TMI Blog1961 (3) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... late Assistant Commissioner. That authority, while sustaining the view of the Income-tax Officer that the alleged borrowings represented by the cash credits were income from undisclosed sources, held that such income must have been received during the year previous to the year of account. The Appellate Assistant Commissioner stated : The credits appear partly on November 23, 1943, and the rest on December 21, 1943. The amounts having manifested themselves in the financial year 1943-44 can be included only in the assessment year 1944-45 and not the assessment year 1945-46. The appellant's preliminary objection is well founded and the sum of ₹ 56,234 cannot be included in the assessment year 1945-46. The Income-tax Officer is directed to consider the credits for the assessment year 1944-45 after initiating appropriate proceedings . Thereupon, the Income-tax Officer, Salem, initiated proceedings against the petitioner under section 34(1)(a) of the Act in respect of the assessment for the year 1944-45 and issued a notice on January 28, 1958, calling upon the petitioner to submit a return of income for the year ending March 31, 1944. The facts in W.P. No. 1007 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken or any order, 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, or section 66 or section 66A . The contention urged on behalf of the assessees is that the terms of the proviso, as re-enacted above, have the effect of placing no time-limit to re-open assessments coming under the terms of that proviso and would not apply to the present cases, which would be governed only by the terms of the proviso which was in force till April 1, 1952. It is their further case that under the terms of the previous proviso what can be reopened was only in pursuance of an order under section 31, that is, what would relate to the particular year of assessment withwhich the appellate authority was concerned. It is urged that as the period of four years prescribed under section 34(1)(b) had expired before the Act 25 of 1953 came into force, the right to revive under section 34(1)(b) should be held to be barred. On the other hand, it is contended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expression year had not been further denned by the section, it was clear from the context that the year referred to was the assessment year and had no reference to the accounting year, which has been referred to in the Act as the previous year. We respectfully agree with that view. It follows that the jurisdiction of the Income-tax Officer to initiate proceedings under section 34(1)(a) in respect of the assessment year 1944-45 would extend up to March 31, 1953. The Act 25 of 1953 came into force as and from April 1, 1952. It is one of the settled rules of construction of statutes that no person has a vested right in procedure. Rules of limitation being rules of procedure, proceedings initiated at a particular time would be governed in the manner prescribed for the time being. Therefore, it is the re-enacted proviso that would apply to the instant case. Reliance is placed on the decision of a Bench of this court, to which one of us was a party, in United Nilgiris Services Ltd. v. Commissioner of Income-tax [1960] 40 ITR 369 , wherein it was held that the initiation of proceedings for re-opening the assessment after the expiry of the period limited by section 34 would be w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner was so to say only a negative finding, that is, that the income was not received during the year with which the appeal was concerned, there being no positive decision as to the year in which it was received. Learned counsel relies on the decision in Indurkar v. Pravinchandra Hemchand [1958] 34 ITR 397. The Appellate Assistant Commissioner in that case stated that the assessee could be assessed, if at all, for the tax year 1944-45 for which the Income-tax Officer might take necessary steps, if so advised. The learned judges of the Bombay High Court held that the decision of the Appellate Assistant Commissioner only amounted to this, namely, that the amounts did not form part of the income for the assessment year 1945-46 with which he was concerned and not that they were income for the earlier year ; and that the suggestion contained in the order that the assessee could be assessed, if at all, for the year 1944-45, was neither a finding nor a direction which would support a notice under section 34 of the Act. With great respect to the learned judges we are unable to agree with that conclusion. The proviso to section 34(3) enables the initiation of proceedings under section 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner to confirm, reduce, enhance or annul the assessment or set aside the assessment and direct the Income-tax Officer to make a fresh assessment after making such further enquiry as may be necessary. This provision is relied on as indicating the scope of the powers of the appellate authority and it is contended that as section 31(3) only refers to the assessment for the particular year, which was the subject-matter of the appeal, the appellate authority would have no jurisdiction to give a finding in regard to a receipt during any other year. The view taken by our court is, however, to the opposite effect. In Simrathmull v. Additional Income-tax Officer [1959] 36 ITR 41 Balakrishna Ayyar J., delivering the judgment of the Bench, observed : Mr. Subbaraya Aiyar then argued that even if it be right to say that the Assistant Commissioner has given a finding in respect of this sum of ₹ 20,000 that finding can be used only in respect of the assessment year in which he gave his decision. To support this argument no authority was cited and it appears to us to be completely untenable. When an assessment is made and either the department or the assessee appeals, the whole matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellate authority, namely, that the income was not received during the year in which it formed the subject-matter of the appeal. The term finding in the proviso to section 34(3) must have a wider significance having regard to its purpose ; the finding may be one which is necessary for the disposal of the appeal or one which is incidental to it. Therefore, the proviso would apply to cases where the appellate or revisional authority finds that the income was received in any particular year. As we held earlier, it will also apply to a case where it is held that the income was not received during the year with which the authority was concerned. In such a case it would be for the Income-tax Officer to investigate afresh as to in which year the income was received. In either case, the action taken by the Income-tax Officer under section 34 would be the result of or the logical consequence of the finding arrived at for the purpose of the disposal of the appeal by the appellate authority. We are, therefore, of opinion that the Income-tax Officer acted within his jurisdiction in initiating proceedings under section 34 in the instant cases. The writ petitions fail and are dismisse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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