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TMI Blog1964 (1) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... 45. This notice was issued by him on March 27, 1957. On behalf of the respondents, it is contended that the notice was bad because, though it was in respect of an amount of less than Rs. 1 lakh it was issued after the expiry of the assessment year and that the sanction of the Central Board of Revenue for issuing that notice had not been obtained by the Income-tax Officer as required by clause (iii) of the proviso to section 34(1) of the Act. It is not disputed before us that the case falls under section 34(1)(a). That provision reads thus : " 34. (1) If---- (a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or ......... he may in cases falling under clause (a) at any time .... serve on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years for cases falling under section 34(1)(b). By the amendment the period of limitation was removed and the Legislature provided that if the case fell under section 34(1)(a) a notice can be served at any time. But while removing any bar of limitation, the Legislature provided some safeguards for the assessee and these safeguards were three in number and they were set out in the proviso. The first safeguard was that a notice shall not be issued for any year prior to the year ending on the 31st day of March, 1941 ; the second safeguard was that, if eight years had elapsed then the notice should not be issued for an escaped income which aggregated to less than one lakh of rupees ; and the third safeguard was that the Central Board of Revenue had to be satisfied on reasons to be recorded that this was a fit case for the issue of a notice, which was for a period beyond eight years. Now, admittedly, this notice is for an amount which is less than a lakh of rupees and admittedly the Central Board of Revenue has not considered this matter at all. Therefore, there does not seem to be any answer to the contention put forward by the petitioner. " The High Court is right in saying that a n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Revenue. If a notice is issued by virtue of some other provision such as the second proviso to sub-section (3) of section 34, it would be a notice " in any other case " referred to in clause (iii) of the proviso to sub-section (1) of section 34 and in such a case the sanction which is required is only that of the Commissioner. Such a sanction was obtained in this case and, therefore, the notice cannot be said to be bad because the sanction of the Central Board of Revenue has not been obtained. Now, we will come to the other aspect of the matter. Limitation is no doubt placed upon the power of the Income-tax Officer by clause (ii) of the first proviso which says that if eight years have elapsed after the expiry of that year no such notice can issue unless the income which has escaped assessment is likely to amount to one lakh of rupees or more. Here admittedly the income which has escaped assessment is below one lakh of rupees and more than eight years have elapsed since the assessment year in respect of which the income is alleged to have escaped assessment. Clearly, therefore, no notice could issue under clause (ii). The answer given by the Income-tax Officer, however, is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of any escaped income, whatever the amount, provided the notice was issued to give effect to a direction contained in an order of an income-tax authority. Now a direction is not necessary for the issue of a notice. But as against that an assessee whose escaped income is not a lakh of rupees is completely protected and even though there may be a direction contained in an order of an income-tax authority no notice can be issued against the assessee if the escaped income is less than a lakh of rupees. Therefore, on the one hand, the assessee whose escaped income is less than a lakh of rupees is now put in a better position than he was before the amendment. The assessee whose escaped income is more than a lakh of rupees is put in a worse position because he can be proceeded against even without a direction contained in an order of an income-tax authority provided the Central Board of Revenue has applied its mind to the question of the issue of the notice. " It would appear that the view of the High Court was that the provisions of the second proviso to section 34(3) would not apply to a case where the escaped assessment is of an amount less than a lakh of rupees and more than eigh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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