TMI Blog1977 (4) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ax for the three assessment years in question had escaped assessment within the meaning of section 147 of the Income-tax Act, and requiring the petitioner to submit returns of income within thirty days of the service of notices as he proposed to reassess the income for the said assessment years. These notices were served on the petitioner on April 2, 1974. The petitioner objected to the validity of the notices and demanded the disclosure of the reasons on which the Income-tax Officer grounded his belief that income chargeable to tax had escaped assessment. The petitioner received no reply. The petitioner, therefore, filed C.W.Ps. Nos. 2808, 2809 and 2810 of 1975, impugning the validity of the notices as invalid and without jurisdiction. The first submission of Shri Gokal Chand Mittal, learned counsel for the petitioner, was that the notices were bad as they were served beyond the period of limitation prescribed by section 149(1)(b) of the Income-tax Act. Shri Mittal contended that the notices fell under section 147(b) and, therefore, the period of limitation was only four years. In the written statement filed by the revenue the reasons recorded by the Income-tax Officer under sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Officer did not focus his attention on or apply his mind to the question whether the receipts by way of charity were to be treated as income or not and that later on the Income-tax Officer acquired the "knowledge or instruction" that the receipts by way of charity ought to have been included in the assessable income of the assessee. In other words, something which had not presented itself to the mind of the Income-tax Officer at the time of the original assessment came to be so presented to his mind after the completion of the assessment. Thus, though the statements of the reasons recorded by the Income-tax Officer refer to section 147(a), the cases really fall under section 147(b) and the period of limitation is only four years. Of course, as was held in Income-tax Officer v. Eastern Coal Co. Ltd. [1975] 101 ITR 477 (Cal) by, Sankar Prasad Mitra C.J. and Sabyasachi Mukharji J. "a notice under section 147 which has been proposed under clause (a) can be treated as one, if the material conditions are fulfilled, under clause (b) of section 147 of the Income-tax Act of 1961". In fact, section 292B of the Income-tax Act, 1961, expressly provides that no return of income, assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purported to follow the decision of the Supreme Court in Banarsi Debi's case [1964] 53 ITR 100 (SC), it is necessary to consider the facts and the ratio of that case in some detail. Banarsi Debi's case [1964] 53 ITR 100 (SC) arose under the provisions of the 1922 Act and, as we shall presently point out, there is a vital difference between the provisions of the 1922 Act and the provisions of the 1961 Act. For the assessment year 1947-48, the assessee in that case had filed a return of her income and the assessment was completed some time in 1948. On April 2, 1956, the Income-tax Officer served on her a notice dated March 19, 1956, under section 34(1) of the Indian Income-tax Act, 1922. The date of the notice was within 8 years from the end of the relevant assessment year, i.e., March 31, 1948, but it was served beyond eight years from that date. Section 34(1), as it stood at that time, provided that a notice falling under clause (a) had to be served on the assessee within eight years of the end of that assessment year. The notice was clearly out of time as it was served beyond eight years from March 31, 1948. The situation in such cases was sought to be saved by section 4 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 23(3) had previously been equated with the expression "served" occurring in the substantive part of section 34(1) by judicial interpretation. They referred to the observations of Chagla C.J. in Commissioner of Income-tax v. D. V. Ghurye [1957] 31 ITR 683 (Bom) in that connection. They then referred to the General Clauses Act and the Calcutta Municipal Act and held that the expression "issued" had both a limited and a wide meaning and that it was for the court to give a proper meaning to the expression according to the context of the Act. They said [1964] 53 ITR 100, 107 (SC): " In the legislative practice of our country the said two expressions are sometimes used to convey the same idea. In other words, the expression 'issued' is used in a limited as well as in a wider sense. We must, therefore, give the expression 'issued' in section 4 of the Amending Act that meaning which carries out the intention of the legislature in preference to that which defeats it. By doing so we will not be departing from the accepted meaning of the expression, but only giving it one of its meanings accepted, which fits into the context or setting in which it appears." The Supreme Court then proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 34(1) which provided for service of notice within a period of eight years and in the context of the object of the Amending Act, the expression "issued" could only be given a wider meaning in section 4 of the Amending Act. The Supreme Court did not lay down that the expression 'issued', whenever and wherever it occurred in the Income-tax Act, carried the wider meaning. Now, let us examine the provisions of the Income-tax Act, 1961, alongside the corresponding provisions of the 1922 Act. Sections 147, 148 and 149 of the 1961 Act, which correspond to section 34(1) of the 1922 Act, provide the machinery for assessment or reassessment if it is found by the Income-tax Officer that income chargeable to tax has escaped assessment. The expression " income chargeable to tax which has escaped assessment" is deemed to include income chargeable to tax which has been under-assessed, income which has been assessed at too low a rate, income which has been made subject to excessive relief under the 1961 Act or the 1922 Act and income assessed after excessive computation of loss or depreciation allowance. Section l47(a) and (b) of the 1961 Act, which corresponds to section 34(1)(a) and (b) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, limitation was prescribed for the service of the notice that the Supreme Court had to hold in Banarsi Debi's case [1964] 53 ITR 100 (SC) that the expression "issued" in section 4 of the amending Act meant "served". In the scheme of the 1961 Act, limitation is prescribed with reference to the issuance of the notice. The scheme of the Act is that an Income-tax Officer must first have reason to believe that income chargeable to tax has escaped assessment either by reason of the omission or failure on the part of the assessee to make a return or to disclose fully and truly all material facts or in consequence of information in his possession. He is then required to record his reasons. He is then required to issue the notice prescribed by section 148 within the period prescribed in section 149. This notice must be served before the Income-tax Officer can proceed to make the assessment or reassessment under section 147. That is the scheme of the present Act and there is no reason why the expression "issued" occurring in section 149 should not be given its natural meaning instead of the strained, wider meaning "served". The departure from the old provision in section 34 of the 1922 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer" may also be brought under section 147(b). We do not, however, propose to go into this question having regard to another formidable objection raised by Shri Awasthy that under the amended provisions of article of the Constitution we are precluded from going into these questions if any other remedy is provided by or under any other law for the time being in force. Shri Awasthy argued that the assessee was entitled to raise the question of non-existence of reasons for belief before the assessing authority, the Appellate Assistant Commissioner and the Appellate Tribunal. In the famous case of Calcutta Discount Company Ltd. v. Income-tax Officer [1961] 41 ITR 191 (SC), the Supreme Court recognised the existence of alternative remedy under the provisions of the Indian Income-tax Act, 1922, when it observed at page 207: "Mr. Sastri mentioned more than once the fact that the company would have sufficient opportunity to raise this question, viz., whether the Income-tax Officer had reason to believe that under-assessment had resulted from non-disclosure of material facts, before the Income-tax Officer himself in the assessment proceedings and, if unsuccessful there, before the App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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