V.G. Oak, C.J. - (1.) THE question for consideration in this income-tax reference is whether a certain assessment is within limitation or not. Dhiraj Mal is the assessee. THE assessment year is 1950-51,
(2.) DHIRAJ Mal was the karta of a joint Hindu family called Messrs. Mithoolal Ram Nath, There was a business under the style of Messrs. Shri Ram General Engineering Works. Partners of the firm were DHIRAJ Mal and Lalta Prasad. A sum of Rs. 21,079 was introduced as capital in the said firm between April 1, 1949, and February 28, 1950. When the Income-tax Officer took up assessment of the Hindu undivided family for the years 1950-51 and 1951-52, he thought that two sums of Rs. 14,167 and Rs. 6,912 represented income of the undivided Hindu family. The joint family was assessed accordingly. That decision was affirmed by the Appellate Assistant Commissioner. But the joint family succeeded in further appeal before the Appellate Tribunal. On October 7, 1959, the Appellate Tribunal upheld the contention of the Hindu undivided family that the two sums of Rs. 14,167 and Rs. 6,912 did not represent income of the undivided Hindu family. Acting on the decision of the Appellate Tribunal, the Income-tax Officer issued a notice to Dhiraj Mal under Section 34(1)(a) of the Indian Income-tax Act, 1922 (hereafter referred to as " the Act "), with respect to the assessment year 1950-51. Dhiraj Mal raised an objection that the notice issued under Section 34(1)(a) was barred by time. The objection was overruled by the Income-tax Officer. Dhiraj Mal was assessed for 1950-51 on the footing that the sum of Rs. 21,079 represented his undisclosed income. The assessee, however, succeeded in appeal before the Appellate Assistant Commissioner. He held that the reassessment proceedings were barred by time. The department appealed against the decision of the Appellate Assistant Commissioner. The appeal filed by the department was allowed by the Appellate Tribunal on March 28, 1963. The Tribunal restored the decision of the Income-tax Officer, holding that the notice and the assessment proceedings were not barred by time.
(3.) THE assessee applied under Section 66(1) of the Act requesting the Tribunal to refer a number of questions to this court. THE Tribunal agreed to refer only one question to this court. THE question runs thus: " Whether, on the facts and in the circumstances of the case, notice dated March 2, 1960, is time-barred in view of (a) Section 34(4), or (b) second proviso to Section 34(3) of the Indian Income-tax Act, 1922 ? " The sole point for consideration in this reference is with respect to limitation under Section 34 of the Act. It is, therefore, necessary to examine the relevant provisions contained in Section 34. Section 34 deals with income escaping assessment. Section 34 states : " (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 ... or to disclose fully and truly all material facts . . . he may in cases falling under Clause (a) at any time . . . serve on the assessee ... a notice . . . and may proceed to assess or reassess such income . . . Provided that the Income-tax Officer shall not issue a notice under Clause (a) of Sub-section (1) .. . (ii) for any year, if eight years have elapsed after the expiry of that year, unless the income, profits or gains chargeable to income-tax which 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 the Act. . . amount to or are likely to amount to, one lakh of rupees or more in the aggregate .. . Provided further that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made, shall apply to a reassessment made under .. . Section 31, Section 33 ... (4) A notice under Clause (a) of Sub-section (1) may be issued at any time notwithstanding that at the time of the issue of the notice the period of eight years specified in that sub-section before its amendment by Clause (a) of Section 18 of the Finance Act, 1956 (18 of 1956), had expired in respect of the year to which the notice relates." ;