1966 (1) TMI 23 - SUPREME COURT

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, in respect of a concealed income to which section 34 (1A) thereof applied?

Held that:- 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 within the period beginning on September 1, 1939, and ending on March 31, 1946, for they were barred under the unamended section. Sub-section (1A), therefore, practically governed a situation that was not governed by the provisions of section 34(1)(a). It was intended to catch escaped incomes of the war years which were out of the reach of section 34(1)(a). It is not, therefore, appropriate to describe sub-section (1A) as one carved 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.