Oak, C.J. - (1.) THIS petition under Article 226 of the Constitution is directed against proceedings for reassessment under Section 147 of the Income-tax Act, 1961 (hereafter referred to as the Act or the 1961 Act), The assessee is a Hindu undivided family. It was assessed under the name and style " Punjab Khalsa Hindu Hotel" for the assessment year 1948-49. At that time Sardar Sunder Singh was the manager of the Hindu undivided family. When the Income-tax Officer, Varanasi, took up proceedings for assessment of the Hindu undivided family for the year 1958-59, he thought that income to the extent of Rs. 80,000 received by the family in the year 1947 had escaped assessment. So, on March 26, 1965, he issued to the assessee a notice under Section 147/148 of the Act proposing reassessment. Sardar Inder Singh, representing the Hindu undivided family has filed this writ petition challenging the notice under Section 148, dated March 26, 1965. Annexure F to the writ petition is a copy of the impugned notice.
(2.) THE main contention of Mr. P. N. Pachauri appearing for the petitioner is that reassessment proceedings were barred by time under the Indian Income-tax Act, 1922 (hereafter referred to as the old Act or the 1922 Act). Consequently, reassessment proceedings cannot be initiated under the 1961 Act. This position has been disputed by Mr. Gopal Behari appearing for the respondents. Firstly, he contended that reassessment proceedings were not barred under the 1922 Act. Secondly, even if they were barred under the 1922 Act, that does not prevent the respondents from initiating reassessment proceedings under the 1961 Act. Before taking up the question of limitation, it will be convenient to fix the amount, which is alleged to have escaped assessment. Annexure " E " to the petition is a copy of the assessment order for the year 1958-59. During the course of that order the Income-tax Officer observed : " As a sum of Rs. 80,000 had been introduced in the year 1947 action under Section 147 will be taken for the assessment year 1948-49. " The petitioner filed a supplementary affidavit on the question of the extent of the alleged income of the year 1947. In paragraphs 2 and 3 of the supplementary affidavit it is stated that the Income-tax Officer approached the Central Board of Direct Taxes for sanction on the footing that the sum involved was Rs. 90,000. It is further stated in paragraph 4 of the supplementary affidavit that the order sheet indicated that action was being taken with respect to a total sum of Rs. 90,000. The respondents have filed several counter-affidavits. There is no indication in any counter-affidavit that the amount, which escaped assessment, may exceed Rs. 90,000. On the other hand, in one of the counter-affidavits it has been expressly stated that the contents of paragraphs 1, 2, 3 and 4 of the supplementary affidavit were admitted. We may, therefore, take it that the notice (annexure " F ") was issued to the assessee on the footing that a sum of Rs. 90,000 had escaped assessment with reference to the assessment year 1948-49.
(3.) SECTION 34 of the 1922 Act dealt with income escaping assessment. Sub-section (1) of SECTION 34 of the 1922 Act ran thus : "(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... he may in cases falling under Clause (a) at any time... 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 ; (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...amount to, or are likely to amount to, one lakh of rupees or more... " Sub-section (1) of Section 34 of the 1922 Act indicates that, although there was no limitation if the amount involved exceeded one lakh of rupees, in other cases the period of limitation was eight years. We have seen that in the present case the amount involved is Rs. 90,000. The present, case is, therefore, governed by the eight years rule. The assessment year 1948-49 ended on March 31, 1949. The period of eight years contemplated by Clause (ii) of the proviso ended on March 31, 1957.;