TMI Blog1962 (12) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... r Narain JUDGMENTS S. K. DAS J.-This appeal has been brought to this court on a certificate of fitness granted by the High Court of Bombay. The appellants are the Union of India and the Income-tax Officer, Market Ward, Bombay. By this appeal the appellants challenge the correctness of the judgment and order of the High Court of Bombay dated October 5, 1955, by which the High Court affirmed the judgment and order of a learned single judge of the same court dated December 7, 1954, on a petition filed by the respondents under article 226 of the Constitution. The relevant facts are these. The firm of Purshottam Laxmidas was started on October 28, 1935. This firm had two partners, Dwarkadas Vussonji and Parmanand Odhavji. Dwarkadas died on April 1, 1946, leaving a son, Vasantsen. Another firm by the name of Vasantsen Dwarkadas was started on January 28, 1941, and in that firm there were three partners, Vasantsen, Narandas Shivaji and Nanalal Odhavji. This firm was dissolved on October 24, 1946. The firm of Vasantsen Dwarkadas filed a return of its income for the assessment year 1942-43 and also claimed registration as a firm. The income-tax authorities refused registration and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s thereof as provided in section 23(5) of the Act. " The Commissioner of Income-tax questioned the correctness of the aforesaid finding of the Tribunal, but on a reference to the High Court the latter upheld the order of the Tribunal. The reference was decided on October 8, 1953. On April 30, 1954, the Income-tax Officer concerned who is the appellant before us served on the firm Purshottam Laxmidas a notice under section 34 of the Indian Income-tax Act, 1922. This notice was in these terms : " Whereas I have reason to believe that your income assessable to income-tax for the year ending 31st March, 1943, has been under-assessed, I, therefore, propose to reassess to income allowance that has been under assessed : I hereby require you to deliver to me within 35 days of the receipt of this notice a return in the attached form of your total income and total world income assessable for the year ending 31st of March, 1943. This notice is being issued after obtaining the necessary satisfaction of the Commissioner of Income-tax, Bombay City, Bombay. " The notice was followed by some correspondence between the firm Purshottam Laxmidas and the Income-tax Officer. The result of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings before the Appellate Tribunal were concerned ; but the proviso was bad in so far as it affected persons other than assessees. He held however that the petitioners before him were parties to the proceedings before the Appellate Tribunal and therefore fell within the category of assessees. In view however of his finding that the second proviso to sub-section (3) of section 34 did not apply to the case, his final conclusion was that the notice was without jurisdiction. The matter was then taken in appeal and the appeal was heard by Chagla C. J. and Tendolkar J. The appellate court affirmed the finding of Desai J. that the notice under section 34 was issued out of time and was, therefore, invalid. It further held that the second proviso to sub-section (3) of section 34 did not apply to the case. On the question as to whether the second proviso violated article 14 of the Constitution it came to the conclusion that no valid distinction could be drawn between persons with regard to whom a finding or direction is given by the Appellate Tribunal and persons with regard to whom no such direction or finding is given. The appellate court expressed the view that both fell in the same c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Act. The section made a distinction between two classes of cases ; one in which the Income-tax Officer had reason to believe that the assessee had concealed the particulars of his income or had deliberately furnished inaccurate particulars thereof and in this class of cases the Income-tax Officer could take action as laid down in the section at any time within eight years ; in all other cases the Income tax Officer could take action within four years of the end of the relevant assessment year. The section was almost completely recast by the Income-tax and Business Profits Tax (Amendment) Act, 1948 (LXVIII of 1948). For the purpose of this case all that I need state is that the two time limits of eight years and four years were continued in respect of two classes of cases mentioned in clauses (a) and (b) of sub-section (1) of section 34 ; clause (a) related to cases of 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 necessary for his assessment, and clause (b) related to cases where the Income-tax Officer had in consequence of information in his possession reason to believe that income, profits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, assessment or reassessment may be made, shall apply to a reassessment made under section 27 or to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A. " I have stated earlier that the second proviso as amended was inserted by the Income-tax (Amendment) Act, 1953 (XXV of 1953), with effect from April 1, 1952. Now, I proceed to discuss the first question as to whether this proviso applies in the present case. The question has two facets : (1) whether the proviso is constitutionally valid and (2) if it is constitutionally valid, does it apply to a case where the time limit fixed by sub-section (1) of section 34 had expired some time before April 1, 1952, the date on which the proviso came into effect ? With regard to the first facet, Chagla C. J. had pointed out, rightly in my opinion, that the persons with regard to whom a finding or direction is given and persons with regard to whom no finding or direction is given belong really to the same category, namely, the category of persons who are liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal or they are discovered by any other method, they really belong to the same category and therefore require equal treatment. The second proviso to sub-section (3) of section 34 which came into effect from April 1, 1952, patently introduced an unequal treatment in respect of some out of the same class of persons. Those whose liability to pay tax was discovered by one method could be proceeded against at any time and no limitation would apply in their case, and in the case of others the limitation laid down by sub-section (1) of section 34 would apply. This in my opinion is unequal treatment which is not based on any rational ground. Desai J. put the matter on a somewhat narrower ground. He held that so far as assessees were concerned, there might be a rational ground for distinction because the appeal proceedings, etc., might take a long time and the assessee being a party to the appeal could not complain of such delay ; therefore, assessees did not occupy the same position as strangers. But the learned judge held that there was no rational distinction so far as strangers were concerned and there was no reason why they should be deprived of the benefit of the time limit prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ready lost to the Income-tax Officer. It seems to me that the proposition of law is settled beyond any doubt that although limitation is a procedural law and although it is open to the legislature to extend the period of limitation, an important right accrues to a party when the remedy against him is barred by the existing law of limitation and a vested right cannot be affected except by express terms used by the statute or the clearest implication flowing therefrom. Some reliance was placed on