1953 (9) TMI 36 - HC - Income Tax

Court Rules Assessment Made on Completion by Officer, Not Communication to Assessee

PM. P.R. Viswanathan Chettiar Versus The Commr. of Income Tax, Madras

The court held that the assessment was made within the meaning of Section 34(2) when the Income Tax Officer completed the assessment and determined the ... - Issues Involved:1. Whether the assessment was made within the period of limitation prescribed under Section 34(2) of the Indian Income Tax Act.Issue-Wise Detailed Analysis:1. Period of Limitation for Assessment under Section 34(2):The primary issue was whether the assessment was made within the four-year limitation period prescribed under Section 34(2) of the Indian Income Tax Act. The assessment year in question was 1942-43, with the accounting year ending on 12-4-1942. The assessment was completed on 24-3-1947, and the assessment order and demand notice were dispatched on 25-3-1947, received by the assessee on 2-4-1947. The assessee contended that the assessment was not 'made' until 2-4-1947, when it was communicated to him, thus exceeding the four-year limit.2. Interpretation of 'Made' in the Context of Section 34(2):The court examined the meaning of 'made' within the context of Section 34(2). The assessee's counsel relied on precedents such as 'Swaminathan v. Lakshmanan' and 'Muthiah Chettiar v. Commr. of Income tax, Madras', which dealt with the statutory expression 'making of the order' and the principle that limitation should not be computed from a date earlier than when the party aggrieved knew of the order. However, the court emphasized that the term 'made' should be construed with reference to the context in which it is used in the statute.3. Assessment Process under Section 23:The court analyzed the assessment process under Section 23 of the Act. It highlighted that the assessment involves determining the income and the tax payable by the assessee, which must be done within the limitation period. The court noted that the assessment stage precedes the communication of the tax due under Section 29 of the Act. Therefore, the assessment is considered 'made' when the Income Tax Officer completes the assessment and determines the tax payable, even if the terms of the order are not communicated to the assessee within the limitation period.4. Distinction from Section 33-A:The court distinguished the current case from the principles applied in Section 33-A of the Income Tax Act, which deals with the time limit for the exercise of revisional powers by the Commissioner. The court explained that the context and purpose of Section 34(2) differ from those of Section 33-A, and thus the same interpretation could not be applied.5. Judicial Precedents and Statutory Interpretation:The court referred to various judicial precedents and statutory interpretations, including 'Abdul Ali v. Mirza Khan', 'The Secretary of State v. Gopisetti Narayanaswami Naidu', and 'Barlow v. Vestry of St. Mary Abbotts, Kensington'. It concluded that the necessity to bring the terms of the order to the knowledge of the person affected turned on the expression 'on' and not on the necessity to have the order in writing. The court emphasized that the time limit prescribed by Section 34(2) pertains to the completion of the assessment stage by the Income Tax Officer.Conclusion:The court held that the assessment was made within the meaning of Section 34(2) when the Income Tax Officer completed the assessment and determined the tax payable, which occurred on 24-3-1947. The communication of the assessment order to the assessee on 2-4-1947 was not relevant to the computation of the limitation period. Therefore, the court answered the question in the affirmative and against the assessee, concluding that the assessment was made within the prescribed period of limitation. The assessee was ordered to pay the costs of the Commissioner of Income Tax, fixed at Rs. 250.