Reassessment notice validation under income tax law saved late-served notices from limitation challenge.

Notices under section 34(1)(a) of the Indian Income-tax Act, 1922, served after the original limitation period were nevertheless treated as protected by section 4 of the Indian Income-tax (Amendment) Act, 1959. The provision was read as validating reassessment notices and proceedings taken in consequence of them where the challenge rested on expiry of the pre-amendment time limit. The expression "issued" was construed in context as including service, since a narrow reading would defeat the legislative purpose of curing escaped-income reassessment defects. The challenge to the notices therefore failed.

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Issues: Whether notices issued under section 34(1)(a) of the Indian Income-tax Act, 1922, but served after the prescribed period, were protected by section 4 of the Indian Income-tax (Amendment) Act, 1959.

Analysis: Section 34(1)(a), as it stood before the Finance Act, 1956, required service of notice within eight years from the end of the relevant assessment year. Section 4 of the 1959 Amendment Act barred challenge to notices issued under section 34(1)(a) and proceedings taken in consequence of such notices on the ground that the time for issue or assessment had expired under the unamended provision. The expression "issued" had to be construed in context. It had previously been judicially treated as equivalent to "served" in the setting of section 34, and the word was also used interchangeably with "served" and "sent" in legal usage. A narrow meaning would create anomalies and frustrate the legislative purpose of validating reassessment proceedings in escaped-income cases.

Conclusion: The notices served after the prescribed time were saved by section 4 of the Indian Income-tax (Amendment) Act, 1959, and the challenge to them failed.

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