1967 (5) TMI 2 - SC - Income Tax

Orders of assessment - prejudicial to the interests of revenue - s. 297 is meant to provide as far as possible for all contingencies which may arise out of the repeal of the 1922 Act - hence s. 297(2)(a) of the 1961 includes within the scope a proceeding under s. 33B of the 1922 Act.

Issues Involved:
1. Jurisdiction of the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922, post repeal by the Income-tax Act, 1961.
2. Applicability of Section 6 of the General Clauses Act to proceedings initiated under the repealed 1922 Act.
3. Scope of Section 297(2) of the 1961 Act and its relation to Section 33B of the 1922 Act.
4. Validity of the Income-tax (Removal of Difficulties) Order, 1962, issued under Section 298 of the 1961 Act.

Detailed Analysis:

1. Jurisdiction of the Commissioner of Income-tax under section 33B of the Indian Income-tax Act, 1922:
The primary issue was whether the Commissioner had the authority to initiate proceedings under section 33B of the 1922 Act after its repeal by the 1961 Act. The court held that Section 297(2)(a) of the 1961 Act includes within its scope a proceeding under section 33B of the 1922 Act. The court reasoned that the word "assessment" has a comprehensive meaning that includes the entire process of imposing liability on the taxpayer, thereby encompassing the revisional proceedings under section 33B.

2. Applicability of Section 6 of the General Clauses Act:
The court examined whether Section 6 of the General Clauses Act, which saves certain proceedings from being affected by the repeal of an enactment, applied to the initiation of proceedings under the repealed 1922 Act. The court concluded that Section 6 would not apply because Section 297(2) of the 1961 Act evidenced an intention to the contrary. The comprehensive provisions in Section 297(2) indicated that Parliament intended to cover all possible contingencies arising from the repeal of the 1922 Act, thus negating the need for the application of Section 6.

3. Scope of Section 297(2) of the 1961 Act:
The court interpreted Section 297(2) to mean that it was designed to provide for all contingencies arising out of the repeal of the 1922 Act. This section was found to cover pending appeals, revisions, non-completed assessments, and assessments based on returns filed after the commencement of the 1961 Act. The court rejected the appellant's argument that the term "proceedings for the assessment" in Section 297(2)(a) should be narrowly construed to exclude revisional proceedings. The court found that the term should be given a comprehensive meaning to include all proceedings related to the assessment of tax liability.

4. Validity of the Income-tax (Removal of Difficulties) Order, 1962:
The court upheld the validity of the Income-tax (Removal of Difficulties) Order, 1962, issued under Section 298 of the 1961 Act. The appellant's reliance on the case of Jalan Trading Company (Private) Ltd. v. Mill Mazdoor Union to argue that Section 298 was void was rejected. The court referred to its decision in Commissioner of Income-tax v. Dewan Bahadur Ramgopal Mills, which upheld a similar order under the Finance Act, 1950. The court found that Section 298 was valid and that the Removal of Difficulties Order was appropriately issued to clarify any ambiguities in the transition from the 1922 Act to the 1961 Act.

Conclusion:
The Supreme Court dismissed the appeal, holding that the Commissioner of Income-tax had the jurisdiction to initiate proceedings under section 33B of the 1922 Act, even after its repeal. The court found that Section 297(2) of the 1961 Act was comprehensive enough to include such proceedings, and that Section 6 of the General Clauses Act did not apply due to the specific provisions of Section 297(2). The validity of the Income-tax (Removal of Difficulties) Order, 1962, was also upheld. The appeal was dismissed with costs.

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