TMI Blog1994 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... er of assessment, exhibit P-3, made by the Inspecting Assistant Commissioner of Agricultural Income-tax, Kollam, is dated April 23, 1986, and determined the accumulated loss to be carried forward to the next year at Rs.4,44,200 after setting off the loss carried forward from the previous year, namely, Rs. 7,77,200, against the income of Rs. 3,33,000 for the current year. The order was rectified on June 5, 1986, by another order, exhibit P-4, refixing the loss to be carried forward at Rs. 2,28,060. The order, exhibit P-4, was not challenged and became final. Long thereafter, the petitioner was served with a notice, exhibit P-4, dated March 24, 1992, from the Inspecting Assistant Commissioner (Agricultural Income-tax and Sales tax), Kottaya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent, exhibit P-7, are incompetent because of the repeal and the re-enactment in the meanwhile. The first point raised is one of jurisdiction. According to the petitioner, its files had been transferred from Kollam to the Inspecting Assistant Commissioner at Ernakulam (the Eenakulam officer) and, therefore, the Kottayam officer had no jurisdiction to take any proceedings for reassessment as he had no seisin of the case. The petitioner refers to some letters, exhibits P-8 to P-10, received by it from the Ernakulam officer in support of this plea. But it has been pointed out in the counter affidavit of the respondents that the Kottayam officer was having jurisdiction in the matter since October 1, 1991, by virtue of the proceedings of the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the period to five years unless the Commissioner of Agricultural Income-tax is satisfied on the reasons recorded by the Agricultural Income-tax Officer that it is a fit case for issue of notice to reopen the assessment. According to the petitioner, the Commissioner has not recorded his satisfaction in this case and, therefore, going even by the terms of section 41 of the 1991 Act, the reassessment is barred. The proceedings have been initiated by the notice, exhibit P-5, issued under section 35 of the 1950 Act. Though the petitioner has a contention that section 35 is inapplicable after the repeal of the 1950 Act and that the proceedings could, if at all, be only under section 41 of the 1991 Act, I am unable to uphold it in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year". Evidently the expression "financial year" in section 41 means only the assessment year as the tax is levied in each assessment year and the escape from assessment could only be with reference to that year. The period of five years is thus liable to be reckoned under either of the enactments only from the end of the assessment year concerned, which in this case is 1986-87, i.e., the year ending March 31, 1987. The period of five years thus expired only on March 31, 1992, and therefore, the order, exhibit P-7, passed on that day is within time. This contention is, therefore, overruled. The plea which is substantial and which has got to be accepted is the next one raised by the petitioner, namely, that the notice, exhibit P- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of decisions. In Y. Narayana Chetty v. ITO [1959] 35 ITR 388, the Supreme Court held that the service of a valid notice as required by the section constitutes the very foundation of the jurisdiction of the Income-tax Officer to reopen an assessment and, therefore, failure to serve such notice or any invalidity in the notice will render the proceedings illegal and void. Gajendragadkar J., observed : "The notice prescribed by section 34 cannot be regarded as a mere procedural requirement ; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid then the validity of the proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 22(2), it must at the same time permit the assessee to comply with that requirement within a period which is not less than 30 days. If the period is shorter than 30 days, then the requirement is not the requirement as set out in section 22(2). In this case, the notice gave only six days to the assessee to make a return under section 34. Therefore the requirement was different from the requirement under section 22(2) and the notice was clearly bad." In Commissioner of Agrl. I. T. v. Amalgamated Coffee Estates Ltd. [1962] 45 ITR 348 (Ker), a notice under section 35 of the Madras Plantations Agricultural Income-tax Act, 1955, which did not give thirty days' time to give particulars was held defective and the reassessment made pursuant th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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