the decision of the Calcutta High Court in Income-tax Officer v. Calcutta Discount Co. Ltd. [1953] 23 ITR 471 which later came to this court on a different point. I am of the opinion that the decision is of no help to the present appellants. It was said in that decision that the plain effect of the substitution of new section 34 with effect from March 30, 1948, was that from that date the Income-tax Act was to be read as including the new section as a part thereof ; the further effect of the express language of the section was that so far as cases coming within clause (a) of sub-section (1) were concerned, all assessment years ending within eight years from March 30, 1948, and from subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be deemed always to have applied to any assessment or reassessment for any year ending before the 1st day of April, 1948, in any case where proceedings in respect of such assessment or reassessment were commenced under the said sub-sections after the 8th day of September, 1948, and any notice issued in accordance with sub-section (1) or any assessment completed in pursuance of such notice within the time specified in sub-section (3), whether before or after the commencement of the Indian Income-tax (Amendment) Act, 1953, shall, notwithstanding any judgment or order of any court, Appellate Tribunal or income-tax authority to the contrary, be deemed to have been validly issued or completed, as the case may be, and no such notice, assessment or reassessment shall be called in question on the ground merely that the provisions of section 34 did not apply or purport to apply in respect of an assessment or reassessment for any year prior to the 1st day of April, 1948. " It will be noticed that the section is in two parts : the first part is declaratory of the law and says that sub-sections (1), (2) and (3) of section 34 shall apply and shall be deemed always to have applied to any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 1948-49, any action could be taken under the amended section in respect of those assessments which had become time-barred before the amended section came into effect. Bose J. answered the first question in the negative and necessarily the second question also in the negative. The learned Chief Justice answered the first question in the affirmative, but took pains to point out that an assessment made before eight years from March 30, 1948, was not within the purview of section 34. I am of the opinion that in its true scope and effect, section 31 of the Amending Act of 1953 puts beyond any doubt that the view expressed by the learned Chief Justice in Income-tax Officer v. Calcutta Discount Co. Ltd. [1953] 23 I. T. R. 471, is the correct view and amended section 34 applies to assessment years prior to 1948-49, but it does not say that an assessment which had become final and in respect of which reassessment proceedings had become time barred before the amended section came into force could be reopened. This appears to me to be clear from the first part of section 31. That part says that sub-sections (1), (2) and (3) of section 34 shall apply and be deemed always to have applied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long before which date the assessment had become final and in respect of which reassessment proceedings had become time-barred. The short answer to the argument based on section 31 is that the notice in the present case was not issued in accordance with sub-section (1) of section 34, and the first part of section 31 requires that the notice must be so issued before the second part thereof can give any protection to it. I now proceed to consider the Amending Act of 1959. The Indian Income-tax (Amendment) Act, 1959 (1 of 1959), received the assent of the President on March 12, 1959. The relevant provisions with which we are concerned are contained in sections 2 and 4 of the Amending Act. By section 2 of the Amending Act, a new sub-section, namely, sub-section (4), was inserted in section 34. This sub-section said : " (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. " Section 4 of the Amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Company's case came to us, we had explained what was meant by non-disclosure of material facts and pointed out the distinction between primary facts and inferences therefrom (see Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District [1961] 41 ITR 191, [1961] 2 SCR 241. There is nothing in the record to show that in the present case there was an omission or failure on the part of the assessee to make a return of his income under section 22 for the year 1942-43 ; nor is there any averment on behalf of the appellants that the assessee failed to disclose fully and truly all material facts necessary for his assessment for that year in the sense explained above. I have said earlier that there was some correspondence between the Income-tax Officer concerned and the firm of Purshottam Laxmidas with regard to the notice issued on April 30, 1954. The firm wanted to know the reason why the notice had been issued. In reply to the letter from the firm, the Income-tax Officer said (see exhibit C) : " The income of the concern of Vasantsen Dwarkadas was originally included in the hands of Dwarkadas Vassonji ; Dwarkadas Vassonji was also a partner in the registered firm of Messr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under clause (a) of sub-section (1) of section 34. I am of the opinion that even on that supposition the appellants are not entitled to succeed. It is manifest that sub-section (4) of section 34 does not help the appellants. That subsection is clearly prospective and is intended to authorise action after the coming into force of the 1959 amendment ; therefore, sub-section (4) of section 34 cannot validate a notice issued in 1954. Now the question is, what about section 4 of the Amending Act of 1959 ? It has been very strenuously argued before us that that section by reason of the unambiguous language used therein saves the notice. It is pointed out that the section in its first part refers inter alia to a notice issued under clause (a) of sub-section (1) of section 34 any time before the commencement of the 1959 Act and in its second part says that no such notice shall be called in question in any court, etc., merely on the ground that at the time the notice was issued, the time within which such notice should have been issued under section 34 as in force before its amendment by section 18 of the Finance Act, 1956, had expired. The argument is that the language of the section is su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h sub-section (4) of section 34 and section 4 of the Amending Act of 1959 are meant to deal with only those cases where action is taken under section 34 as amended in 1956, but where the eight years' time limit had already expired and the original assessment (if any) had become final prior to the amendment of section 34 in 1956. Whereas sub-section (4) of section 34 is intended to authorise action in such cases after the coming into force of the Amending Act of 1959, section 4 is intended to save and validate action taken in such cases between 1956, when section 34 was amended by the Finance Act, 1956, and 1959, when the Amending Act was passed. In my view, section 4 of the Amending Act of 1959 has no bearing on a notice issued under section 34 prior to 1956. I do not accept as correct the decision of the Bombay High Court in Onkarmal Meghraj v. Commissioner of Income-tax [1960] 38 ITR 369. That decision implies that section 4 of the Amending Act of 1959 in effect abrogates and supersedes the statutory time limits for action under section 34(1)(a) in all the past years ever