TMI Blog1971 (10) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessment years for which the sum should be brought to tax are 1957-58 and 1958-59. The addition made in the assessment year under appeal towards the unexplained investment amounting to Rs. 13,000 cannot, therefore, be sustained. I accordingly delete it and direct the Income-tax Officer to assess the unexplained investment for the above-mentioned assessment years . . . " Inconsequence of the finding and to give effect to the direction contained in the order passed by the Appellate Assistant Commissioner in the appeal relating to the assessment year 1959-60, the Income-tax Officer issued notices dated June 20, 1969, to the assessee, to show cause why the assessments under section 147 of the Income-tax Act, 1961, for the assessment years 1957-58 and 1958-59 should not be reopened and unexplained investment in the respective accounting years added ? According to the assessee, the notices dated 20th March, 1969, issued by the Income-tax Officer for reopening the assessments for 1957-58 and 1958-59 were time-barred and hence bad in law. The assessee, therefore, moved this court by this writ application filed under article 226 of the Constitution of India, seeking the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 153(3) of the Act, at any time and without the prior sanction of the Commissioner of Income-tax. Hence, the impugned notices and reassessments are valid in law. In reply, the learned counsel for the assessee submitted that when the finding or direction given by the Appellate Assistant Commissioner is, as held by the Supreme Court, invalid, the legislature cannot validate a finding declared to be invalid by the Supreme Court by adding an Explanation. The basis of infirmity pointed out by the Appellate Assistant Commissioner should have been removed by appropriately amending the powers of the Appellate Assistant Commissioner to hear an appeal under the Income-tax Act. The mere addition of an Explanation to section 153(3) of the Act, without amending section 251, which gave power to the Appellate Assistant Commissioner for disposing of an appeal before him, would amount to usurping the judicial power which the legislature did not possess. The Explanation is, therefore, void. The procedure for bringing to tax an income which escaped assessment is laid down in sections 147 to 153 of the Income-tax Act, 1961. Income chargeable to tax may escape assessment for more than one reason. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot apply to a case of such an assessment, reassessment or recomputation of income if it related to an assessment year in respect of which assessment, reassessment or recomputation of income if it related to an assessment year in respect of which assessment, reassessment or recomputation of income could not have been made at the time when the order which was the subject-matter of appeal, reference or revision, was made, by reason of the time-limits, fixed under section 153 for making the assessments, reassessments, etc. (section 150(2)). We are not here concerned with section 152 of the Act. Section 153, which is by far the most important for the purpose of deciding the case before us, so far as it is relevant, is reproduced below : " 153. (2) No order of assessment, reassessment or recomputation shall be made under section 147-- (a) where the assessment, reassessment or recomputation is to be made under clause (a) of that section, after the expiry of four years from the end of the assessment year in which the notice under section 148 was served ; (b) where the assessment, reassessment or recomputation is to be made under clause (b) of that section, after-- (i) the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact given or can, in law, give a finding or direction that the income should be taxed in a specified assessment year other than the year for which the authority hears the case. The effect of section 150 and this sub-section read with Explanation 2 is that, if any income is deleted from assessment in a higher proceeding on the ground that it is not the income of that year, steps may be taken under section 147 to assess it as the income of another year, without any limitation applying to the issue of the notice under section 148 or to the completion of the assessment or reassessment. Explanation 2 operates to put all the assessees on the same footing inasmuch as, once an income is excluded from assessment for a particular year on the ground that it is not the income of that year, the bar of limitation is necessarily removed for assessment for another year, regardless of the question whether there is any express finding by the higher authority that the amount represents the income of another specified year. On the other hand, in the 1922 Act there was scope for discrimination, because the assessment of assessees in whose cases the appellate authority, for instance, gave a finding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Commissioner for disposing of an appeal before him, the Act has merely added the impugned Explanation to section 153(3). By doing so, the legislature has usurped the judicial power which is not vested in it. The next argument was that the legislature has attempted to overrule the decision of the Supreme Court and to validate a finding which the Supreme Court has invalidated ; that the legislature cannot do, and if the legislature attempts to do that, the provision should be struck down. In support of these arguments, the learned counsel for the assessee invited our attention to Janapada Sabha, Chhindwara v. Central Provinces Syndicate Ltd., State of Tamil Nadu v. M. Rayappa Gounder, Municipal Corporation of Ahmedabad v. New Shorrock Spinning and Weaving Company Ltd. and Prithvi Cotton Mills Ltd. v. Broach Borough Municipality. The first argument advanced by the learned counsel in this behalf has no substance. Mere exclusion of an income from one assessment by an appellate authority would empower the Income-tax Officer to reopen the assessment for a different year and Explanation 2 to section 153(3) of the Act. Explanation 2 does not validate and finding or direction given by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or reassessed or collected ........ " Dealing with such a provision, the learned judges of the Supreme Court observed that the Amending Act which contained the above provision was invalid in so far as it attempted to validate an invalid assessment, without removing the basis of its invalidity. As we have already stated above, Explanation 2 does not convert an invalid finding or direction into a valid finding or direction. Hence, the above decision does not help the assessee. In Municipal Corporation of Ahmedabad v. New Shorrock Spinning Weaving Company Ltd., the impugned section authorized the Corporation that, despite the fact that certain assessments have been set aside by courts, it shall be lawful for the Corporation to assess or reassess the premises, concerned in those decisions, to property tax for the concerned assessment years. Dealing with the validity of that provision, the Supreme Court observed that : " Prima facie provision of sub-section (3) introduced in section 152-A by the Gujarat Amending and Validation Ordinance, 1969, appears to command the Corporation to refuse to refund the amount illegally collected despite the orders of the Supreme Court and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1957-58 and 1958-59 could be issued at any time, notwithstanding anything contained in section 149. Section 149 not only prescribes the time limits for the issue of notice under section 148, but also says that such notices shall be subject to the provisions of section 151 of the Act. Section 151 of the Act provides that no notice under section 148 could be issued without the prior sanction of the Board or the Commissioner of Income-tax. When section 149 itself is not applicable to an assessment or reassessment coming within the purview of section 150(1) then both the conditions occurring in section 149, i.e., the time limit for the issue of notices and the prior sanction of the Board or the Commissioner of Income-tax do not apply to an assessment or reassessment made under section 150(1). We, therefore, hold that the reassessments for the assessment years 1957-58 and 1958-59 have been validly made and the notices for making those reassessments were valid and validly issued. Since the reassessments are legal and valid, they cannot be quashed. The writ petition fails and is accordingly, dismissed with costs. The assessee shall pay the costs of the department. Advocate's fee Rs. 100. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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