Limitation for reassessment notices under income-tax law could not be extended beyond the plain terms of saving provisions.

A notice issued under section 34 of the Indian Income-tax Act, 1922 for escaped income below the relevant threshold was held time-barred. The second proviso to section 34(3) could not save it because the reassessment-saving part had already been struck down as unconstitutional under article 14. Section 34(4) did not apply to smaller escapements, and section 4 of the Indian Income-tax (Amendment) Act, 1959 protected only notices issued before that Act commenced, not a fresh notice issued in 1962. The notice was therefore quashed.

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Issues: Whether the notice issued under section 34 of the Indian Income-tax Act, 1922 was barred by limitation and, if so, whether it was saved by the second proviso to section 34(3), section 34(4), or section 4 of the Indian Income-tax (Amendment) Act, 1959.

Analysis: The notice was issued on 5 January 1962 in respect of escaped income below one lakh of rupees. The second proviso to section 34(3) could not sustain the notice because the proviso, so far as it removed the time bar for reassessments made in consequence of findings or directions in appellate orders, had been declared unconstitutional as offending article 14 of the Constitution of India. Section 34(4) also did not apply, because it preserved notices issued after the 1959 amendment only in cases where the escaped income exceeded the threshold contemplated by the amended proviso, and it did not override the limitation applicable to smaller escapements. Section 4 of the Indian Income-tax (Amendment) Act, 1959 protected only notices issued before the commencement of that Act and the reassessments made in consequence of such notices; it did not extend to a notice first issued in 1962.

Conclusion: The notice was time-barred and none of the relied-upon provisions saved it.

Final Conclusion: The writ petition succeeded and the impugned notice was quashed.

Ratio Decidendi: A notice under section 34 of the Indian Income-tax Act, 1922 cannot be sustained where the applicable limitation has expired unless it is clearly saved by a valid statutory exception, and a saving provision cannot be extended beyond its plain terms.

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