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Issues: (i) whether notice under section 34(1)(a) of the Income-tax Act, 1922 was validly served on 28 March 1957 within the period of limitation; (ii) whether, after the amendment by section 18 of the Finance Act, 1956, a notice under section 34(1)(a) issued within eight years but served thereafter was invalid.
Issue (i): Whether notice under section 34(1)(a) of the Income-tax Act, 1922 was validly served on 28 March 1957 within the period of limitation.
Analysis: The evidence of the serving inspector was supported by contemporaneous records, including the personal diary entry and the order-sheet entry recording service of the notice and the acknowledgment slip. The loss of the acknowledgment slip did not outweigh this corroborative material. On the facts, the service of notice on 28 March 1957 was accepted as proved.
Conclusion: The notice was validly served within time and the objection on the ground of factual non-service failed.
Issue (ii): Whether, after the amendment by section 18 of the Finance Act, 1956, a notice under section 34(1)(a) issued within eight years but served thereafter was invalid.
Analysis: The amended language of section 34 distinguished between issue and service, and expressly permitted service of the notice at any time after issue, so long as the notice was issued within the period prescribed by the proviso. The earlier view requiring both issue and service within eight years was held inapplicable after the amendment.
Conclusion: Service after expiry of eight years did not invalidate a notice issued within time under the amended provision.
Final Conclusion: The challenge to the reassessment failed on both limitation and service, so the assessment proceedings were upheld and interference was refused.
Ratio Decidendi: Under the amended section 34(1)(a) of the Income-tax Act, 1922, the notice must be issued within the prescribed period, but its service may validly take place thereafter; factual service, when proved by reliable contemporaneous records, is sufficient to sustain reassessment.
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