TMI Blog1958 (10) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... rm carrying on business in Rajasthan, but which the Income-tax Officer held was income from undisclosed sources. The petitioner appealed to the Appellate Assistant Commissioner, Coimbatore, and raised various contentions. One point that he took was that the Income-tax Officer had not judicially considered the evidence which he had tendered to show that the sum of ₹ 31,000 really represented a loan that he had taken from Messrs. Mangilal Inderchand. Alternatively he contended that in any event the entire sum of ₹ 31,000 would not come in for assessment for the assessment year 1946-47 as his previous year relevant for the assessment year 1946-47 ended on 5th November, 1945, and, it has been held that for assessing the income from other sources the previous year to be adopted is the financial year unless the assessee has any other previous year in respect of the same. The Appellate Assistant Commissioner did not accept the contention of the petitioner that the amount represented loans he had taken from Messrs. Mangilal Inderchand. He, however, found that a sum of ₹ 20,000 out of ₹ 31,000 came in as credits on 25th January, 1945, and 8th March, 1945, and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer, Ootacamund, from proceeding further with the matter. The first contention which Mr. Subbaraya Aiyar, the learned advocate for the petitioner, put forward was that the proceedings which the Additional Income-tax Officer, Ootacamund, has now initiated are barred by limitation. His argument may be put this way. If the Income-tax Officer proceeded on the basis of section 34 (i)( b) of the Act, he should have issued a notice within four years from the end of the assessment year, that is to say, on or before March 31, 1950. The second proviso to sub-section (3) of section 34 was amended by Central Act XXV of 1953. Sub-section (2) of section 1 of that Act directed, Subject to any special provision made in this behalf in this Act, it shall be deemed to have come into force on the 1st day of April, 1952. The result of it was that the second proviso to sub section (3) of section 34 of the Act took effect only on 1st April, 1952. But before that date action under section 34(i)( b) had become wholly barred, and if proceedings have once become barred, any subsequent amendments made in the Act cannot be called in aid to reopen the assessment. This was decided in Prashar v. Vasantsen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority contained in an order mentioned in the second proviso to section 34(3) of the Act. Even though there may be a finding or direction in an order of an Income-tax authority, no notice of re-assessment can be issued against an assessee whose escaped income is less than one lakh of rupees after the expiry of eight years. These contentions of Mr. Subbaraya Aiyar call for a careful examination of some of the provisions of section 34 of the Act. That section is intended to deal with cases in which income has escaped assessment wholly or in part. Such cases are placed in two broad categories. Where income has escaped assessment wholly or in part, by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 or to disclose fully and truly all material facts necessary for his assessment for that year, it would fall under section 34(i)( a). That is one category. Where income has escaped assessment wholly or in part owing to other causes, it would fall under section 34(i)( b). That is the second category. In respect of cases falling under section 34(i)( b), the Income-tax Officer may commence proceedings for re-assessment at any tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... states nothing contained in this section and not nothing contained in this sub-section . Therefore, this proviso would apply to sub-section (1) also. The next thing to be noticed about this proviso is that it applies only to the time prescribed elsewhere in the section and to nothing else. The effect of this proviso therefore is to abrogate or do away with the period of limitation prescribed in the section in those cases where the Income-tax Officer takes action in consequence of a finding or direction given in an order made under sections 31, 33, 33A, 33B, 66 or 66A of the Act. The position, therefore, is that when action is taken in pursuance of a finding or direction given by one of the various authorities indicated in that proviso, the Income-tax Officer can take action at any time. This, of course, is subject to the general rule that he cannot take proceedings where before the proviso became law the remedy of the Income-tax Department had already become barred. The decision in Prashar v. Vasantsen Dwarkadas [1956] 29 ITR 857, which Mr. Subbaraya Aiyar relied on does not apply here because in that case the remedy of the Department had become barred before the second pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner therein said was they could be assessed, if at all, for the tax year 1944-45 for which the Income-tax Officer may take necessary steps, ifso advised. He gave no direction and recorded no finding. The Appellate Assistant Commissioner in the present case, however, has definitely recorded a finding that the sum of ₹ 31,000, represented income from undisclosed sources. He then dealt with the argument of Mr. Sethuraman that the amount of ₹ 20,000 would properly fall to be assessed in the assessment year 1945-46. He accepted that contention following a judgment of the Patna High Court. To our minds this appear to be a finding clear enough to fall within the second proviso to section 34(3). Mr. Subbaraya Aiyar next said that the finding was not called for, and referred to Indira Balakrishna v. Commissioner of Income-tax [1956] 3 ITR 320, where the learned Judges commented on the inadvisability of giving findings and expressing opinions on matters that did not really arise. But the present is not such a case. As already stated, Mr. Sethuraman, on behalf of the petitioner did raise the points on which the Assistant Commissioner has given his findings. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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