since section 34(1)(a) was put on the statute book. It seems to me that on the contrary, the provisions of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already expired before the issue of the notice ; this seems to me to be the true meaning of section 4 when the first part of the section which talks of a notice issued under clause (a) of sub-section (1) of section 34 is contrasted with the second part which says that such a notice shall not be called in question on the ground that the time limit had already expired before the date on which the notice was issued. If the intention was to abrogate the time limit for all notices issued before 1959, there was no sense in saying that the notice should issue under clause (a) of sub-section (1) of section 34 and at the same time it would not be called in question on the ground that the time limit had expired before the date of its issue ; the section then would have simply said that notwithstanding any time limit in clause (a) of sub-section (1) of section 34, all notices issued before 1959 would be valid. I do not think section 4 of the Amending Act, 1959, was intended to abrogate all periods of limitation for action under clause (a) of sub-section (1) of section 34 for all past years. The time limit of eight years was removed in 1956 in respect of those cases where the amount was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the ground that the firm was not a genuine firm but really belonged to Dwarkadas Vussonji, the principal partner in the firm, Purshottam Laxmidas. The Income-tax Officer added the income of the firm, Vasantsen Dwarkadas, for the assessment year 1942-43 to the individual income of Dwarkadas Vussonji, in the subsequent year, i.e., 1943-44. In the subsequent years also the firm, Vasantsen Dwarkadas, applied for registration but registration was refused on the ground that it was not a genuine firm. Appeals were taken in usual course to the Income-tax Appellate Tribunal by the firm, Vasantsen Dwarkadas, both against the quantum of its assessed income and against the refusal of registration. This was for the years of assessment 1942-43 to 1948-49. These appeals filed by the firm, Vasantsen Dwarkadas, and the appeal filed by Vasantsen Dwarkadas as representing the estate of his father, Dwarkadas Vussonji, and the appeals filed by the firm, Purshottam Laxmidas, in regard to the excess profits tax were all heard together and decided by the Income-tax Appellate Tribunal by its order made on August 14, 1951. In that order the Income-tax Appellate Tribunal gave a finding that Dwarkadas Vu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in certain cases. These various changes will be discussed in detail at appropriate places. The Amending Act of 1953 received the assent of the President on May 24, 1953, but came into force retrospectively as from April 1, 1952. By that Act the second proviso to section 34(3) of the Act was amended. A notice under section 34(1)(a) was issued to respondent No. 2 which has been set out above. Thereupon, Vasantsen Dwarkadas filed a petition under article 226 of the Constitution in the Bombay High Court being Misc. Application No. 266-X of 1954 challenging its legality. S. T. Desai J., who heard the petition in the first instance held that the Amending Act of 1953, which became operative as from April 1, 1952, had no retrospective effect so as to enable the Income-tax Officer to reopen the assessment of the firm, Purshottam Laxmidas, for the assessment year 1942-43 which had become time barred before April 1, 1952, and therefore the Income-tax Officer's action was barred and without jurisdiction ; that the second proviso to section 34(3) of the Act " so far as it affects persons other than assessees not parties to the proceedings " was ultra vires of the Constitution being in vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 34 of the Act. It provides : "(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. " Section 4 of that Act provides for saving and validation of notices, assessment, etc., in certain cases. The relevant portion of the section applicable to notices issued under section 34(1)(a) of the Act is as follows: " No notice issued under clause (a) of sub-section 34 of the principal Act at any time before the commencement of this Act shall be called in question in any court merely on the ground that at the time the notice was issued the time within which such notice should have been issued under that section as in force before its amendment by clause (a) of section 18 of the Finance Act, 1956 (18 of 1956) had expired. " The new proviso which was substituted in place of the old proviso to section 34(1) by section 18 of the Finance Act, 1956, may conveniently be given here. It reads as follows : " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clause under which the notice was issued and there is nothing to indicate that it was under clause (a). The respondents in their supplemental statement specifically raised the point that the notice was not under clause (a) and could only be under clause (b). The language of that section shows (1) that it applies to all notices under section 34(1)(a) issued at any time before the Amending Act of 1959, i.e., March 12, 1959, and (2) its effect is that notices issued before the Amending Act of 1959, cannot be challenged merely on the ground that at the time the notices were issued they were barred under section 34(1)(a) of the Act as it was before its amendment by section 18 of the Finance Act, 1956. Now the legislature has not said that the notices shall not be challenged on the ground that a period of eight years under section 34(1)(a) as in force after the Amending Act of 1948 had elapsed. It has deliberately used the words " as in force before its amendment by the Finance Act, 1956 ". These words indicate that the legislature intended to give full effect to the amendment made by the Finance Act of 1956 in section 34(1)(a) removing the bar of the lapse of eight years' period in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (76 E. R. 627) which was accepted in R. M. D. Chamarbaugwalla v. Union of India [1957] S. C. R. 930, 936. Taking this principle into account it appears that the object of the amendment was to validate certain notices after the amendment and after the lapse of eight years from the end of the assessment year and also to nullify the effect of the Calcutta judgment above mentioned. Mr. Rajagopal Sastri relied next on the amendment to section 34(3) of the Act by the Amending Act of 1953 which came into effect as from April 1, 1952. By section 18 of that Act the second proviso to sub-section (3) of section 34 was amended whereby certain changes were made in regard to the period of time for taking action in consequence of or to give effect to any finding or direction contained in an order under the various sections therein mentioned one of them being an order of the Income-tax Appellate Tribunal. The proviso as amended reads as follows : " 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 27 or to an assessment or reassessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction to proceed with the reassessment on the ground that section 34(1) as amended in 1948 had no application to assessments for the year prior to 1948 even though the period of eight years had not elapsed. It was also held that the Amending Act of 1948 was expressly made retrospective as from March 30, 1948, it had no further retrospectivity and therefore the notices issued under section 34(1) were without jurisdiction. Against that judgment which was dated March 26, 1952, an appeal was taken which was decided on March 25, 1953, and is reported as Incometax Officer, Companies District