TMI Blog1963 (7) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 34 in respect of these years by issue of notice dated May 30, 1957, and served on June 3, 1957. These notices were accompanied by forms of return. In the returns made in response to the notices, the assessee claimed losses of ₹ 17,266, ₹ 36,012 and ₹ 43,702 for the assessment years 1953-54, 1954-55 and 1955-56 respectively. The Income-tax Officer on receipt of the said returns, issued notices under section 23(2) of the Income- tax Act to the assessee for the three assessment years and examined the evidence adduced by the assessee in support of the returns filed. The Income-tax Officer by his orders dated August 10, 1959, August 8, 1959, August 8, 1959, passed respectively for the assessment years 1953-54, 1954-55 and 1955-56 under section 23(3) read with section 34 of the Income-tax Act held that the losses returned were fully substantiated and held further that the assessee was not entitled to have this loss assessed for purposes of carry-forward and set-off against future assessments, observing that section 34 cannot be brought into play in this case; and that if the assessee really intended that his loss should be assessed and carried forward he should h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lars as may be required by the notice) his total income and total world income during that year: Provided that the Income-tax Officer may in his discretion extend the date for the delivery of the return in the case of any person or class of persons. (2) In the case of any person whose total income is, in the Income-tax Officer's opinion, of such an amount as to render such person liable to income-tax, the Income-tax Officer may serve a notice upon him requiring him to furnish, within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income and total world income during the previous year: Provided that the Income-tax Officer may in his discretion extend the date for the delivery of the return. (2A) If any person, who has not been served with a notice under sub- section (2) has sustained a loss of profits or gains in any year under the head 'profits and gains of business, profession or vocation', and such loss or any part thereof would ordinarily have been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning is ours)(Here printed in italics). The only other portion of section 34 with which we are concerned is sub-section (2) of section 34 which reads: 34. (2) Where an assessment is reopened in circumstances falling under clause (b) of sub-section (1) the assessee may, if he has not impugned any part of the original assessment order for that year either under section 30 or under section 33A, claim that the proceedings under sub-section (1) of this section shall be dropped on his showing that he had been assessed on an amount or to a sum not lower than what he would be rightly liable for even if the items alleged to have escaped assessment had been taken into account, or the assessment or computation had been properly made: Provided that in so doing he shall not be entitled to reopen matters concluded by an order under section 33B or section 35, or by a decision under section 66 or section 66A. This clause was introduced by means of an amendment to the Act in the year 1948. Now we may proceed to notice the contentions advanced on behalf of the assessee. It was urged on his behalf that every notice under section 34(1) in law is also a notice under section 22(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vise the original assessment except to the limited extent to which such power is recognised under section 34. In P.L.M.P.L. Palaniappa Chettiar v. Commissioner of Income-tax [1929] 4 I.T.C. 196 a Special Bench of the Madras High Court laid down that under section 34 of the Act , an Income-tax Officer is not bound to determine afresh the correct taxable income of the assessee. In the course of the judgment, Kumaraswami Sastri J. who spoke for the Special Bench observed: We do not think that section 34 requires the whole thing to be reopened and every item under which income-tax is charged to be considered afresh and a fresh assessment levied. In one sense, of course, he must fix the taxable income to enable him to fix the rate, but he is not bound to reopen the items which are not in question or which have become final and start proceedings again. We think he is only bound to confine himself to the particular item which has been omitted. In In re Kashi Nath Bagla A.I.R. 1932 All 1; 4 I.T.C. 472 a Bench of the Allahabad High Court laid down that the words in the latter part of section 34 'assess or reassess such income, profits or gains' must be taken to refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income-tax Officer may issue a fresh notice under section 22(2) and may proceed to reassess such assessee afresh, the language employed would have been noticeably different from that which we find in the present section. When section 34(1) says that 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 only creates a legal fiction. As laid down by the Supreme Court in Bengal Immunity Co. Ltd. v. State of Bihar [1955] 6 S.T.C. 446 (S.C.) the legal fiction is to be limited to the purpose for which it was created and should not be extended beyond that legitimate field. Hence in a proceeding under section 34, assistance from other provision in the Act can be taken only to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance , mentioned in section 34. Any relief under section 24(2)(ii) can only be given in the course of the assessment of the total income of the assessee as is made clear by that provision itself and not in a proceeding under section 34. In this connection we may refer to the decision of the Madras High Court in Anglo-French Textile Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled upon to consider the scope of the enquiry under section 34. The court was merely considering whether the subsequent assessment made in that case was valid under section 34(1). The decision in question does not bear on the point under consideration. Similarly, the decision of the Patna High Court in Bhimraj Panna Lal v. Commissioner of Income-tax [1957] 32 I.T.R. 289 ; A.I.R. 1957 Pat. 638 has no relevancy on the point under consideration. In that case it was laid down that the procedure under notice referred to in section 34 is to be, as far as may be, the same as would be applied in case of an original notice under sub-section (2) of section 22. The failure to make any return at all as required by section 22(2), or to produce the account books, etc., called for as required by section 22(4) would have to be dealt with under sub-section (4) of section 23 and, therefore, other provisions of sub-section (4) of section 23 will apply to the proceeding under section 34 of the Act . Similarly we are of the opinion that the decision of the Assam High Court in Tansukhrai Bodulal v. Income-tax Officer, Nowgong [1962] 46 I.T.R. 325, does not bear on the point under consideration. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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