department's argument based on section 150(1) of the 1961 Act was rejected as the Appellate Assistant Commissioner's order was not under the 1961 Act, rendering the section inapplicable. Additionally, reliance on proviso (iii) of section 34 of the 1922 Act was deemed irrelevant as no such proceedings had been initiated. The Court emphasized the need to assess the validity of the impugned notices under the 1961 Act, which were found to be invalid based on the circumstances presented.

In conclusion, the Supreme Court allowed the appeal, setting aside the High Court's order and quashing the impugned notices issued under the 1961 Act. The appellants were granted costs for the appeal. The judgment clarified the inapplicability of certain provisions and highlighted the importance of following due process in income-tax assessments and reassessments.