I, Calcutta v. Calcutta Discount Co. Ltd. But in the meanwhile, i.e., the period between the two judgments, a Bill was introduced in 1952 to amend section 34 so as to nullify the effect of the judgment of Bose J. in the Calcutta case. This resulted in the enactment of the Amending Act of 1953 which received the assent of the President on May 24, 1953, but was given retrospective effect as from April 1, 1952. Section 31 of the Amending Act of 1953 can be divided into two parts. The first part beginning with the words " it is hereby declared " to the words " were commenced under the said sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled a notice " in accordance with " and therefore the deeming provision as to validity is not applicable to the present case. Further the words notwithstanding any judgment etc. are indicative of the purpose of this provision to be this that if the notice was in conformity with section 34(1) it will be valid notwithstanding any judgment etc. That this was the purpose and meaning of this second part is further made clear by the provisions against such notice being challenged on the ground of its being in respect of an assessment or reassessment for any year prior to April 1, 1948. Thus these words only nullified the effect of the judgment of Bose J. in Calcutta Discount Co.'s case (Supra) and did not validate time-barred notices. Moreover, in the present case the notice is not being impugned on the ground of section 34 being inapplicable in respect of the assessment year 1942-43. On the contrary the plea raised against the validity of the notice is that the provisions as to eight years in section 34(1) are applicable ; in other words the attack on the legality of the notice is that it is barred by the provisions of section 34(1). This part of section 31 also does not validate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of the power was revived. The first argument above brings us to the general principles of the law of limitation whether a change in the period of limitation takes away the existing finality of the immunity against actions which had already been barred by the lapse of the period of limitation. The statute of limitation has been termed a statute of " repose, peace and justice " and its intention was stated by Sir Richard Couch in Hari Nath Chatterjee v. Mothurmohun Goswami [1893] L. R. 20 I. A. 183, 192, as follows : "The intention of the law of limitation is, not to give a right where there is not one, but to interpose a bar after a certain period to a suit to enforce an existing right." In Kr. Kr. Kr. Ramanathan Chettiar v. N. M. Kandappa Goundan I. L. R. [1951] Mad. 581. it was held that if a right to sue had become barred by the provisions of the Limitation Act in force on the date of the coming into force of a new Act then such barred rights cannot be revived by the application of the new enactment and it cannot be said that because the remedies are barred but the rights are not extinguished such rights can be revived by mere change in the period of limitation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 1908. Lord Atkinson observed at page 345 : " There is no provision in this latter Act [9 of 1908] so retrospective in its effect as to revive and make effective a judgment or decree which before that date had become unenforceable by lapse of time. " In Delhi Cloth and General Mills Co. Ltd. v. Income-tax Commissioner [1927] L. R. 54 I. A. 421 ; A. I. R. 1927 P. C. 242, 244., it was held that no appeal lay against the decision of a High Court if it was given before appeals to the Privy Council were provided for. In that connection Lord Blanesburgh observed at page 425 : "Their Lordships can have no doubt that provisions which, if applied retrospectively, would deprive of their existing finality orders, which, when the statute came into force, were final, are provisions which touch existing rights. " In all these cases the Privy Council proceeded on the principle that if the right of action had become barred according to the law of limitation in force, subsequent enlargement of the period of time does not revive the remedy to enforce the rights already barred. The same principle, in my opinion, would apply to the periods specified in section 34 of the Act and if the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the attention of the learned judges was drawn to the principles laid down in the decisions of the Privy Council. The Benaras Bank Ltd. v. Sri Prakasha I. L. R. [1946] All. 461 ; [1946] 16 Comp. Cas. 38. relied on by Mr. Rajagopala Sastri did not decide the question that subsequent change in the law can revive barred rights. It proceeded on the construction of the amended section 235 of the Indian Companies Act. He also relied on two judgments of the Patna High Court : Baleswar Prasad v. Sheikh Latafat Karim [1945] I. L. R. 24 Pat. 249 and Jagdish v. Saligram ) [1945] I. L. R. 24 Pat. 391. In the former it was held that the law of limitation which governs an action is the law which prevails on the date when the action is brought and therefore acknowledgement made on a pronote executed in 1934 would be governed by the law in force at the time the suit was brought. In the latter also it was held that the law relating to acknowledgement under section 20 was the one which was in force at the time of the bringing of the suit. But it is significant to note that S. K. Das J. (now a judge of this court) did not disagree with the decision as the matter had been previously decided in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... das, respondent No. 1, was substituted in place of his father in the appeal of Purshottam Laxmidas. The order in the appeal of firm, Vasantsen Dwarkadas against the firm Purshottam Laxmidas was not an order to which firm Purshottam Laxmidas as such was a party and consequently any finding given in regard to the income of firm Vasantsen Dwarkadas being the income of the firm Purshottam Laxmidas was an order passed against a third party who was not heard in those proceedings. It was contended on behalf of respondents that the second proviso to section 34(3) is unconstitutional because it infringes article 14 of the Constitution in so far as it deprives such third party of the immunity given against assessment or reassessment by the period of eight years mentioned in section 34(1)(a) and it results in prejudging the merits of the third party's case before he is even heard and that there is no reasonable basis for distinguishing such third party from any other person escaping income-tax. The words used in the section are " assessment or reassessment made on the assessee in consequence of or to give effect to any finding contained in an order ". Any person there mentioned must mean a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was held that after the coming into force of the amended section 34 which operates in the same field as section 5(1) of Act 30 of 1947 both classes were included within the ambit of amended section 34 and the two sections overlapped. Therefore according to the two cases abovementioned if there are no particular qualities and elements which distinguish one set of evaders of income-tax from another and both have evaded income-tax their cases fall under section 34(1) before and after 1948 or before and after 1953. From the mere fact that in regard to one a direction is given or an order is made within the second proviso to section 34(3) and in regard to another it is not given, no reasonable basis for classification arises as their essential characteristics are the same. But it was argued that in A. Thangal Kunju Musaliar v. M. Venkatachalam Potti [1955] 2 S. C. R. 1196 ; [1956] 29 I. T. R. 349. such classification