TaxTMI 
TaxTMI 
1958 (4) TMI 7
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....al assessment was made on February 12, 1946, for 1946-47 on January 21, 1949, for 1947-48 on January 22, 1949, and for 1948-49 also sometime in the year 1949. The tax so assessed was duly paid by the assessee. On January 5, 1954, more than four years after, the Income-tax Officer, Special Circle, Bangalore, served a notice on the assessee under section 34 of the Indian Income-tax Act, 1922, for the purpose of assessing what was described as " escaped " or " under-assessed " income chargeable to income-tax for the said years. The assessee appeared through his auditors and contested the jurisdiction of the Income-tax Officer to issue the notice or make a re-assessment under section 34 of the Indian Income-tax Act, 1922. On February 19, 1954 the Income-tax Officer overruled the assessee's objection, and made a re-assessment order for the year 1945-46. On February 25, 1954, the assessee filed four writ petitions in the Mysore High Court in which he challenged the jurisdiction of the Income-tax Officer to take proceedings under section 34 or to make an order of re-assessment in such proceedings ; he asked for appropriate orders or writs quashing the pending proceedings for three years a....
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....m August 15, 1947. The Act, however, received Royal assent on July 18, 1947. Section 7 set out the consequences of the setting up of the two new Dominions : one such consequence was that the suzerainty of His Majesty over the Indian States lapsed, and with it lapsed all treaties, agreements, etc., between His Majesty and the rulers of Indian States, including all powers, rights, authority or jurisdiction exercisable by His Majesty in an Indian State by treaty, grant, usage, suffrage, etc. In view of the aforesaid provision---perhaps in anticipation of it, the retroceded area was given back to the State of Mysore on July 26, 1947, by a notification made by the Crown Representative under the Indian (Foreign Jurisdiction) Order in Council, 1937. This did not, however, mean that the Mysore laws at once came into force in the retroceded area. On August 4, 1947, the Maharaja of Mysore enacted two laws : the Retrocession (Application of Laws) Act, 1947, being Act XXIII of 1947, and the Retrocession (Transitional Provisions) Act, 1947, being Act XXIV of 1947. The combined effect of these laws was this : all laws in force in the retroceded area prior to the date of retrocession, which was....
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....ter that stage ; ..." The effect of sections 3, 5 (b) and 6 of Mysore Act XXXI of 1948, inter alia, was that though the Indian Income-tax Act, 1922, stood repealed and the Mysore Income-tax Act, 1923, came into effect from July 1, 1948, the former Act as in force in the retroceded area prior to July 1, 1948, continued to apply in respect of the total income chargeable to income-tax in the retroceded area prior to July 1, 1948, but which had not been assessed until that date, and it further applied to all proceedings relating to the assessment of such income until the stage of assessment and the determination of income-tax but the Mysore Act 1923, applied to such proceedings after that stage. On August 5, 1948, was promulgated the Retroceded Area (Application of Laws) Act, LVII of 1948, which came into effect from August 15, 1948. Sections 3 and 4 of Act LVII of 1948 are material for our purpose and may be quoted : " 3. Except as hereinafter in this Act provided,--- (3) all laws in force in Mysore shall apply to the Retroceded Area ; and (b) the laws in force in the Retroceded Area immediately before the appointed day shall not, from that day, have effect or be operative in ....
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....ioned in the Union List, until provision to the contrary was made by Parliament by law. Such law was made by the Finance Act, 1950, by which the whole of Mysore including the retroceded area became " taxable territory " within the meaning of the Indian Income-tax Act, 1922, from April 1, 1950, and the Indian Income-tax Act again came into force in the retroceded area from the aforesaid date. Section 13 of the Finance Act, 1950, dealt with repeals and savings. As the true scope and effect of sub-section (1) of section 13 is one of the questions at issue before us, it is necessary to read it : " If immediately before the 1st day of April, 1950, there is in forte in any Part B State other than Jammu and Kashmir or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of Cooch-Behar any law relating to income-tax or super-tax or tax on profits of business that law shall cease to have effect except for the purposes of the levy, assessment and collection of income-tax and super-tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income-tax Act, 1922, for the year ending on the 31st day of March, 1951, or for any sub....
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....ecause what was saved was the prior law " for the purposes of the levy, assessment and collection of income-tax ", which expression did not include re-assessment proceedings ; secondly, it was argued that, even otherwise, the financial agreement made between the President of India and the Rajpramukh of Mysore on February 28, 1950, which received constitutional sanctity in article 278 of the Constitution, rendered the impugned proceedings unconstitutional and void ; thirdly, it was submitted that the Indian Income-tax Act, 1922, as in force in the retroceded area stood repealed on June 30, 1948, by Mysore Act XXXI of 1948, and the saving provisions in section 5(b) thereof or in paragraph (2), sub-paragraph (b), of Schedule A to Mysore Act LVII of 1948, did not save section 34 in so far as it permitted re-assessment proceedings in respect of years in which there had been an assessment already ; and lastly, it was contended that after June 30, 1948, and until April 1, 1950, the Income-tax Officer in the retroceded area could re-open the assessment under section 34 of the Mysore Income-tax Act, 1923, within a period of four years specified therein, but there was no authority to re-op....
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....the assessment of such income until the stage of assessment and determination of income-tax payable thereon. " Total income " means the total amount of income, profits and gains computed in the manner laid down in the Act, and there are no good reasons why the word " assessment " occurring in the saving provisions should be restricted in the manner suggested so as to exclude proceedings for assessment of escaped income or under-assessed income. On behalf of the assessee our attention has been drawn to the words " in respect of the total income chargeable to income-tax ........................... but which has not been assessed until that date " occurring in the saving provisions and the argument is that those words show that there was no intention to permit re-opening of assessments which had been made already. We are unable to accept this argument. In its normal sense " to assess " means " to fix the amount of tax or to determine such amount ". The process of re-assessment is to the same purpose and is included in the connotation of the term " assessment ". The reasons which led us to give a comprehensive meaning to the word " assessment " in section 13(1) of the Finance Act, 1950....