AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1966 (1) TMI 23
X X X X Extracts X X X X
X X X X Extracts X X X X
.... notice to the members of the defunct Hindu undivided family under section 34(1)(a) of the Act in respect of the assessment year 1945-46 on the ground that certain income of the said family had escaped assessment. Pursuant to the proceedings so initiated, a sum of Rs. 3,63,000 was added to the original assessment of the said family. The assessee took up the matter on appeal to the Appellate Assistant Commissioner, who held that the said notice was barred by time, though on the merits he confirmed the order of the Income-tax Officer. The income-tax department as well as the first respondent preferred appeals against the said order to the Income-tax Appellate Tribunal. The Tribunal held that the notice was barred by time and, therefore, the income-tax authorities had no jurisdiction to give a finding on the merits. Meanwhile section 34(1)(a) of the Act was amended by the Finance Act, 1956, with effect from April 1, 1956, whereunder, subject to certain conditions, a notice under section 34(1)(a) could be issued at any time. Thereafter, on July 25, 1958, the Income-tax Officer issued a notice to the first respondent calling upon the members who constituted the undivided family to file ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time ... serve on the assessee . . . a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income profits or gains or recompute the loss or depreciation allowance ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section : Provided that the Income-tax Officer shall not issue a notice under clause (a) of sub-section (1) --- (i) for any year prior to the year ending on the 31st day of March, 1941 ; (ii) for any year, if eight years have elapsed after the expiry of that ear, unless the income, profits or gains chargeable to income tax which have escaped assessment or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this Act, or the loss or depreciation allowance which has been c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hin six months from the receipt of such notice or before the assessment or reassessment is made, whichever is earlier, to have the matters relating to his assessment settled, the Central Board of Revenue may, after considering the terms of settlement proposed and subject to the previous approval of the Central Government, accept the terms of such settlement, and, if it does so, shall make an order in accordance with the terms of such settlement specifying among other things the sum of money payable by the assessee. (1C) Any sum specified in a settlement arrived at in pursuance of sub-section (1B) may be recovered and any penalty for default in making payment of any such sum may be imposed and recovered in the manner provided in Chapter VI. (1D) Any settlement arrived at under this section shall be conclusive as to the matters stated therein ; and no person, whose assessments have been so settled, shall be entitled to reopen in any proceeding for the recovery of any sum under this Act or in any subsequent assessment or reassessment proceeding relating to any tax chargeable under this Act or in any other proceeding whatsoever before any court or other authority any matter which f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 34, as amended in 1956, enabled an assessee to whom a notice has been issued under clause (a) of sub-section (1) or sub-section (1A) for any of the years ending on March 31 of the years 1941 to 1948 inclusive, to apply to the Central Board of Revenue for a settlement of the amount of tax payable by him. Sub-section (4), which was inserted in 1959, emphasized the fact that a notice could be issued under section 34(1)(a), notwithstanding that the time of 8 years had expired before the Finance Act, 1956, came into force. We may at this stage notice the arguments advanced by learned counsel on the interpretation of the said provisions. The arguments of Mr. S. T. Desai, learned counsel for the revenue, may be summarized thus : The terms of section 34(1)(a), after its amendment by the Finance Act, 1956, are clear and unambiguous and the scope of the expression " at any time " cannot be curtailed by construction. So construed, proceedings for reassessment in respect of escaped income contemplated by the said clause can be initiated without any restriction of time. The legislative history of the fasciculus of sub-sections, namely, subsections (1)(a), (1A), (1B), (1C) and (1D) of sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved out. While section 34(1)(a) was a general provision, section 34(1A) was a special provision. On the principle of generalia specialibus non derogant, the field covered by section 34(1A) should be excluded from that covered by section 34(1)(a). If that was the legal position before the 1956 amendment, the argument proceeded, the same position would continue thereafter, as Parliament retained section 34(1A), along with its provisos, as it stood before the amendment and amended only section 34(1)(a). The lifting of the bar of limitation, therefore, should, on the basis of the said doctrine, be confined to the field covered by section 34(1)(a) before the amendment. If Parliament intended to do away with the period of limitation in respect of the escaped incomes during the war period, it would not have retained section 34(1A) on the statute book; for, in that event, it would serve no purpose. It would be wrong to say that it ceased to be operative after April 1, 1956, for the period of limitation would still apply to proceedings in respect of escaped incomes of the war years. Sub-section (4) added in section 34 in the year 1959 and section 34(1B), as amended in 1956, would not throw ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in its most comprehensive sense, would overrule the former, the particular enactment must be operative, and the general enactment must be taken to affect only the other parts of the statute to which it may properly apply. " But this rule of construction is not of universal application. It is subject to the condition that there is nothing in the general provision, expressed or implied, indicating an intention to the contrary : see Maxwell on the Interpretation of Statutes, 11th edition, at pages 168-169. When the words of a section are clear, but its scope is sought to be curtailed by construction, the approach suggested by Lord Coke in Heydon's case yields better results : " To arrive at the real meaning, it is always necessary to get an exact conception of the aim, scope and object of the whole Act ; to consider, according to Lord Coke : 1. What was the law before the Act was passed ; 2. What was the mischief or defect for which the law had not provided : 3. What remedy Parliament has appointed; and 4. The reason of the remedy. " With these rules of construction in mind, let us now tackle the problem raised in this case. Under section 34(1)(a), after it was amended by the Fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the period not covered by the said years. With that object, in 1956, section 34 was amended by the Finance Act, 1956, by which it was provided that notice under section 34(1)(a) can be issued at any time. But, sub-section (1A) was retained, including the second proviso. This amendment, along with the other amendments, made by the said Act came into force on April 1, 1956. In 1959, the said section was again amended by the Indian Income-tax (Amendment) Act, 1959. Under sub-section (4), as amended by the 1959 Amendment Act, notice under sub-section (1)(a) might be issued at any time notwithstanding that at the time of the issue of notice the period of 8 years specified in that sub-section before its amendment by the Finance Act, 1956, had expired in respect of the year to which the notice related. This amendment was necessitated by the judgments of the Bombay and Calcutta High Courts in S. C. Prashar v. Vasantsen and Debi Dutt v. T. Belan respectively, holding that if the right of the Income-tax Officer to reopen an assessment was barred under the law for the time being in force, no subsequent enlargement of the time could revive such right in the absence of express words or necess....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., appropriate to describe sub-section (1A) as one carved out of sub-section (1)(a) or to call it a species of which sub-section (1)(a) is the genus. Sub-section (1A) operated where sub-section (1)(a) practically ceased to function. Now, coming to the period after the Finance Act, 1956, was passed, i.e., after April 1, 1956, a different situation arose. The extended period given under the second proviso to sub-section (1A) expired on March 31, 1956. Thereafter, sub-section (1A) ceased to be operative in the sense that no notice could thereafter be given thereunder. It worked itself out. The legislature could have extended the period under the second proviso to sub-section (1A), but it did not do so. It did not give a further lease of life to it ; instead it removed the period of limitation under sub-section (1)(a), as sub-section (1A) had become practically defunct. The wide phraseology of sub-section (1)(a) takes in all the escaped concealed incomes during all the years commencing from 1941 and confers a power on the Income-tax Officer to give notice thereunder in respect of the said incomes without any bar of limitation. There is, therefore, no conflict after April 1, 1956, betw....