Reassessment limitation under amended income-tax law did not bar notice for escaped concealed income; the wider provision prevailed.

After the Finance Act, 1956 widened section 34(1)(a) of the Indian Income-tax Act, 1922, notice for reassessment of escaped concealed income could be issued at any time for years not earlier than 31 March 1941. Section 34(1A), which had earlier dealt with war-year income when the limitation in section 34(1)(a) blocked action, was held to operate in a different field and to have worked itself out by 31 March 1956. The retention of section 34(1A) and related amendments did not restrict the plain scope of the amended general provision, and the maxim generalia specialibus non derogant could not cut down that language. The reassessment notice was therefore not time-barred.

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Issues: Whether, after the Finance Act, 1956 amended section 34(1)(a) of the Indian Income-tax Act, 1922, a notice for reassessment could be issued at any time in respect of escaped concealed income for the war years covered by section 34(1A).

Analysis: The amended section 34(1)(a) used clear and unqualified language permitting notice to be issued at any time for escaped concealed income for years not earlier than the year ending 31 March 1941. Section 34(1A) was enacted to deal with escaped income of war years and had operated when the earlier limitation under section 34(1)(a) prevented action for those years, but after the 1956 amendment the two provisions occupied different fields. The special provision under section 34(1A) had, by 31 March 1956, worked itself out, while the amended section 34(1)(a) was intended to remove the bar of limitation for concealed income generally. The retention of section 34(1A), and the amendments to section 34(1B) and insertion of section 34(4), did not curtail the width of section 34(1)(a). The maxim generalia specialibus non derogant could not be used to cut down the plain language of the amended general provision.

Conclusion: The notice issued under section 34(1)(a) on 25 July 1958 was not barred by time, and the contention that war-year escaped income remained confined to section 34(1A) was rejected. The decision was in favour of the Revenue.

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