TMI Blog1958 (3) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 954. The contention of the assessees was that the notice was beyond time and, therefore, the assessment could not be made upon the assessees. The Tribunal has upheld the contention of the assessees and the Commissioner has come to this Court on this reference. 2. The first question as submitted to us is whether on the facts and circumstances of the case, it was necessary for the Income Tax Officer to initiate action under Section 34 of the Indian Income Tax Act in order to tax the deemed income distributed by virtue of the order under Section 23A of the Act? Now, this question was considered in the case of Navinchandra Mafatlal v. Commissioner of Income Tax, Bombay City [1955]27ITR245(Bom) and the view we took there was that Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpretation. If that be the correct interpretation, then inasmuch as the notice was served on the 1st of April, 1954 and the assessment year was the year 1949-50, the last date for serving the notice was 31-3-1954 and inasmuch as the notice was served on 1-4-1954 the notice was clearly out of time. But what Mr. Joshi contends is that however clear the language used by the Legislature, we must construe this language in a manager which would not make an order under Section 23A an infructuous order. It is pointed out that in Kasturchand Ltd. v. Commr. of Income Tax Bombay AIR1950Bom1 we held that no period of limitation was provided for an order to be made under Section 23A and when it was urged in Navinchandra Mafatlal's case [1955]27IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the making of the order under Section23A, then an order under Section 23A can safely be made by the Department at any time it might so choose, and the Department would not be troubled by the question of limitation. The Department would be able indefinitely to keep its sword hanging not only over the head of a company but also over the head of an assessee who was a shareholder in that company. But Mr. Joshi is against at the suggestion that by reason of our interpretation with regard to limitation for serving a notice, we would now be depriving the Department of its discretion to issue a notice at any time it likes: because if notice is to be served within 4 years of the end of the assessment year, then an order under Section 23A must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the effect of our taking the view that the period of limitation for serving this notice is four years from the end of the assessment year in which the income escaped tax would be to compel the Department to make an order under Section 23A within four years of that time. It is not correct to say that an order under Section 23A would become infructuous. It is more correct to say that the Department should be more vigilant and should not postpone making an order under Section 23A would become infructous. It is more correct to say that the Department should be more vigilant and should not postpone making an order under Section 23A would become infructuous. It is more correct to say that the Department should be more vigilant and sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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