MADANLAL MATHURDAS Vs. CHUNILAL ITO
LAWS(GJH)-1960-6-9
HIGH COURT OF GUJARAT
Decided on June 14,1960

MADANLAL MATHURDAS Appellant
VERSUS
CHUNILAL,INCOME TAX OFFICER Respondents


Cited Judgements :-

INDUPRASAD DEVSHANKER BHATT VS. J P JANI INCOME TAX OFFICER [LAWS(GJH)-1964-12-7] [REFERRED]
COMMISSIONER OF INCOME TAX VS. KAILASA DEVI SMT AND RUKMINI BAI SMT [LAWS(APH)-1975-4-28] [REFERRED TO]
COMMISSIONER OF INCOME TAX VS. SHEO KUMARI DEBI [LAWS(PAT)-1985-8-1] [REFERRED TO]


JUDGEMENT

S. T. DESAI, N. M. MIABHOY - (1.)A question of some importance has been raised before us on this petition and the question relates to the interpretation of the provision imposing. time-limit for issuance of a notice under section 34 of the Income-tax A2ct. A notice under that section was served on the petitioner on 2-4-1958 intimating that his income for assessment year 1949-50 had escaped assessment and the competence of the Income-tax Officer to issue the same is challenged on the ground that the notice was served after the expiry of the statutory period of eight years. The petitioner is a resident of the former Gondal State which become a part of Saurashtra on 1st April 1 48 The State of Saurashtra pro promulgated Ordinance (IX of 1949) dated 19/03/1949 where by income-tax was imposed in that States as there in laid down. The petitioner was doing business in the name of Messrs. Indian Industries at Gondal and was also carrying on business at Rajkot For the assessment year 1949-50 he was assessed under the Saurashtra Income-tax Ordinance by the Income-tax Officer Madhya Saurashtra Circle Rajkot The State of Saurashtra became a part of the State of Bombay after the Constitution came into operation on 26/01/1950. The Indian Finance Act 1950 was enacted by the Central Parliament and received assent of the President on 31/03/1950. The integration of the State of Saurashtra with the Union of India came into effect on and from 1/04/1950. It is not now disputed before us that the present case is governed by the Indian Income-tax Act. But what is disputed is that the notice served on the petitioner under sec. 34 of the Act is beyond the period of limitation prescribed in that section. It is not necessary therefore to discuss the applicability of the Indian Income-tax Act to the case of the assessee or to refer to section 3 of the Indian Income-tax Act which extended the Indian Income-tax Act to the State of Saurashtra
(2.)the Income-tax Officer Ward-B Rajkot issued a notice on the petitioner on 24/03/1958 intimating that he had reason to believe that the income of the assessee for the year 1949-50 had escaped assessment and he therefore intended to re-open the same and by that notice he also required the petitioner to make a new return for the assessment year 1949-50. The notice which was issued on 24/03/1958 was served on the petitioner on 2/04/1958. These two dates as we shall presently point out have material bearing on the contention pressed before us by Mr. Hiralal Shah learned Counsel for the Petitioner. On receipt of the notice the petitioner carried on some correspondence with the Department and in that correspondence he raised two contentions. One contention was that the Income-tax Officer who issued the notice was not the officer duly authorized to do so. That point of authority of the Income-tax Officer has been raised in the petition but Mr. Shah has not pressed it before us in view of certain Notification to which our attention has been drawn by the learned Advocate General who appears for the Revenue.
(3.)The other point and one which has been strenuously urged before us by learned Counsel is that the notice is bad and inoperative as it was given after expiry of eight years which is the period of limitation for the same laid down in section 34. A notice served on an assessee under sub_section (1) of section 34 after eight years for any year if eight years have elapsed after the expiry of that year it is urged would be beyond the period prescribed by the section and therefore beyond the competence of the Income-tax Officer. It will be convenient to set out here the relevant part of section 34(1) and the first Proviso to that Subsection.
"34(1) If (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year in come profits or gains chargeable to income-tax have escaped assessment for that year or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under the Act or excessive loss or depreciation allowance has been computed or (b) ...he may in cases falling under clause (a) at any time and in cases year serve on the assessee or if the assessee is a company on the falling under clause (b) at any time within four years of the end of that principal officer thereof 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 re-assess such income profits or gains or recomputed the loss or depreciation allowance and the provisions of this Act shall so far as may be apply accordingly as if the notice were issued under that sub-section:- Provided that the Income-Tax Officer shall not issue a notice under clause (a) of sub-section (1) (i) for any year prior to the year ending on the 31st day of March 1941 unless the income profits or gains chargeable to income-tax which (ii) for any year if eight years have elapsed after the expiry of that year have escaped assessment or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this Act or the loss or depreciation allowance which has been computed in excess amount to or are likely to amount to one lakh of rupees or more in the aggregate either for that year or for that year and any other year or years after which or after each of which eight years have elapsed not being a year or years ending before the 31st day of March 1941 (iii) for any year unless he has recorded his reasons for doing so and in any case falling under clause (ii) unless the Central Board of Revenue and in any other case the Commissioner is satisfied on such reasons recorded that it is a fit case for the issue of such notice."

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