was made. In that case a native of Quilon within the Travancore State was given a notice under section 5(1) of the Travancore Act XIV of 1124, a provision corresponding to section 5(1) of the Indian Act 30 of 1947 for investigation but before the report could be made th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. Later in M. Ct. Muthiah v. Commissioner of Income-tax [1956] 29 I. T. R. 390 ; [1955] 2 S. C. R. 1247 this court pointed out that if the provision of section 34(1) of the Act as it stood before its amendment by the Amending Act of 1948 had been the only provision to be considered the rule in Musaliar's case [1956] 29 I. T. R. 349 ; [1955] 2 S. C. R. 1195 would have applied but the position was materially affected by reason of the two amendments made in section 34(1), by Amending Act, 1948, and the other by the Income-tax (Amendment) Act (33 of 1954). In that case it was contended and it was so held that section 5(1) of Act 30 of 1947 was ultra vires of the Constitution as it was discriminatory and violative of article 14 by reason of the two amendments above referred to. The submission of the respondents that there is no reasonable basis for classification between those who have escaped assessment under section 34(1)(a) and those third parties who have escaped income-tax but with regard to whom a direction or an order is made under proviso (ii) to section 34(3) is well founded and therefore the provision is unconstitutional and hit by article 14. Lastly it was argued that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt up in appeals against its rejection. In 1951, various appeals concerning the parties named above came up before the Income-tax Appellate Tribunal. These appeals consisted of the said appeals by the alleged firm of Vasantsen Dwarkadas, appeals by Vasantsen as the son and heir of Dwarkadas who had died in 1946 in respect of assessments on him for 1942-43 and 1943-44, and appeals by the firm of Purshottam Laxmidas in respect of assessments on it for various years under the Excess Profits Tax Act. These appeals were disposed of by a common judgment passed by the Tribunal on August 14, 1951. The appeals by the firm of Vasantsen Dwarkadas were all dismissed as it was held that it was not a partnership between the persons alleged. In the appeals by Purshottam Laxmidas, it was held that the business of Vasantsen Dwarkadas was one of its branches. In the appeals against the assessment on Dwarkadas, it was held that the income of the business of Vasantsen Dwarkadas had wrongly been added to his income for the assessment year 1942-43 and the addition should be deleted. It was also said, referring to the income of Vasantsen Dwarkadas in respect of the assessment year 1942-43, that " If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are concerned with the first of these conditions only, that is, whether the notice had been issued within the time provided for it for no order of assessment was ever made. I ought to have said that the second proviso to sub-section (3) of section 34 as amended in 1953 enlarged in certain cases the time for issuing the notice and also for making the order of assessment. That is why the High Court had to deal with this proviso in this case. Now, section 34(1) has been amended on a number of occasions. A reference to some of the amendments would be useful. The first amendment to which I desire to draw attention is that made by the Income-tax (Amendment) Act, 1939. Under that amendment where the revenue authorities thought that the assessee had concealed his income or deliberately furnished inadequate particulars, they could issue the notice within eight years of the year in which the income is supposed to have escaped assessment and in other cases, within four years of that year. Sub-section (1) of section 34 was next amended by the Income-tax and Business Profits Tax (Amendment) Act, 1948. This Act was passed on September 8, 1948, but section 8 which substituted a new sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41. Therefore the provision in the 1956 amendment that no notice could issue for any year prior to the year ending on March 31, 1941, made no real alteration in the law. The other change was that in cases involving escaped income of Rs. 1,00,000 or more, the approval of the Board of Revenue to the issue of the notice was made necessary. This alteration in the law has no bearing on the question that I propose to discuss. Now the present is not a case where the revenue authorities contend that the income which escaped assessment was likely to be Rs. 1,00,000 or more. The notice, it may be remembered, was issued on April 30, 1954, in respect of the year 1942-43. It was a notice therefore which was invalid both under the 1948 and 1956 amendments of section 34(1). I will now refer to the Act of 1959 which I have earlier mentioned. That is the Income-tax (Amendment) Act, 1959. It was passed on March 12, 1959. Section 2 of this Act introduced a new sub-section in section 34, namely, sub-section (4). That sub-section was in these terms : " (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (a) of that section as so amended if it was a case where income had escaped assessment because of the failure of Purshottam Laxmidas to disclose fully its income for the year 1942-43. There can be no doubt on the facts of this case that Purshottam Laxmidas had failed to disclose fully its income for the year 1942-43. On the facts found, the income of the business of Vasantsen Dwarkadas was the income of Purshottam Laxmidas. Therefore, Purshottam Laxmidas should have disclosed in its return for 1942-43 the income made by it on the business done in the name of Vasantsen Dwarkadas. What happened was that the income of Vasantsen Dwarkadas for 1942-43 was shown as the income of its own as an independent firm and this was done by Vasantsen. Obviously, Vasantsen, his father Dwarkadas and Parmanand, the latter's partner in Purshottam Laxmidas, were all acting together. It would perhaps be more correct to say that things had been left to Dwarkadas and Vasantsen to manage. They had three-fourth interest in the business, while Parmanand had only one-fourth. Furthermore, Parmanand has taken no interest in the present proceedings. It would follow from all this that if Vasantsen Dwarkadas' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without any limitation could be brought to assessment. If that is the result of the words used in section 4, the words must have that effect. That would be no reason to say that section 4 applies only to notices issued after the 1956 Act came into force. No doubt the words " at any time " would comprehend a notice whenever issued before the commencement of 1959 Act. But the section protects such notice only against the invalidity caused by section 34(1) as it stood after the 1948 amendment, that is, against the invalidity caused by reason of the notice having been issued after the expiry of the time prescribed for it in the section as it then stood. Section 4 does not protect the notice from invalidity otherwise attaching to it. Now it will be remembered that the 1939 amendment of section 34 also prescribed a period of time for the issue of the notice. That prescription had to be obeyed whenever applicable. Section 4 provided for no immunity against a breach of that prescription. So, though section 4 of the 1959 Act freed a notice from the bar of limitation in respect of it imposed by the 1948 amendment, it did not altogether do away with all prescriptions of time. In spite of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese two cases differently. But in the latter kind of cases, there is no incongruity. It would indeed be absurd to hold that notices