Civil Appeal No 60 of 1961
2 Appeal from the judgment and order dated September 15 1958 of the Mysore High Court at Bangalore in Writ Petition No 144 of 1957
K N Rajagopal Sastri and P D Menon for for the appellant
Rameshwar Nath section N Andley and P L Vohra for the respondent
October 5
The Judgment of the Court was delivered by KAPUR J
This is an appeal on a certificate of the High Court under article 133 1c of the Constitution against the judgment and order of the High Court of Mysore passed in a petition under article 226 of the Constitution of India
The appellant before us is the 1st Additional Income tax officer and the respondent is the assessee and the matter relates to the assessment year 1948 49 the accounting year being 1947 48
The facts of this appeal are as follows
On November 27 1956 a notice was issued to the respondent under B 34 1a of the Indian Income tax Act calling upon him to make a return on the ground that his income had escaped assessment for the assessment year ending 31st March 1949
This notice was served on the respondent on November 29 1956
The respondent objected that no notice under B 34 of the Income tax Act could be issued to him because of the lapse of eight years from the end of the accounting year
This objection was overruled and the respondent filed on June 12 1957 in the High Court of Mysore a petition under article 226 of the Constitution for a writ of certiorari quashing the order made by the Income tax officer
The High Court held on a construction of s 34 of the India Income tax Act that the words any year as used in section 311a mean not the assessment year but the accounting year
It is that question which is required to be decided in this appeal
Section 341 a reads 3 section 341 If a the Income tax officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year income profits or gains chargeable to income tax have escaped assessment for that year or have been under assessed or assessed at too low a date or have been made the subject of excessive relief under the Act or excessive loss or depreciation allowance has been computed or b       he may in cases falling under clause a at any time within eight years serve on the assessee or if the assessee is a company on the principal officer thereof a notice containing all or any of the requirement which may be included in a notice under sub section 2 of section 22 and may proceed to assess or re assess such income profits or gains or recompute the loss or depreciation allowance and the provisions of this Act shall so for as may be apply accordingly as if the notice were a notice issued under that sub section
The argument is that the words any year in cla refer to the assessment year because under the Income tax Act the income of the previous year is assessed for the assessment year
For this purpose reference was made to some of the other provisions of the Income tax Act
In section 3 of that Act which is the charging section it is provided section 3 Where any Central Act enacts that income tax shall be charged for any year at any rate or rates tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions 4 of this Act in respect of the total income of the previous year of every individual Hindu undivided family company and other local authority and of every firm and other ar association of persons or the partners of the firm or the members of the association individually  
This shows that income tax is charged for any year at the rate or rates set out in a Central Act and the reference is to the Indian Finance Act in this case to that of 1948 Act XX of 1948 Section 9 of that Act reads as follows section 91 Subject to the provisions of sub sections 34 5 and 6 for the year beginning on the 1st day of April 1948 a income tax shall be charged at the rates specified in Part I of the Second Schedule to this Act and b      2 In making any assessment for the year ending on the 31st day of March 1949   3 In making any assessment for the year ending on the 31st day of March 1949 a      b     
It is quite clear from this section that according in to the Finance Act 1948 the income tax was to be charged at the rates specified in the Schedule attached thereto for the year beginning on the 1st day of April 1918 and the assessment was for the year ending on March 31 1949 under sub sections
2 and 3
Thus according to the Indian Finance Act assessment was to be made for the year ending March 31 1949 at rates specified for the year beginning April 1 1948
Coming now to 8
221 it is there 1 provided that section 221 The Income tax officer 5 shall can or before the 1st day of May in each year give notice by publication in the press and publication in the prescribed manner requiring every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income tax to furnish within such period less than sixty days as may be specified in the notice a return in the prescribed manner setting forth along with such other particulars as may be required by the notice his total income and total world income during that year    It shows therefore that a return has to be made for the year of assessment in regard to the total income during the previous year which is the accounting year in other words income tax is assessed for the assessment year on total income of the previous year
