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TMI Blog1935 (2) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... nd raise tax Upon the balance of income after setting off under Section 24 the reduced loss thus determined? 2. Translated in plain language, it means whether an Income Tax officer, can under Section 34, Income Tax Act, reopen the assessment made be the predecessor, and assess the deductions allowed by the latter to Income Tax on the ground that they were not permissible under the law. The answer to this question depends upon the interpretation which can be placed upon the words escaped assessment used in Section 34. These words have been differently interpreted by different Courts in India and the point therefore is not free from difficulty. 3. In Kishen Kishore v. Commissioner of Income Tax 1933 Lah. 284, a Division Bench of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submit, has escaped assessment within that year, and can be subsequently assessed only under Section 34 with its time limitation. This involves reading the expression 'has escaped assessment' as equivalent to 'has not been assessed'. Their Lordships cannot assent to this, reading. It gives too narrow a meaning to the word 'assessment' and too wide a meaning to the word 'escaped'. That the word 'assessment' is not confined in the statute to the definite act of making an order of assessment appears from Section 66 which refers to 'the course of any assessment.' To say that the income of Burn Co. which in January, 1928, was returned for assessment and which was accepted as correctly returned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the income to be assessed did not escape assessment in the year in question. All that had occurred was that it had been assessed in the hands of an assessee to whom it was subsequently found not to belong. The learned Judges observed that this argument did not appear to them to be sound and that the income had escaped assessment so far as the person who received it was concerned. They further remarked that whatever may be the reason for the Income Tax officer's failure to assess the income within the period prescribed by law, he was not Competent to assess it after the expiration of that period of limitation. These remarks would evidently show that the learned Judges were not prepared to restrict the meaning that could be placed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d escaped assessment in the year, and fell within the ambit of Section 34 of, the Act. It may be mentioned here that two out of the three Judges composing the Special Bench on both these occasions were the same. In In re The Anglo Persian Oil Company (India) Ltd., 1933 Cal. 77 a Division Bench of the Calcutta High Court composed of Rankin, C.J. and Buckland, J. had an opportunity to consider this matter. Rankin, C.J., who delivered the judgment, observed as follows: I see no way of holding that Section 34 is inapplicable to put right an assessment, by which a deduction has been improperly allowed. Such a case is, in my opinion, a case of Income escaping assessment not the whole income of the assessee but a part of it escaping assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... construction of the act just as much as to a case where the officer has not considered the matter at all, but simply omitted the assessable property from his view and from his assessment. 10. We also find that when in 1926 the question of the interpretation of Section 34 came before a Special Bench of the same High Court composed of Sir Murray Coutts-Trotter, C.J., Krishnan and Beasley, J J., two of whom, as stated above, were responsible for the decision reported in Commissioner of Income Tax v. Krishna Chandra Ganapati, 1926 Mad 287 the learned Judges decided that an assessment already made under Section 23(4) could be re-opened by the Income Tax officer under Section 34 on the sole ground that there had been an underassessment in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lature intended to include all those cases which either resulted from mere inadvertence or from conscious misapprehension of the proper situation. From the perusal of the judgments cited above which restrict the meaning of the word escape it appears that the significance of these words has not been duly considered. To us, in the presence of these r words, there appears to be no justification for confining the meaning of the word escape to those cases only which have not come to the notice of the Income Tax officer at all and excluding those cases where he has applied his mind but on account of an error of judgment has set any part of the income free from assessment. The did conveyed by the words for any reason is sowide as to make it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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