issued before 1956 in cases where the escaped income was Rs. 1,00,000 or over were excluded from section 4, for in such cases notices may be clearly issued after the 1959 Act under sub-section (4) of section 34 introduced by that Act. Sub-section (4) of section 34 was enacted by the Act of 1959 which also enacted section 4. If a year's escaped income could be brought to tax by a notice issued after the 1959 Act under subsection (4), it could not be that it was intended that the same income could not be brought to tax by a notice earlier issued and prima facie made valid by section 4. There would be no reason to make a distinction between the two cases. If a distinction could not be made between the two cases, and in one case notices issued before 1956 were covered by section 4, section 4 must apply to all notices issued before the 1956 amendment came into force. I may, before I conclude, as well say that for the reasons mentioned in the judgment in the case of Commissioner of Income-tax v. Sardar Lakhmir Singh (1) (C. As. Nos. 213-215 of 1958), that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Das and Kapur JJ. who have ordered the dismissal of all the appeals. We have the misfortune to differ from them as we are of opinion that these appeals must succeed. The point of law which arises in these appeals is common though it arises in different settings. We are concerned with section 34 of the Indian Income-tax Act as it stood between 1939 and 1959. This section has been the subject of repeated amendments in 1939, 1948, 1953, 1956 and 1959. It has, while enabling the bringing to tax income, profits and gains which escape assessment, always provided a period or periods of time for such action though after 1956 it has done away with the restriction of time in certain classes of cases. We are not concerned with the state of law prior to the Amending Act of 1939 or the amendments made later than the Act of 1959. During the intervening twenty years, the Indian Legislature and Parliament have not only amended section 34 but have passed at intervals validating laws and these cases involve the interpretation and application of the section as amended from time to time and the determination of the effect of the validating provisions with a view to seeing whether any impugned notice o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court by a petition under article 226 of the Constitution. The first contention was that the notice was out of time and the second was that the second proviso to section 34(3) was ultra vires article 14 of the Constitution in so far as it applied to persons other than the assessees. Both the points were accepted by the learned single judge who heard the petition. He, however, held that the firm " Purshottam Laxmidas " could not be called " a stranger " to the assessment proceedings. A Divisional Bench of the High Court upheld the conclusions of the learned single judge but held further that the said firm was " a stranger " to the proceedings before the Tribunal. The validity of the notice was sought to be established under section 34 as amended in 1948 and also by invoking section 31 of the Indian Income-tax (Amendment) Act, 1953, Act XXV of 1953. In this court by a supplemental statement the amendments made by the Finance Act of 1956 (18 of 1956) and by the Indian Incometax (Amendment) Act, 1959 (1 of 1959) were also brought to our notice. The amount involved in this case was Rs. 62,732. In the companion appeals, the full facts of which will be given in this judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gains chargeable to income-tax have escaped assessment in any year, or have been under-assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act, the Income-tax Officer may, in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case, at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains a notice and may proceed to assess or reassess such income, profits or gains and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section" It will be noticed that the Income-tax Officer was to proceed on definite information that there was an escapement of assessment before he took action. The section provided two periods in which action could be taken -(i) an eight year period and (ii) a four year period. The first was to apply to cases in which the Income-tax Officer had reason to believe (a) that the assessee had concealed the particulars o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case for the issue of such notice ;. . . . . Explanation.-Production before the Income-tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section. . . . . (3) No order of assessment under section 23 to which clause (c) of subsection (1) of section 28 applies or of assessment or reassessment in cases falling within clause (a) of sub-section (1) of this section shall be made after the expiry of eight years, and no order of assessment or reassessment in any other case shall be made after the expiry of four years, from the end of the year in which the income, profits or gains were first assessable : Provided that where a notice under sub-section (1) has been issued within the time therein limited, the assessment or reassessment to be made in pursuance of such notice may be made before the expiry of one year from the date of the service of the notice even if such period exceeds the period of eight years or four years, as the case may be : Provided further that nothing contained in this sub-section shall apply to a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd any notice issued in accordance with sub-section (1) or any assessment completed in pursuance of such notice within the time specified in sub-section (3), whether before or after the commencement of the Indian Income-tax (Amendment) Act, 1953, shall, notwithstanding any judgment or order of any court, Appellate Tribunal or Income-tax authority to the contrary, be deemed to have been validly issued or completed, as the case may be, and no such notice, assessment or reassessment shall be called in question on the ground merely that the provisions of section 34 did not apply or purport to apply in respect of an assessment or reassessment for any year prior to the 1st day of April, 1948. " The effect of these provisions will have to be seen in cases in which notices or assessments took place after April 1, 1952, particularly as a result of a direction such as is mentioned in the second proviso to subsection (3) of section 34 as amended by this Act. By the Finance Act, 1956, the section was again amended from April 1, 1956. The most significant changes were the omission of the time limit of eight years in sub-section (1) in respect of cases falling under clause (a) and the substi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 . . . . Explanation.-Production before the Income-tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income-tax Officer will not necessarily amount to disclosure within the meaning of this section. " That this section was to operate on back period does not admit of any doubt. No clearer language could be used for the purpose. The first proviso to sub-section (1) makes this abundantly clear by allowing notices to be issued " at any time " for any year later than the year ending on March 31, 1941, and then limiting action to eight years from the end of the year in cases coming in clause (a) involving l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by clause (a) of section 18 of the Finance Act, 1956 (18 of 1956), had expired. " These repeated amendments, in so far as relevant to the present cases, were in two directions. It will be remembered that by the amendment of 1939 two periods in which action could be taken were created : an eight year period applying to the concealment or deliberate furnishing of inaccurate particulars by the assessee and a four-year period applying to all other cases. The 1948 Amendment did not make any change in these two periods but stated that the eight year period applied also to a failure to furnish a return. All other provisions substantially remained the same. In a case in which the return was not made, it would have been a question which of the two periods in the section as amended in 1939 would have applied. The 1948 amendment said the action could be taken within eight years. Another question thus arose, namely, whether the four-year period as provided by the 1939 amendment which had expired applied or the eight-year period as provided by the 1948 amendment. The answer to this question depended on the further question whether the 1948 amendment was retrospective in its operation. