Court upholds validity of reassessments for 1957-58 & 1958-59, deems reopening notices lawful. Petition dismissed, assessee to pay costs.

The court upheld the validity of reassessments for the assessment years 1957-58 and 1958-59, ruling that the notices for reopening these assessments were lawfully issued. The court dismissed the writ petition, ordering the assessee to pay the department's costs, including an advocate's fee of Rs. 100.

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Issues Involved:
1. Time-barred notices for reopening assessments.
2. Jurisdiction and validity of the Appellate Assistant Commissioner's direction.
3. Applicability and validity of Explanation (2) to section 153(3) of the Income-tax Act, 1961.
4. Requirement of prior sanction from the Commissioner of Income-tax for issuing notices under section 148.

Detailed Analysis:

1. Time-barred Notices for Reopening Assessments:
The assessee contended that the notices dated March 20, 1969, for reopening the assessments for 1957-58 and 1958-59 were time-barred and hence invalid. The court examined the provisions of sections 147 to 153 of the Income-tax Act, 1961, which outline the procedure for reopening assessments. It was noted that section 149 prescribes time limits for issuing notices under section 148, subject to section 151, which requires prior sanction from the Commissioner of Income-tax. However, section 150(1) allows notices to be issued at any time to give effect to a finding or direction in an order passed by an appellate authority. The court concluded that since the reassessments fell under the purview of section 150(1), the time limits prescribed in section 149 did not apply, making the notices valid.

2. Jurisdiction and Validity of the Appellate Assistant Commissioner's Direction:
The assessee argued that the direction given by the Appellate Assistant Commissioner to reassess the unexplained investment in the years 1957-58 and 1958-59 was without jurisdiction and void, as held by the Supreme Court in Income-tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das. The court acknowledged this decision but noted that Explanation (2) to section 153(3) partially supersedes the Supreme Court's ruling by allowing the Income-tax Officer to assess or reassess income excluded by a higher authority in a different assessment year. The court held that the Appellate Assistant Commissioner's exclusion of income from the 1959-60 assessment gave the Income-tax Officer jurisdiction to reopen assessments for other years, validating the reassessments.

3. Applicability and Validity of Explanation (2) to Section 153(3) of the Income-tax Act, 1961:
The assessee contended that Explanation (2) to section 153(3) was not applicable and, if applicable, was ultra vires of section 251(1) of the Act. The court explained that Explanation (2) allows the Income-tax Officer to assess income excluded from one year in another year without being constrained by the time limits in section 149. The court rejected the argument that the legislature had usurped judicial power by adding the Explanation, noting that it did not validate an invalid finding but merely empowered the Income-tax Officer to reopen assessments. The court also found no substance in the argument that the Explanation attempted to overrule the Supreme Court's decision, as it did not ask the State to disobey or disregard the court's ruling.

4. Requirement of Prior Sanction from the Commissioner of Income-tax for Issuing Notices under Section 148:
The assessee argued that the notices issued under section 148 were invalid because the prior sanction of the Commissioner of Income-tax was not obtained, as required by section 151. The court clarified that section 150(1) overrides the provisions of section 149, including the requirement for prior sanction under section 151. Since the reassessments were made to give effect to the exclusion of income by the Appellate Assistant Commissioner, they fell within the scope of section 150(1), making the prior sanction requirement inapplicable. Consequently, the notices and reassessments were deemed valid.

Conclusion:
The court held that the reassessments for the assessment years 1957-58 and 1958-59 were validly made, and the notices for reopening these assessments were lawfully issued. The writ petition was dismissed with costs, and the assessee was ordered to pay the department's costs, including an advocate's fee of Rs. 100.

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