TMI Blog1951 (2) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... e discovered that your income assessable to income-tax for the year ending 31st March, 1943, has (a) escaped assessment, I therefore propose to assess the said income that has escaped assessment. I hereby require you to deliver to me not later than 28th August, 1944, or within 30 days of the receipt of this notice, a return in the attached form of your total income and total world income assessable for the said year ending 31st March, 1943. The final report was submitted to the Commissioner by the Income-tax Officer on 31st July, 1944. On 15th September, 1944, the Commissioner passed final order to the effect that there was deficiency of profits and the applicant was not liable to excess profits tax for the years in question. After the receipt of Section 34 notice the applicant filed the requisite returns and his representative stated that the applicant had no objection to the total income being increased by ₹ 29,842 for 1942-43 and by ₹ 19,682 for 1941-42. The Income-tax Officer accordingly made assessments on these amounts. Against the order of the Income-tax Officer the applicant preferred appeals to the Appellate Assistant Commissioner but was unsuccessful. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case the Income-tax Officer could not have: discovered on 27th July, 1944, that income of the applicant has' escaped assessment for the years in question. In my opinion the argument addressed by the learned counsel is untenable and cannot succeed; for it is not questioned in the present case that the applicant had filed a petition on 10th April, 1944, before the Commissioner of Income-tax for recomputation of his liability under the Excess Profits Tax Act. The Commissioner has thereupon asked for a report from the Income-tax Officer who was also in charge of collection and assessment of excess profits tax. The officer accordingly recomputed the tax liability of the applicant and communicated the result to the applicant on 18th July, 1944. The applicant made his suggestions to the Income-tax Officer on 24th July, 1944. Thereafter the Income-tax Officer issued a notice under Section 34 of the Act and at the same time submitted his final report about the recomputation of the excess profits to the Commissioner of Income-tax. It is true that the final order of the Commissioner was made on 15th September, 1944. But it is impossible to accept the argument of the learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 were started on 7th May, 1938, on the ground that the income of the Madras branch of the assessee had escaped assessment and these proceedings terminated on 30th November, 1938. On 30th August, 1938, assesee was assessed for the year 1938-39. On 29th July, 1939, a notice under Section 34 was issued to him stating that his income had partially escaped assessment and the final assessment was made on 10th August, 1943. The assessee contended that as the only reason for the Income-tax Officer to start proceedings under Section 34 in respect of the year 1938-39 was that the income of the Madras branch had not been assessed and as this fact was present in the mind of the Income-tax Officer on 30th August, 1938, when the assessment for 1938-39 became final, the notice under Section 34 issued on 29th July, 1939, was not valid in law. Upon the facts of that case it was held by the High Court that the notice under Section 34 of the Indian Income-tax Act issued on 20th July, 1939, was not tenable in law. It should be noticed, that the Appellate Tribunal had found that at the time the Income-tax Officer started proceeding under Section 34 he had in mind the existence of the Madras branch o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what persons in respect of what property are liable. Next, there is the assessment. Liability does not depend on assessment. That, ex hypothesi, has already been fixed. But assessment particularises the exact sum which a person liable has to pay. Lastly, come the methods of recovery, if the person taxed does not voluntarily pay. In W.H. Cocker line and Co. v. Commissioners of Inland Revenue [1930] 16 Tax Cas. 1, Lord Hanworth after quotino the above passage from Lord Dunedin's judgment states : Lord Dunedin, speaking, of course, with accuracy as to these taxes, was not unmindful of the fact that it is the duty of the subject to whom a notice is given to render a return in order to enable the Crown to make an assessment upon him; but the charge is made, in consequence of the Act, upon the subject; the assessment is only for the purpose of quantifying it. In a passage in Lord Justice Sargant's judgment in the case of Williams he says this: 'I cannot see that the non-assessment prevents the incidence of the liability though the amount of the deduction is not ascertained until assessment. The liability is imposed by the charging section, namely Section 38'-which is E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material time the Finance Act of 1940 was not operative in the area in question the Governor by his notification could not give jurisdiction to the Income-tax Officer in respect of his ultra vires notices. The contention was rejected by the Federal Court on the ground that it was based on a misunderstanding of the jurisdiction of the Income-tax Officer and the operation of the Income-tax Act. At page 307 Kania, J., (as he then was) observed : This contention is founded on a misunderstanding of the jurisdiction of the Income-tax Officer and the operation of the Income-tax Act. The income-tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice is not, however, the foundation of the jurisdiction of the Income-tax Officer to make the assessment or of the liability of the assessees to pay the tax. It may be urged that the issue and service of a notice under Section 22(1) or (2) may affect the liability under the penal clauses which provide for failure to act as required by the notice. The jurisdiction to assess and the liability to pay the tax, however, are not conditional on the validity of the notice. For the reasons stated I am of opi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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