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, in the absence of any provision restricting action by a time-limit, it can be enforced at any time. What the law does is to prevent harassment of assessees to the end of time by prescribing a limit of time for its own officers to take action. This limit of time is binding upon the officers, but the liability under the charging section can only be said to be unenforceable after the expiry of the period under the law as it stands. In other words, though the liability to pay tax remains it cannot be enforced by the officers administering the tax laws. If the disability is removed or according to a new law a new time-limit is created retrospectively, there is no reason why the liability should not be treated as still enforceable. The law does not deal with concluded claims or their revival but with the enforcement of a liability to the State which though existing remained to be enforced. This aspect was admirably summed up by Chakravartti C. J. (Sarkar J. concurring) in Income-tax Officer v. Calcutta Discount Co. Ltd. [1953] 23 I. T. R. 471, 482. as follows : " The plain effect of the substitution of the new section 34 with effect from the 30th March, 1948, is that from that date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Debi Dutta Moody's case A. I. R. 1959 Cal. 567 held that the 1956 amendment was not applicable to the case, Parliament passed the 1959 Act, nullifying that decision. By the same Act, Parliament gave power to issue a notice at any time in all these cases in which the eight-year period under the principal Act as it stood prior to the 1956 amendment, had expired. The words "at any time " mean what they say. There is no special meaning to be attributed to them. "Any time " thus meant action to be taken without any limit of time. A similar result was reached in certain cases under the 1953 amendment of the second proviso to sub-section (3) of section 34. It provided : nothing in the section limiting the time within which any action may be taken shall apply to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section already mentioned. This proviso was challenged under article 14 of the Constitution but that is a different matter. If the section is constitutionally enacted then it also means what it says. It is hardly possible to imagine clearer language than the one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 53, which made section 34 of the principal Act (which meant the Income-tax Act) as amended till that date including the amendments made by the Amending Act of 1953, in the second proviso to section 34(3), applicable to any assessment or reassessment for any year ending before April 1, 1948, where proceedings were commenced after September 8, 1948. It also saved all notices issued or assessments made, whether before or after the commencement of the Amending Act of 1953 (April 1, 1952) from the attack that the provisions of section 34 (as amended up to April 1, 1952) did not apply to an assessment or reassessment for any year prior to April 1, 1948. The effect of the amendment of the year 1953 on this case may be stated shortly thus : The assessment year being 1942-43, notice under section 34 had to issue in 1951 at the latest. After that year notice could not issue unless the limit of time was increased or removed. But the fact that the notice could not be issued after 1951 did not clothe the assessee with a right not to pay the tax if it became legally claimable again. If the law conferred a power on the Income-tax Officer to deal with such a case, the assessee would again be exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous Amending Acts were meant to operate on assessment years following the commencement of the Acts and not on back assessment years which continued to be governed by the old provisions. He also contended that even if an assessment year was within the time indicated in the new law, the new law could not take note of it, if under the old law that assessment year was out of time. He also contended that the validating sections operate on the assessment years between the Act as amended by the last preceding amendment and the validating section. Thus according to him section 4 of the Amending Act of 1959 operated to validate action taken after the 1956 amendment and sub-section (4) introduced in section 34 operated from the date of introduction. Mr. Palkhivala tried to support these contentions by a textual interpretation of the sections, the history of legislation on the subject of income, profits and gains escaping assessment, and the marginal notes to the sections. What he argued in relation to the 1959 Act was applied with suitable adaptations in the interpretation of the amendments of 1948, 1953 and 1956. To begin with we do not accept the contention of Mr. Palkhivala that section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing under the 1948 amendment. It is impossible to say, as contended, that the last words of section 4 of the Amending Act of 1959 limit retrospectivity only up to 1956, even though the words are " at any time before the commencement of this Act ". Further, by subsection (4) added to section 34, the Amending Act gave power to issue fresh notices which under the 1948 amendment would have been barred. The sub-section reads : " 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. " The last words definitely refer to an year which would be governed by the 1948 amendment. This is a law made in 1959 and it speaks of notices not complying with the time-limit as prescribed by the 1948 Act. To test whether the retrospectively goes back only to 1956 we can look at the matter this way. The time-limit in clause (a) of section 34(1) for all cases was eight years under the 1948 amendment. The years on which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the history of the law before the amendment. Even if the history be examined one thing is quite clear. It is that at intervals the Indian Legislature and Parliament have been at pains to save notices issued to, and assessments made on, defaulting taxpayers and have enabled fresh action to be taken and saved notices and assessments out of time. The provisions made in 1959 were not present before the High Court. The High Court decided this case in 1956 but we must take notice of them and give effect to section 4 thereof. In any case, the provisions of section 34, as amended by the Amending Act of 1953 read with section 31 of that Act, were sufficient to save notice issued against the firm of " Purshottam Laxmidas " unless the amendment to the second proviso to sub-section (3) of section 34 was unconstitutional. We are of opinion that the proviso was not unconstitutional and we shall give our reasons in a later part of this judgment. That is a matter which can be dealt