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TMI Blog1956 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ld by the Judicial Committee that the interest on arrears of agricultural rent was not agricultural income within the meaning of section 2(1) of the Income-tax Act and was, therefore, not exempt from income-tax. The decision of the Judicial Committee is dated the 6th of July, 1948. In accordance with this decision the Income-tax Officer issued notices under section 34 of the Income-tax Act against the assessee for all the four assessment years. These notices were issued on the 8th of August, 1948. The assessee filed returns of income in response to these notices and included in the returns the receipt of interest on arrears of rent. The Income-tax Officer completed all the assessments on the 26th of August, 1948. The Income-tax Officer followed the procedure laid down by section 34 as it stood before it was amended by Act XLVIII of 1948. The amendment received the assent of the Governor-General on the 8th of September, 1948. The assessee took appeals to the Appellate Assistant Commissioner against the order of the Income-tax Officer, but the appeals were dismissed. The assessee took the matter in appeal again to the Appellate Tribunal. The appeals were heard before the Patna Bench ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out by learned counsel that the Amending Act was promulgated on the 8th of September, 1948, on which date it received the assent of the Governor-General. It was contended, therefore, that the Income-tax Authorities were entitled to proceed under the old section against the assessee. I do not accept this argument as correct. The reason is that section 34 was amended by section 8 of the Act XLVIII of 1948, and section 1 of the Amending Act makes section 8 expressly retrospective with effect from the 30th of March, 1948. Section 1 of Act XLVIII of 1948 states: 1. (1) This Act may be called the Income-tax and Business Profits Tax (Amendment) Act, 1948. (2) Sections 3 to 12 shall be deemed to have come into force on the 30th day of March, 1948, and the amendment made in the Indian Income-tax Act, 1922 (XI of 1922) by section 2 shall be deemed to be operative so as to apply in relation to all assessments subsequent to the assessment for the year ending on the 31st day of March, 1948. Sections 13 to 15 shall be deemed to have come into force on the day on which the Business Profits Tax Act, 1947 (XXI of 1947) came into force. Section 8 of the Amendment Act is to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son deemed to be the agent of a non-resident person under section 43, this sub-section shall have effect as if for the periods of eight years and four years a period of one year was substituted. Explanation.-Production before the Income-tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section.' **** In the present case notices under section 34 were issued by the Income-tax Officer on the 8th of August, 1948; and after the assessee filed his returns the Income-tax Officer completed the assessments on the 26th of August, 1948. It is true that the Amending Act, namely, Act XLVIII of 1948, was promulgated on the 8th of September, 1948. But section 1 of the Act makes the amendment expressly retrospective with effect from the 30th of March, 1948. It follows, therefore, that he amended section 34 should be deemed to have been in existence with effect from the 30th of March, 1948. It is true that on the 8th of August, 1948, when the Income-tax Officer issued notices under section 34, Act XLVIII of 1948 had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on section 53(a) of the Town and Country Planning Act, 1947. In dealing with this question Lord Asquith expressed the same principle as follows: If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequence and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs ; it does not say that, having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. My concluded opinion, therefore, is that effect must be given to the statutory fiction created by section 1 of Act XLVIII of 1948 and it must be deemed that the amended section 34 was in existence on the 8th of August, 1948, when the Income-tax Officer issued notices against the assessee. If that is the correct view of the law, it follows that the Income- tax Officer was bound to comply with the mandatory requirements of the amended section 34, and his failure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndition precedent to the jurisdiction of the Income-tax Officer to make the assessment. But the language of section 34 is entirely different from that of section 22 and, as I have already pointed out, the condition imposed by section 34 must be strictly complied with, for the jurisdiction of the Income-tax Officer to assess income-tax under that section depends essentially upon the compliance of the peremptory conditions imposed by that section. The ruling of the Federal Court in Chatturam and Others v. Commissioner of Income-tax, Bihar [1947] 15 I.T.R. 302, has, therefore, no application to the present case. As regards the other case, Jitan Ram Nirmal Ram v. Commissioner of Income-tax, Bihar and Orissa [1951] 19 I.T.R. 476, it was held by the High Court that notice under section 34 was legally valid and there was no defect in the form or contents of that notice. The ratio of that case has no application to the present case, because the material facts here are quite different. A point was also taken by the learned counsel on behalf of the Income-tax Department that there has been a waiver of the procedural benefit on the part of the assessee and so the assessment under section 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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