1969 (5) TMI 4 - HC - Income Tax

Declaration filed by the assessee under section 17(1)- mere acceptance of the declaration under the second proviso to section 17 does not make any difference - therefore, declaration filed by the assessee u/s 17(1) in respect of the assessment year 1958-59 cannot be operative and be availed of by the assessee in relation to the reassessments proposed by the revenue in respect of the previous assessment years

Summary

Issues:
- Interpretation of section 17(1) of the Indian Income-tax Act, 1922 regarding the effect of a declaration filed by the assessee in a reassessment scenario.
- Whether a declaration filed under section 17(1) during the assessment year 1958-59 can be applied to reassessments for the previous years under section 34.

Analysis:

The judgment delivered by the High Court of Madras involved a dispute regarding the interpretation of section 17(1) of the Indian Income-tax Act, 1922, specifically focusing on the effect of a declaration filed by the assessee during the assessment year 1958-59. The Commissioner of Income-tax requested the Appellate Tribunal to refer a question of law arising from the consolidated order of the Income-tax Appellate Tribunal. The central question was whether the declaration made by the assessee under section 17(1) for the assessment year 1958-59 could impact the reassessments for the previous years ending in 1954, 1955, and 1956, corresponding to the assessment years 1955-56, 1956-57, and 1957-58.

The facts of the case revealed that the original assessments of the assessee were completed for the mentioned years, and subsequently, the assessments were reopened under section 34 due to certain discrepancies. The crux of the matter was whether the declaration filed by the assessee during the assessment year 1958-59, after the completion of assessments for the previous years, could still be considered valid for the reassessments. The Income-tax Officer contended that the declaration could not be applied retroactively to the earlier assessments, leading to a dispute between the revenue and the assessee.

Upon appeal, the Appellate Assistant Commissioner and the Tribunal held that the declaration filed by the assessee during the assessment year 1958-59 was valid and could impact the reassessments for the previous years. They emphasized that the reopening of assessments under section 34 rendered the previous assessments pending again, allowing the declaration to apply to those years as well.

The High Court analyzed the provisions of section 17(1) and its provisos in detail. It highlighted that the privilege granted to an assessee under the provisos was contingent upon timely action and adherence to the prescribed procedure. The Court emphasized that the declaration should precede the completion of assessments for it to be effective. In this case, since the assessee filed the declaration after the completion of assessments for the previous years, the Court ruled that the declaration could not retroactively impact the reassessments initiated under section 34.

Ultimately, the High Court ruled against the assessee, stating that the declaration filed for the assessment year 1958-59 could not be applied to the reassessments for the previous years. The Court emphasized the importance of timely compliance with statutory provisions and upheld the revenue's jurisdiction to reassess based on the circumstances at hand.