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TMI Blog1966 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... ved out of sub-section (1)(a) or to call it a species of which sub-section (1)(a) is the genus. Sub-section (1A) operated where sub-section (1)(a) practically ceased to function. Sub-section (1A) does not really prescribe any period of limitation. It enables the Income-tax Officer to take proceedings within a particular time, though the period of limitation had expired. In this view, no question of carving out a species out of a genus arises. It conferred a special power on the Income-tax Officer and the said power expired on April 1, 1956. Appeal allowed. - Civil Appeals Nos. 494 and 495 of 1964 - - - Dated:- 19-1-1966 - Judge(s) : K. SUBBA RAO., M. HIDAYATULLAH., R. S. BACHAWAT JUDGMENT The judgment of the court was delivered by SUBBA RAO J.---These two appeals, one by special leave and the other by certificate, raise the question whether notice can be issued at any time for reassessment under section 34(1)(a), as amended by the Finance Act, 1956, of the Indian Income-tax Act, 1922, hereinafter called the Act, in respect of a concealed income to which section 34 (1A) thereof applied. The facts may be briefly stated. Messrs. Shahzada Nand and Sons, the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me ? " The Division Bench, in its turn, referred the said question to a Full Bench. The Full Bench, inter alia, held that section 34(1A) was a special provision whereas section 34(1)(a) was a general provision and that, as the escaped income of the year 1945-46 was governed by section 34(1A), no notice under section 34(1)(a) could be issued. In the result, after expressing that view, the Full Bench sent back the case to the single judge before whom it came in the first instance. Dua J., who heard the petition, following the view expressed by the Full Bench, allowed the petition. The appellants, thereafter, preferred a Letters Patent appeal against that order to a Division Bench, which dismissed the same, Civil Appeal No. 494 of 1964 has been filed by the revenue by special leave against the order of the Full Bench dated September 8, 1961, and Civil Appeal No. 495 of 1964 has been filed, by certificate, by the revenue against the order of the Division Bench confirming that of Dua J. At the outset it will be convenient to read the material provisions of section 34 of the Act as amended by the Finance Act, 1956, and by the Income-tax (Amendment) Act, 1959. Section 34. " (1) I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the period beginning on the 1st day of September, 1939, and ending on the 31st day of March, 1946 ; and (ii) that the income, profits or gains which have so escaped assessment for any such year or years amount, or are likely to amount, to one lakh of rupees or more ; he may, notwithstanding that the period of eight years or, as the case may be, four years specified in sub-section (1) has expired in respect thereof, serve on the assessee ... a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22, and may proceed to assess or reassess the income, profits or gains of the assessee for all or any of the years referred to in clause (i), and thereupon the provisions of this Act [excepting those contained in clauses (i) and (iii) of the proviso to sub-section (1) and in sub-sections (2) and (3) of this section], shall, so far as may be, apply accordingly : Provided that the Income-tax Officer shall not issue a notice under this sub-section unless he has recorded his reasons for doing so, and the Central Board of Revenue is satisfied on such reasons recorded that it is a fit case for the issue of such notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) of sub-section (1) or under sub-section (1A) for any of the years ending on the 31st day of March of the years 1941 to 1948 inclusive " were substituted for the words " to whom a notice has been issued under sub-section (1A) ". Sub-section (4) was added by the Income-tax (Amendment) Act, 1959. The gist of the relevant provisions may be stated thus : Under section 34(1)(a), before it was amended by the Finance Act, 1956, in the case of concealed income a notice for reassessment could be issued within 8 years of the end of the relevant year ; and after the said amendment, notice in respect of the said income could be issued at any time, but it was subject to three conditions, namely, (i) it could not be issued for any year prior to the year ending on March 31, 1941 ; (ii) such concealed income amounted to one lakh of rupees or more in the aggregate ; and (iii) the Income-tax Officer gave reasons for doing so and obtained the consent of the Central Board of Revenue. Sub-section (1A) of section 34 did not undergo any change after the Finance Act, 1956. Escaped assessment for any year in respect of which the relevant previous year fell within the period beginning on September 1, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected, could not be applied if the latter was omitted. Further, the said sub-sections still applied to incomes falling under section 34(1)(b) in respect of the war years. In any view, it must have been retained in super-abundant caution and that fact could not restrict the scope of an otherwise clearly expressed provision, viz., section 34(1)(a). The construction accepted by the High Court led to the anomalous position of the legislature prescribing a shorter period of limitation in the case of tax evaders during the war years and