CHANDRA REDDI, J. - (1.) THE question that arises for consideration in this reference is as to the starting point of the period of limitation under S. 34(1) (a) of the Indian IT Act, i.e., whether the eight years period has to be computed from the expiry of the accounting year or the assessment year.
(2.) THIS very question fell to be decided by a Bench of this Court Talluri Raghavaiah vs. First Addl. ITO, Bapatla (1962) 44 ITR 136. After referring to the various provisions of the Indian IT Act and several of the decided cases, we reached the conclusion that the year contemplated by S. 34(1) (a) is the assessment year and not the accounting year. Sri Narasinga Rao for the assessee contends that the judgment of the Supreme Court in Pannalal Nandlal Bhandari vs. CIT (1961) 41 ITR 76 throws doubt on the correctness of the principle enunciated in Talluri Raghavaiah vs. First Addl. ITO, Bapatla (supra). We have to demur to this proposition. Far from rendering the judgment in Talluri Raghavaiah vs. First Addl. ITO, Bapatla(supra), doubtful, the ruling cited above lends support to it. At page 78 of the report, their Lordships observed : "Admittedly, the notices issued by the ITO for the years in question were issued within eight years from the end of the years of assessment and if cl. (1) (a) of S. 34 applied, the assessment was not barred by the law of limitation."
(3.) SRI Narasinga Rao thinks that the sentence with which the judgment commences, namely, "To the appellant who was a non resident for the purposes of the Indian IT Act, 1922, has accrued in the asst. yrs. 1943 44, 1944 45, 1946 47 and 1947 48 certain dividend income within the taxable territory of British India, . . . . . " indicates that the starting point of limitation is from the expiry of the accounting year. We do not think that there is any basis for this argument. Their Lordships observed that dividends had accrued in the assessment years for purposes of the Act, which only means that dividends were chargeable to tax for the assessment years. That does ot in any way justify the conclusion that the period of limitation commenced from the expiry of the year in which the dividends were received. As already observed, this judgment does not lend any colour to the argument of the learned counsel for the assessee.;