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TMI Blog1959 (6) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... rship in the name of Messrs. Narayandas Kedarnath. Amongst these sixteen persons there were three sets of persons who constituted Hindu untied families. Narayandas Pokermal and his three sons--Govindram, Bhagwandas and Vasudeo-constituted one Hindu united family; Meghraj Pokermal and his three sons--Onkarmal, Banarasilal and Beniprasad--constituted another Hindu united family; and Hanumandas Sewakram and his four sons-Kedarnath, Banarasidas, Durgaprasad and Harkisondas--constituted the third Hindu united family. Beside these 13 persons there were three strangers who were partners in the firm. For the assessment year 1944-45, the members of the original three Hindu united families made returns for income-tax in their status as individuals returning their respective incomes in the firm. The Income-tax Officer following his orders in the previous year of assessment ordered that the firm of Narayandas Kedarnath be registered under section 26A of the Income-tax Act and the total income be assessed in the hands of only six assessees, viz., the three outsiders and the three Hindu united families of Narayandas Pokermal, Meghraj Pokermal and Hanumandas Sewakram and he closed the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer was substantially confirmed. The Tribunal held that the notices issued by the Income-tax Officer in April, 1954, were issued under section 34(1)(a) read with section 34(3) as amended by section 18 of the Income-tax (Amendment) Act, 1953, and that the Act having retrospective operation as from the 1st of April, 1952, the notices issued on the assessees were within the period of eight years prescribed by section 34(1)(a). They also held that the case of the other 7 members who were appellants before them fell within section 34(1) read with section 34(3) of the Income-tax Act as amended. Accordingly, the Tribunal confirmed the order passed by the Revenue Authorities. On applications made by these 11 assesses, the Tribunal has referred the following question: "Whether, having regard to the direction given by the Appellate Assistant Commissioner in his order dated March 9, 1954, in the case of the appropriate Hindu undivided families and having regard to the second proviso to section 34(3) as amended by section 18 of the Indian Income-tax (Amendment) Act, 1953, the reassessment made by the Income-tax Officer on January 31, 1955, in the case of any one or more of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lakh or more. Counsel for the assessees contends that having regard to the circumstances the conditions prescribed for the issue of for notice under section 34(1)(a) were absent and the notices issued against the assesses for reassessment were invalid. It is submitted that all the assessees had made their returns containing full and true disclosure of all the material facts necessary for assessment of the income in the year 1944-45, and, therefore, notices under section 34(1)(a) could not be issued for reopening the assessment and that the Tribunal was in error in holding that, because in the year 1954 some of the assessees had submitted their fresh returns in their status as individuals, i.e., as separated members of the erstwhile Hindu united families, whereas in the earlier returns they had made their returns as individuals, the assessees had omitted or failed to disclose fully and truly all material facts necessary for the assessment. It is not disputed that the assessees have in the fresh returns made by them made claims which were inconsistent with the claims made by them in the earlier returns. In the original returns made by the eleven assessees they had claimed that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actment of Act 1 of 1959, be issued at any time notwithstanding that the period of eight years prescribed by sub-section (1) clause (a) before it was amended by the Act of 1956 had expired. Presumably this provision was enacted with a view to supersede a judgment of the Calcutta High Court in which it was held that to a notice of assessment or reassessment issued under section 34(1)(a) as amended by the Finance Act of 1956, when the period of eight years after the last day of the year of assessment to which the notice relates, had expired before the Finance Act of 1956 was enacted, the plea of bar of limitation could effectively be set up. By section 4 of Act 1 of 1959 it was provided: "No notice issued under clause (a) of sub-section (1) of section 34 of the principal Act at any time before the commencement of this act and no assessment, re-assessment or settlement made or other proceeding taken in consequence of such notice shall be called in question in any court, tribunal or other authority merely on the ground that at the time the notice was issued or at the time the assessment or re-assessment was made the time within which such notice should have been issued or the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ardinal rule of interpretation of a statute is to read the words used by the Legislature in their ordinary natural and grammatical meaning; and it is only when context of the words used or the scheme of the statue justifies that course, the court may be justified in cutting sown the meaning of the words of the statute. In interpreting the words used in a statute, especially when the words used are plain, the statement of objects and reason cannot be pressed into service. In construing a statute the court may ascertain the legislative history, may also ascertain what was the understanding of the law prior to the amendment and may even ascertain what the defect sough to be remedied by exacting the amending Act was. But the courts are not entitled to interpret the Act by assuming that the Legislature has effectuated the purpose which it had in mind as set out in the objects and reasons and has only effectuated that purpose and no other purpose. The meaning of section 2 of Act 1 of 1959 which incorporated sub-section (4) in section 34 of the Income-tax Act is fairly plain. A notice for assessment or re-assessment under sub-section (1), clause (a), of section 34 after amendment by act I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment could be made within one year from the date of service. By the amendment made by the Finance Act of 1956, these periods of limitation prescribed by section 34 are abrogated, and section 4 of Act 1 of 1959 seeks to protect from challenge notices of assessment or reassessment which have been issued and assessments and re-assessments made in pursuance of such notice after the period prescribed by section 34 before it was amended by the Finance Act of 1956. The notice which is protected must accordingly be a notice which when issued was barred under section 34 before it was amended. Therefore, there is the clearest indication in the framework of section 4 which supports the view that the notices of assessment or re-assessment to which the bar of limitation prescribed by the unamended section 34 cannot be set up may be notices issued before the 1st of April, 1956. But counsel for the assessees contends that this interpretation of section 4 is likely to render certain important provisions contained in section 34 in effective, and our attention is invited to the proviso incorporated in sub- section (1) to that section by the Finance Act of 1956. Undoubtedly even after the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otices where the escaped income is Rs. one lakh or more and other notices. If the escaped income is Rs. one lakh or more the notice under the amended provision may be issued at any time, but in other cases the notice may be issued only within eight years from the year of assessment to which the notice relates. But the restrictions imposed by the proviso have no retrospective operation. A notice of assessment or re-assessment issued after the 1st April, 1956, will of necessity be subject to the restrictions contained in the proviso to clause (i). Such a notice may not by virtue of section 4 of Act 1 of 1959 be called in question merely on the plea that it was not issued within the time prescribed by section 34 before it was amended by the Finance Act of 1956; but the exercise of the jurisdiction of the Income-tax Officer being conditioned by the proviso, the plea of non-fulfillment of the conditions may certainly be set up in defence. The proviso not being retrospective, a notice of assessment or reassessment issued before 1st of April, 1956, but not within eight years from the assessment year to which it relates, could successfully be challenged on the ground of limitation before A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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