1958 (4) TMI 122 - HC - Income Tax

Court upholds validity of notice under Income-tax Act, 1922, dismisses petition

The court found that the notice under Section 34(1)(a) of the Income-tax Act, 1922, was validly served on the petitioner on 28th March 1957, despite the ... - Issues Involved:1. Validity of service of notice under Section 34(1)(a) of the Income-tax Act, 1922.2. Applicability of the eight-year limitation period for re-opening the assessment.Issue-wise Detailed Analysis:1. Validity of Service of Notice under Section 34(1)(a):The petitioner was assessed for income-tax for the assessment year 1948-1949, and a notice under section 29 of the Income-tax Act, 1922, was served upon him for payment. On 27th March 1957, a notice under section 34(1)(a) was issued, with one copy sent by post and another purportedly served personally on 28th March 1957. The petitioner disputed the personal service. The court examined affidavits, including one from the serving officer, Haridas Chatterji, who affirmed that he served the notice personally on the petitioner on 28th March 1957. Documentary evidence, such as the Inspector's personal diary and an entry in the order-sheet by the Income-tax Officer, corroborated this testimony. Despite the loss of the acknowledgment slip, the court found the evidence sufficient to conclude that the notice was indeed served on 28th March 1957. The court stated, 'I am satisfied that as a fact the petitioner was served in the manner stated in the affidavit of Haridas Chatterji on the 28th March, 1957, with the notice under section 34 of the Income-tax Act.'2. Applicability of the Eight-year Limitation Period:The petitioner argued that the eight-year period of limitation applied, and the notice was served beyond that date. Mr. Meyer, for the respondent, argued that even if the service on 28th March 1957 was bad, the service by post on 4th April 1957 was sufficient due to an amendment in Section 34. The court noted that before the amendment by the Finance Act of 1956, the notice had to be served within eight years. However, the amendment allowed the notice to be issued within eight years and served at any time thereafter. The court referenced the Bombay High Court decision in Commissioner of Income-tax, Bombay v. D.V. Ghurye, where it was held that notice must be both issued and served within eight years. However, the court distinguished the present case due to the amendment, stating, 'Reading the section and the proviso as they now stand, it appears to me to lay down that a notice under clause (a) of sub-section (1) is to be issued within the time specified in the proviso, but it could be served at any time.' Thus, the court concluded that the notice, having been issued within eight years, was valid even if served beyond that period.Conclusion:The court dismissed the petition, stating, 'The result is that on both the points the petitioner has lost. There is, therefore, no reason to interfere in this matter, and the application must be dismissed. The rule must be discharged.' The interim order was vacated, and no order as to costs was made. The operation of the order was stayed for three weeks to enable the petitioner to appeal.