1960 (2) TMI 61 - HC - Income Tax

High Court Upholds Validity of Revised Tax Assessment for Hindu Undivided Family

Atma Ram Bindra Ban Versus Commissioner of Income-Tax, Delhi, Ajmer, Rajasthan And Madhya Bharat

The Punjab and Haryana High Court, in a judgment delivered by Justice Chopra, upheld the validity of a revised assessment under section 34 of the Indian ... - Issues:1. Validity of revised assessment under section 34 of the Indian Income-tax Act.2. Legality of issuing a second notice while proceedings from the first notice were pending.Analysis:The judgment by the Punjab and Haryana High Court, delivered by Justice Chopra, addresses the issue of the validity of a revised assessment under section 34 of the Indian Income-tax Act. The case involved an assessee, a Hindu undivided family, whose original assessment for the year 1947-48 was revised due to certain cash credits that had escaped consideration in the initial assessment. The Income-tax Officer issued a second notice under section 34 for bringing to tax the annual letting values of properties that were overlooked in the original assessment. The key question was whether the revised assessment was sustainable, considering the second notice was issued while proceedings from the first notice were still pending and incomplete.The court referred to the relevant provisions of section 34 of the Income-tax Act, which allow the Income-tax Officer to issue notices if income has escaped assessment. The sub-section provides no limit on the number of notices that can be issued within the specified time limit. The court cited a previous case where it was established that other items of escaped income can be included in the assessment even after the initiation of proceedings based on a specific item. Therefore, there is no restriction on issuing a fresh notice while previous proceedings are ongoing, as long as it benefits the assessee.The court also addressed the proviso to sub-section (3) of section 34, stating that it pertains to the time frame for assessment and does not impact the current issue. A previous decision was cited to emphasize that income cannot be considered as escaped assessment if the proceedings for the original assessment are still pending. However, this ruling was deemed irrelevant to the present case. The court dismissed the application made by the assessee for additional questions to be referred under section 66(2) and answered the main question in the negative, upholding the validity of the revised assessment. Justice Falshaw concurred with the decision, and the reference was dismissed with costs.In conclusion, the judgment clarifies that the issuance of a second notice under section 34 while proceedings from the first notice are pending is legally permissible, as long as it falls within the statutory time limits and benefits the assessee. The court's interpretation of the relevant provisions and past precedents supports the validity of the revised assessment in this case.