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TMI Blog1971 (4) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... er the present proceedings initiated under section 34(1)(a) of the Act against the assessees are valid in law ? " The relevant facts may now be stated. For the assessment year 1948-49 (accounting year ending November 12, 1947) an assessment was made on Abdullabhai Fazalali in the status of an individual on September 30, 1948, on a total income of Rs. 9,102. The sources' of income considered in the assessment were share income from the firm of S. A. Bhagat and Co. and property income. Subsequently, it came to light that Abdullabhai Fazalali had deposited Rs. 40,000 in cash on July 28, 1947, in the branch of the Bank of India Ltd. at Palanpur, now in North Gujarat. Abdullabhai Fazalali died on August 1, 1954. Notice under section 34(1)(a) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Bank of India in Palanpur came from undisclosed sources of income of the assessee in the then taxable territories and assessed it accordingly. We may mention that no reference was made to the Income-tax (Amendment) Act, 1959 (1 of 1959), by him. The assessee appealed to the Appellate Assistant Commissioner and, inter alia, contended that the assessment was time-barred. The Appellate Assistant Commissioner held that the Appellate Assistant Commissioner's order passed in respect of the original proceedings under section 34 did not contain any finding or direction within the meaning of section 34(3) and accordingly the assessment order dated December 14, 1960, was vitiated. The revenue then filed an appeal before the Income-tax Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation. The High Court held that section 4 of Act 1 of 1959 saved the notice under section 34(1)(a), issued on July 9, 1958, from the bar of limitation and accordingly answered the question against the assessee. The short question before us is whether section 4 of the Indian Income-tax (Amendment) Act, 1959, saves the fresh notice from the bar of limitation. But in order to fully deal with the point it is necessary to set out the relevant portion of section 34(1)(a) as it existed at various times. The relevant portion of section 34(1), as amended in 1948, reads as follows : " 34. (1) (a) If 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 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, 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 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... " Section 34(4) of the Act as inserted by the Indian Income-tax (Amendment) Act, 1959, reads as follows : " (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 specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the revenue, that the first sentence of section 4 includes all notices issued under clause (a) of sub-section (1) of section 34 of the Act at any time before the commencement of the 1959 Act and the, notice dated July 9, 1958, falls within this description. But, in our view, the section does not save such notices from attack on all grounds whatsoever ; the only ground which cannot be taken to attack the validity of the notice is that at the time the notice was issued the period prescribed under section 34(1)(a), as in force before its amendment by section 18 of the Finance Act, 1956, had expired. Is the assessee then raising this ground ? It seems to us that he is not. What he is saying is that a notice under section 34(1)(a), as amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld also be subject to the prescription as to time provided by that amendment. (emphasis supplied)' Then it was said that if section 4 applied to a notice issued more than eight years after the year in which the income escaped assessment but before the 1956 amendment came into force in a case where the escaped income of the year was less than Rs. 1,00,000, the position would be curious. A notice issued in a similar case after the 1956 amendment would be bad under section 34 as it then stood and section 4 could not save it for it saved notices only from the effect of the 1948 amendment. The position then would be that in a case involving the same amount of escaped income for the same year, a notice issued before the 1956 amendment and inval ..... X X X X Extracts X X X X X X X X Extracts X X X X
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