no period of limitation for evaders of such income during the pre-war and post-war years. This could not have been the intention of the legislature, as the evasion of tax during the war years was comparatively of larger amounts than during the other periods and for that very reason it had passed the Taxation on Income (Investigation Commission) Act, 1947, which was declared to be void by this court. This contention was accepted by the Bombay and Calcutta High Courts in Laxminarayan R. Rathi v. Income-tax Officer, Poona and Madanlal Jajodia v. Income-tax Officer, Dist. II(1), Calcutta respectively. Mr. Palkhivala, learned counsel for the respondents, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, Special Investigation Office, Ahmedabad. Before we advert to the said arguments, it will be convenient to notice the relevant rules of construction. The classic statement of Rowlatt J. in Cape Brandy Syndicate v. Inland Revenue Commissioners still holds the field. It reads : " . . . In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. " (To this may be added a rider : in a case of reasonable doubt, the construction most beneficial to the subject is to be adopted. But even so, the fundamental rule of construction is the same for all statutes, whether fiscal or otherwise. " The underlying principle is that the meaning and intention of a statute must be collected from the plain and unambiguous expression used therein rather than from any notions which may be entertained by the court as to what is just or expedient. " The expressed intention must guide the court. Another rule of construction which is relevant to the present enquiry is expressed in the maxim, g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1947, mainly to catch the escaped income of the war profiteers. This court in Suraj Mall Mohta and Co. v. A. V. Visvanatha Sastri and Muthiah v. Commissioner of Income-tax held that sections 5(4) and 5(1) of the said Act became void on the commencement of the Constitution as offending article 14 thereof. The first decision led to the insertion of sub-sections (1A) to (1D) in section 34 by the Income-tax (Amendment) Act, 1954, with effect from July 17, 1954. The object of the Amending Act was to provide for the assessment or reassessment of persons who had, to a substantial extent, evaded payment of taxes during the war years and for matters connected therewith. But at the time sub-sec tion (1A) was inserted in section 34, the period of limitation provided with regard to issue of notices under section 34(1)(a) was 8 years and for cases falling under section 34(1)(b) it was 4 years ; but as the Income-tax (Amendment) Act, 1954, came into force only on July 17, 1954, the said periods of limitation prescribed in respect of escaped concealed incomes during the said period had run out except in respect of one or two years. So, with the twin object of extending the time and expediting the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure by making the relevant amendments has succeeded to effectuate its intention. To state it differently, do the amended provisions carry out its intention ? Section 34(1)(a), as it now stands on the statute book, expressly states that in cases falling under clause (a) of sub-section (1) notice can be served thereunder on an assessee at any time. The terms of section 34(1)(a), read with the second proviso, take in the concealed incomes of all the years commencing from the year ending on March 31, 1941. It does not exclude the incomes of the war years, but the said incomes are sought to be excluded on the principle of generalia specialibus non derogant. As we have pointed out earlier, the said doctrine embodies a rule of construction, but it has no universal application. To invoke it, the general and special provisions shall occupy the same field. In this case, both during the period between the amendments of 1954 and 1956 and thereafter, they occupied different fields. By July 17, 1954, when sub-section (1A) was introduced in section 34, no proceedings under section 34(1)(a) could be initiated except for the assessment year 1946-47 in respect of the previous years that fell with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that bar of limitation was removed, sub-section (1A) had become otiose. Sub-section (1B), as amended by the Finance Act of 1956, also throws some light on the interpretation of section 34. Before it was amended, an assessee to whom a notice had been issued under sub-section (1)(a) could apply to the Central Board of Revenue for settlement of the amount of tax payable by him. After the amendment, an assessee to whom a notice was given under sub-section (1)(a) and under sub-section (1A) for any of the years ending on March 31, 1941 to 1948, could apply for such a relief to the Central Board of Revenue. The years 1941 to 1948 are the war years. This sub-section, therefore, assumes that notice could be issued in respect of the war years under sub-section (1)(a). The notice contemplated by sub-section (1B) could only be a notice after the amendment of 1956, for such notice could not have been issued earlier under sub-section (1)(a) in respect of the said years. The notice under sub-section (1A) obviously refers to the notice issued before the amendment of 1956 and pending disposal. Sub-section (4) added by the Indian Income-tax (Amendment) Act, 1959, also reinforces the said const ..... X X X X Extracts X X X X X X X X Extracts X X X X
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