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TMI Blog1973 (2) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... rit in the nature of mandamus directing the respondents to cancel or to rescind the said notice dated January 25, 1972, issued under section 148 of the Income-tax Act, 1961, and the purported letter dated August 17, 1971, for the assessment year 1958-59. The petitioner derived his income from salary and also from moneylending business. For the assessment year 1959-60, the respondent No. 1 assessed the income of the petitioner at Rs. 4,000 from salary and Rs. 25,000 from other sources. This the respondent No. 1 did because a sum of Rs. 25,000 was appearing in the books of the assessee for that year as the opening balance. In the ultimate appeal before the Income-tax Appellate Tribunal the Appellate Tribunal set aside the addition of Rs. 25,000 in the income of the petitioner for the assessment year and allowed the appeal of the petitioner. The Appellate Tribunal found that the assessee derived income from salary and observed that the said amount of Rs. 25,000 could not be earned nor constitute the petitioner's income from any known sources in that assessment year as the amount could not have been earned by the assessee on the first day of the accounting year. The Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 1922 or sub-section (1) to section 150 of the Act of 1961 and, thus, in view of sub-section (2) to section 150 of the Act of 1961, the impugned notice could not be issued. The said notice was thus issued without any jurisdiction and was and is void and must be quashed. According to Mr. Sanjoy Bhattacharya. the second proviso to subsection (3) to section 34 which was in force at the relevant time, that is to say, during the assessment year 1958-59, was applicable to the present case. Sub-section (3) together with the provisos to section 34 of the Act of 1922 as well as sections 149, 150 and 151 of the Act of 1961 are set out hereunder: " 34. (3) No order of assessment or reassessment, other than an order of assessment under section 23 to which clause (c) of sub-section (1) of section 28 applies or an order of assessment or reassessment in cases falling within clause (a) of sub-section (1) or sub-section (1A) of this section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable : Provided that where a notice under clause (b) of sub-section (1) has been issued within the time therein limited, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken." " 151. Sanction for issue of notice.-(1) No notice shall be issued under section 148 after the expiry of eight years from the end of the relevant assessment year, unless the Board is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. (2) No notice shall be issued under section 148 after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the Income-tax Officer that it is a fit case for the issue of such notice. Section 297 of the Act of 1961 reads as follows: " 297. Repeals and savings.-(1) The Indian Income-tax Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained in section 151 of the Act of 1961 should be read along with section 149. Provision for issue of notice under section 148 under sub-section (1) of section 149 has been made expressly subject to the provisions of section 151 and section 151 shall be read with sub-section (1) to section 149 of the Act. Sub-section (1) to section 150 of the Act begins with the words: " Notwithstanding anything contained in section 149 ......." The said sub-section provides that notice under section 148 may be issued at any time for the purpose of assessment or reassessment or recomputation to be made in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision". Thus, if any effect is sought to be given to any finding or direction contained in any order passed by any authority mentioned in the said sub-section in spite of the limits to the time for the issue of the notice under section 148 prescribed by section 149 of the Act, such notice may be issued at any time and for that purpose the requirements laid down in section 151 of the Act need not be complied with. In any even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee for that assessment year. Upon appeal by the assessee, the Appellate Assistant Commissioner held that the bonds were received by the assessee in the previous accounting year and directed that the sum representing interest on the bonds should be deleted from the assessment for the year 1949-50, but included in the assessment for, the year ending 1948-49. Pursuant to the said direction given by the Appellate Assistant Commissioner, the Income-tax Officer initiated proceedings under section 34(1) of the Act in respect of the assessment year 1948-49. The High Court of Allahabad quashed the said assessment proceedings as made beyond the time prescribed by section 34 of the Act. The proceedings would have been in time if the second proviso to sub-section (3) to section 34 of the Act were attracted and, thus, the meaning of the said second proviso quoted earlier in the judgment came up for consideration. The Supreme Court held that by reason of the reference to the said provisions, the powers and jurisdiction conferred on the respective authorities. tribunals or courts mentioned in the said provisions were not enlarged or modified. The Supreme Court was further pleased to observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empowered to give under the sections mentioned therein. The words ' in consequence of or to give effect to ' do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to the scope of the findings and directions." Thus, it was held by the Supreme Court in the aforesaid case that the finding or direction must necessarily be confined to and relate to the matters in issue in the particular year of assessment pending in appeal before the appellate or reviewing or revisional authorities mentioned in the said proviso. The terms of section 150(1) seem to be identical with these of the second proviso to sub-section (3) to section 34 of the Act of 1922. In the instant case also the findings or directions must be held to be those findings or directions which relate and confine to the findings or directions in regard to the matters in issue before the appellate or revisional or reviewing authority. The observation that the said sum of Rs. 25,000 was earned by the assessee in earlier year or years, that is to say, in years prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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