| Headnote |
Income Tax-Escaped income-Reassessment-Validity of notice-Statute providing for saving of notices-Retrospective operation-Indian Income-to"' (Amendment) Act, 1948 (48 of 1948), s· 8-Indian Income-tax"' (Amendment) Act, 1953 (25 of 1953), 1. 31-Finance Act, 1956 (18 of 1956), •· 18-Indian Income-ta"' (Amendment) Act, 1959 (9 of 1959), s. 2, 4-Indian Income-tax Act, 1922 (11 of 1922), s. 34, as amended.The first respondent's father, D, and another were partners doing business in the name of P.L. since 1935. D died in 1946 but the firm was continued with the first respondent as a partner .In 1941 another firm in the name of V. D. was started by the first respondent and two others, and for the assessment year 1942-43 the firm made a return of its income and also claimed registration. The Income-tax Officer, being of theview that the firm belonged really to D refused registration and added the income of the firm to the individual income of D.In 1943-44 the Income-true Officer came to a different conclusion and held that the firm V.D. was a branch of the firm P.L. For the subsequent years of assessment 1942-43 to 1948-49 also the firm V.D. applied for registration but was refused, and for those several years appeals were filed before the Appellate Tribunal. An appeal was filed by the firm P.L. against its assessment in respect of excess profits tax. There was alsoan appeal against the assessment for the year 1942-43 by the first respondent as the heir and legal representative of his fatheragainst the decision that the income of the firm V.D. should be included in the income of his. father. All these appeals wereheard together and decided by the Appellate Tribunal by its order dated August 14, 1951. In that order the Tribunal gavea finding that the business'.of the firm V.D. really belonged to the firm P.L. This derision was confirmed by the High Court onreference on October 8, 1953. In order to give effect to the finding of the Tribunal the Income-tax Officer issued a notice onApril 30, 1954, to the firm P.L. under s. 34 of the Indian Income-tax Act, 1922, that the income for the year ending March 31, 1943, had !>ten under-assessed, and that he proposal to reassess the income. The respondents challenged the validity of the notice on the grounds (I) that the Income-tax Officer had n<' jurisdiction to issue a notice after the expiry of the limit of time fixed by sub-s. (I) of s. 34, (2) that the second proviso to sub-s. (3) of s. 34 on which the Income-tax Officer relied did not apply to the case, and in any case, it was bad on the ground that it violated Art. 14 of the Constitution of India, and (3) that there was no provision in the Act under which the Appellate Tribunal could give a finding in the appeals filed by the firm V.D. or in the appeal filed by the first respondent himself that the income in question represented the income of the firm P.L. The validity of the notice was sought to be sustained on the grounds that, in any case, it could not be challenged by reason of the amendments made in s. 34 of the Indian Income tax Act, by the provisions of s. 31 of the Indian Income-tax (Amendment) Act, 1953, s. 18 of the Finance Act, 1956, and s. 4 of the Indian Income-tax (Amendment) Act, 1959. |
