TMI Blog1964 (1) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Amending Act of 1953, though not by that of the Amending Act of 1956. We may add that the amendment of 1953 took effect from April 1, 1953, and that of 1956 from April 1, 1956. For the reasons stated above, the decision of the High Court is clearly wrong.Appeal allowed. Case remanded. - - - - - Dated:- 29-1-1964 - Judge(s) : B. P. SINHA., K. SUBBA RAO., RAGHUBAR DAYAL., N. RAJAGOPALA AYYANGAR., J. R. MUDHOLKAR JUDGMENT The judgment of the court was delivered by MUDHOLKAR J.----This is an appeal by special leave against the judgment of the Bombay High Court in a writ petition challenging the notice issued under section 34(1) of the Indian Income-tax Act, 1922, by the First Income-tax Officer, Bombay, who is the appellant before us. In the writ petition various grounds were urged by the respondent in support of the contention that the notice was bad in law. The High Court, however, dealt with only one of those contentions, accepted it and did not permit the respondents' counsel, Mr. Mehta, to put forward the other contentions urged in the writ petition by the respondents. The appellant had issued notice to the respondents under section 34(1)(a) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more in the aggregate, either for that year, or for that year and any other year or years after which or after each of which eight years have elapsed, not being a year or years ending before the 1st day of March, 1941 ; (iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under clause (ii), unless the Central Board of Revenue, and in any other case, the Commissioner, is satisfied on such reasons recorded that it is a fit case for the issue of such notice ....... It will thus be seen that where the Income-tax Officer has reason to believe that due to any act of the assessee a full and accurate declaration was not made by the assessee for any year, with the result that part of his income has escaped for that year, the Income-tax Officer may issue a notice under clause (a) at any time. The respondents' contention before the High Court was that the notice was bad because it had not complied with the two conditions laid down in the proviso to section 34(1). Adverting to this contention the High Court has observed thus : " Before the amendment of this section which was in force on the 27th March, 1957, the period of limitation of eigh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the Income-tax Officer shall not issue a notice under clause (a) of sub-section (1) ". So read it will be clear that the words " in any case " used in clause (iii) only mean a case in which notice can be issued under clause (ii). Such a notice can be issued only when the escaped income is of one lakh of rupees and over. It was, however, contended by Mr. Shroff that clause (ii) of the proviso dealt not only with the escaped assessment of one lakh of rupees and over but also with assessments which were less than one lakh of rupees and that, therefore, even in the present case the sanction of the Central Board of Revenue was required. By excluding action with respect to escaped assessment of less than one lakh of rupees, clause (ii) can, in one sense, be regarded as dealing with escaped assessments of this kind. But it would be wrong to say that because of this, clause (iii) requires the obtaining of the sanction of the Central Board of Revenue for a notice to be issued with respect to it. As already pointed out, clause (iii) requires such sanction where the notice is issued under clause (ii) and when on a construction of clause (ii), no notice can be issued with respect to a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed in aid by the Income-tax Officer because in issuing the notice he was giving effect to a direction contained in the order of a higher income-tax authority. Dealing with this matter the High Court has observed as follows in its judgment : " Now, when there was a limitation of eight years under section 34(1)(a) the second proviso to section 34(3) had to be resorted to by the income-tax department if it wanted to issue a notice after the period of limitation, and a notice after eight years in a case falling under section 34(1)(a) could only be issued provided it was a result of a direction contained in an order passed by an income-tax authority. But by reason of the recent amendment the question of limitation does not arise, but the legislature has provided certain safeguards as already pointed out. Therefore, whether a notice is issued as a result of a direction contained in any order of an income-tax authority or not, if it is a notice which is issued beyond eight years the notice must satisfy the conditions laid down in the proviso to section 34(1). Therefore, the result is that in some respects the law has been made more rigorous against the assessee ; and in other resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Amending Act of 1953, though not by that of the Amending Act of 1956. We may add that the amendment of 1953 took effect from April 1, 1953, and that of 1956 from April 1, 1956. Apart from the view expressed by the learned judges as regards the effect of the changes made in section 34(1) with the provisos we have set out earlier----a view which we have held is not correct----they did not further consider the proper construction to be placed on the second proviso to section 34(3) of the Act on which the validity of the impugned notice to the respondents must ultimately be decided. As we have pointed out earlier, at the beginning of the judgment, the learned judges confined their attention practically only to the construction of proviso (iii) to section 34(1) which was decided in favour of the respondents and did not permit them to argue the other points raised by them. We do not propose to decide these other points, particularly for the reason that the parties are not agreed as to what precisely were the contentions which were raised for argument. For the reasons stated above, the decision of the High Court is clearly wrong. We, therefore, allow the appeal, set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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