1965 (9) TMI 4 - HC - Income Tax

Proceedings u/s. 34 for a particular year can not be held to be pending if assessee had filed the return for that year by mistake in response to a notice u/s. 34 issued for a different year -held that notice of reassessment u/s. 147 can be issued in a case where the reassessment u/s. 34 (1A) of the 1922 Act was barred by limitation

Summary

Issues:
1. Validity of the notice issued under section 34 of the Indian Income-tax Act, 1922 for the assessment year 1946-47.
2. Validity of the notice issued under section 148 of the Income-tax Act, 1961 for assessment under section 147 for the assessment year 1946-47.
3. Interpretation of section 297(2)(d)(ii) of the Income-tax Act, 1961 in relation to escaped assessment proceedings.

Analysis:
1. The petitioner sought to quash a notice issued under section 34 of the Income-tax Act, 1922 for the assessment year 1946-47, contending that it was barred by time. However, the court found that the notice was actually for the assessment year 1945-46, and the petitioner's return for 1946-47 was filed in error. As no notice under section 34 was issued for 1946-47 during the validity of the old Act, the subsequent notice under section 148 of the new Act for 1946-47 was deemed valid. The court dismissed the petitioner's claim, stating that the notice under section 34 was for 1945-46, not 1946-47.

2. The court further analyzed the provisions of section 297(2)(d)(ii) of the Income-tax Act, 1961, which allows for the issuance of a notice under section 148 for escaped assessments if no proceedings under section 34 were pending at the time of the new Act coming into force. The court held that as no proceedings were pending for the assessment year 1946-47 under the old Act, the notice under section 148 for that year was valid. The court rejected the argument that the assessment for 1946-47 could not be reopened under section 147 of the new Act due to time limitations, citing the specific provisions of section 297(2)(d)(ii) as enabling such actions.

3. The court addressed the contention that proceedings under section 34 of the old Act were pending for the assessment year 1946-47, as the petitioner had filed a return in response to a notice. However, the court clarified that the issue of a notice under section 34 was a prerequisite for initiating proceedings, and as no such notice was served for 1946-47, the mere filing of a return did not constitute pending proceedings. The court distinguished a previous case to emphasize that filing a return based on a mistaken notice does not trigger proceedings under section 34. Ultimately, the court upheld the validity of the notice under section 148 for the assessment year 1946-47 and dismissed the petition.