with separately. In our judgment notice against the firm of " Purshottam Laxmidas " was validly issued under the amended second proviso to section 34(3) and its validity cannot be called in question in any court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t cannot be upheld. We would, therefore, allow the appeal. C. A. No. 585 of 1960. The assessee in this appeal (Jagannath Fakirchand) is the manager of a Hindu undivided family. He was assessed as karta for the assessment years 1944-45, 1945-46 and 1946-47. These assessments were completed in 1949 and 1950. Later those cases were remanded by the Appellate Assistant Commissioner. In respect of the assessment year 1945-46 a notice under section 34(1) was also issued but it was withdrawn. Some of these cases are still pending but we are not concerned with them. The assessee filed a suit against one Jagannath Ram Kishan for rendition of accounts as a munim. Jagannath Ram Kishan claimed to be a partner. The suit was dismissed as it was not proved that Jagannath Ramkishan was a munim. Jagannath Ram Kishan died and his widow, Kalavati, was substituted as legal representative. The Income-tax Officer issued notices under section 34(1) to Kalavati for the assessment years 1944-45, 1945-46 and 1946-47. In the appeals arising therefrom the Appellate Assistant Commissioner held that there was a partnership between Jagannath Ram Kishan and the assessee which lasted till August 26, 1945, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted fresh assessments. For the assessment year 1946-47 three returns were filed. Lakhmir Singh's return was voluntary and was filed on March 15, 1951. Another return was filed by Nechal Singh. A third return under protest was filed on March 9, 1951, by Nechal Singh on behalf of the Hindu undivided family, showing income " nil ". On March 15, 1951, the Hindu undivided family was assessed by the Income-tax Officer by grossing up the income as disclosed in the returns filed by Lakhmir Singh and Nechal Singh as " individuals ". The voluntary return of Lakhmir Singh as individual remained on file. There was an appeal by the Hindu undivided family and the assessment was set aside by the Appellate Assistant Commissioner on March 20, 1953, who directed assessment of Lakhmir Singh as an individual. This was done on November 17, 1953, on the voluntary return already filed by him. On appeal by Lakhmir Singh it was contended that the assessment was barred under the unamended second proviso to section 34(3) which provided a period of four years. The appeals were dismissed as it was held that there was no limitation for an assessment under section 34(3) in view of the new proviso. The High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of section 34(3) of the Income-tax Act. They also mentioned two sets of dates, namely, the dates of the returns (March 7, 1951, and January 14, 1952) and the date of the assessment (November 17, 1953). Now we know that before the first day of April, 1952, there was a four-year limit for assessments or reassessments under sub-section (3) of section 34 but thereafter that limit was removed by the proviso added by section 18 of the Amending Act of 1953 and by section 31 of the same Act assessments made before or after the commencement of the Amending Act of 1953 (April 1, 1952) were declared valid if proceedings commenced after September 8, 1948. The question as framed cannot be answered without reference to section 31 and even if parties did not bring it to the notice of the High Court it was the duty of the High Court to look into the validating provisions of section 31. If the High Court did not, we know of no rule or decision of this court which prevents us from looking into a validating provision which existed at the time of the High Court's decision and was overlooked by it and which by itself furnished the answer to the question propounded for the opinion of the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esquely described as " statutes of repose ". We were referred to many cases in which this general principle has been firmly established. We do not refer to these cases because in our opinion it is somewhat inapt to describe section 34 with its many amendments and validating sections as a " section of repose ". Under that section there is no repose till the tax is paid or the tax cannot be collected. What the law does by prescribing certain periods of time for action is to create a bar against its own officers administering the law. It tries to trim between recovery of tax and the possibility of harassment to an innocent person and fixes a duration for action from these two points of view. These periods are occasionally readjusted to cover some cases which would otherwise be left out and hence these amendments. An assessment can be said to become final and conclusive if no action can touch it but where the language of the statute clearly reopens closed transactions there can be no finality. We would not raise these prescribed periods to the level of those periods of limitation which confer not only immunity but also give titles by the passage of time. The attack on the second prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. For such persons there is a smaller period for assessing the escaped income. But those who are guilty of an omission or failure or who give incorrect particulars or conceal the particulars of their income must stand exposed to action for a longer time. The difference between these two cases is understandable. Those who are deliberately in default generally cover up their action and it takes longer to detect them and open proceedings against them. They cannot be allowed to say that theirs is a case on par with a man who acts innocently. The section also draws a distinction between two more classes-one above rupees one lakh and the other below it. In the former there is no limit of time except that the Income-tax Officer cannot go beyond the year ending on the 31st day of March, 1941, and that he must take the sanction of the Board of Revenue. In the other cases the Income-tax Officer can take action within eight years and must obtain the sanction of his Commissioner. These two distinctions have never been challenged as discriminatory. What is challenged is the provision that if in the assessment proceedings against A there is a finding or direction against B, proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Travancore Income-tax Act (XXIII of 1121) which corresponded to section 34(1) of the Income-tax Act as it stood before the amendment of 1948, and by section 5(1) of the Travancore Taxation on Income (Investigation Commission) Act (XIV of 1124), were held to be different classes and not falling within the same category on the ground that action against the former class could be taken on the basis of definite information coming into the possession of the Incometax Officer that income had escaped, while, in the case of the latter, the Government could refer the cases to the Commission on finding prima facie reason to believe that they had evaded payment of tax to a substantial amount. The persons who come under section 34(1)(a) of the Income-tax Act after the amendment of 1948 are those in respect of whose income the Income-tax Officer has reason to believe that due to certain conduct on their part their income has escaped assessment, while action can be taken against the persons contemplated by the second proviso to sub-section (3) against those persons alone with respect to whose escaped income some authority had given a finding or directions. These latter persons would therefore c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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