When under section 34 1 a a return is required the return has to be made under section 22 for any year and when the reference is to omission to make a return of the income under section 22 for any year the year is the assessment year although the income which is declared relates to the previous year
The reference in cl
a of sub section
1 to B 22 of the Act therefore makes the meaning of the phrase for any year referable to an assessment year
The clause makes it clear that an assessee can be called upon to make a full and true disclosure of all materials necessary for his assessment of that year which necessarily must mean an assessment year and it is in our opinion erroneous to say that a return under section 22 of the assessees income for any year would have a different meaning in the first part from that dealing with the full and true disclosure of all material facts necessary for the assessment for that year
With due respect to the learned Judges of the High Court who gave the decision the view 6 taken by them as to the meaning of any year was erroneous and the correct way of interpreting section 34 1 a is that the words for any year mean for any assessment year and not for any accounting year because as we have said above the assessment is for the assessment year although of the income which accrued in the previous year
It may be added that the previous year for different heads of income falling under different sections of the Indian Income tax Act may vary and it could not have been the intention of the Legislature to give different starting points of limitation for different sources of income
Reading the various sections of the Indian Income Tax Act which are set out above and the provisions of Indian Finance Act 1948 it is clear that the words that year in section 311 a have reference to the assessment year and not the accounting year
Our attention was drawn to a judgment of this court in Pannalal Nandlal Bhandari vs Commissioner of Income tax Bombay City1
In that case it was held that once a notice is given in the prescribed manner under section 22 1 of the Income tax Act every person whose income exceeds the maximum amount exempt from tax is obliged to submit a return and if he does not do so it will be deemed that there was an omission on his part within section 34 1 a
The question now debated was not raised there but it was observed that the notices had been issued within eight years from the end of the years of assessment and if cl
1 a of section 34 was applied the assessment was not barred by the law of Limitation
It was also observed at page 79 that the appellant not having submitted a return in pursuance of the notice issued under section 22 1  the Income tax officer was competent under section 34 1 a to issue notice at any time within eight years of the end of the year of assessment for assessing him to tax
11961 2 section C R 35 7 The appellant also relied upon CW Spencer vs Income tax officer Madras1
It was there observed The period of limitation whether it is eight years for cases falling under section 34 1 a or four years falling under section 34 1 b has to be computed from the end of that year
Though the expression year has not been further defined by section 34 itself it should be clear from the context to the section itself that the year referred to is the assessment year and has no reference to the accounting year which is elsewhere specified by the Act itself as the previous year
 In our opinion therefore the view taken by the Madras High Court in C W Spencer s 1 case is the correct view and the view taken by the learned judges of the Mysore High Court is erroneous
We therefore allow this appeal set aside the judgment and order of the High Court by which the proceedings taken against the respondent were quashed
The respondent will pay the costs of the appeal in this court and in the High Court


Summary:
In 1956 a notice was issued to the respondent under section 341a of the Indian Income tax Act calling upon him to make a return on the ground that his income had escaped assessment for the year ending 31st March 1949 The respondent contended that notice under section 34 of the Act could not be issued to him because of the lapse of eight years from the end of the accounting year
This contention was not accepted by the Income Tax officer
The assessee then filed an application under article 226 of the Constitution
The High Court held on a construction of section 34 of the Act that the words any year  as used in section 341a mean
not the assessment year but the accounting year
The Income tax officer appealed The contention was that the words any year  in cl
a refer to the assessment year
 Held that the correct way of interpreting section 341a of the Indian Income tax Act 1922 read with the provisions of the Indian Finance Act 1948 is that the words for any year  mean for any assessment year and not for any accounting year because the assessment is for the assessment year although of the income which accrued in the previous year year of account The Previous year for different heads of income falling under different sections of the Indian Income tax Act may vary but does not give different starting points of limitation for different sources of income
Panna Lal Nand Lal Bhandari vs Commmissioner of Income Tax Bombay City   referred to
C W Spencer vs Income tax officer Madras  approved