Appeal No 1984 of 1966
Appeal from the judgment and order dated January 2 1964 of the Madras High Court in TC No
153 of 1962
section Swaminathan and R Gopalakrishnan for the appellant
Veda Vyasa A N Kirpal R N Sachthey and section P Nayar for the respondent
The Judgment of the Court was delivered by Ramaswami J
This appeal is brought from the judgment of the Madras High Court dated January 1 1964 in Tax Case No 153 of 1962
The asessment year involved in this appeal is 1948 49 the corresponding previous year being the financial year 1947 48
For the accounting period from November 13 1947 to November 1 1948 which was the corresponding previous year for the assessment year 1949 50 there was shown a credit of Rs 25000 in the capital account of the appellant
On November 13 1947 this amount was credited in the books of the appellant
On October 30 1948 this amount was transferred to the account of one Amrithlal
Ranchoodas the father in law of the appellant
The Income tax Officer included the said amount as income of the appellant from undisclosed sources in the assessment for the assessment year 1949 50
On appeal to the Appellate Assistant Commissioner the appellant contended that the amount could not be included in the assessment year 1949 50 because the credit appeared prior to March 31 1948
The Appellate Assistant Commissioner allowed the appeal holding that the credit came into the books of the appellant on November 13 1947 ie in the financial year 1947 48 which is the previous year for the assessment year 1948 49
On this finding the Appellate Assistant Commissioner deleted the addition of Rs 25000 from the assessment of the appellant for the year 1949 50
In doing so the Appellate Assistant Commissioner followed the decision in C1T vs 19 PDarolia  Sons1
Consequently on November 3 1958 the Income tax Officer issued a notice under section 341a of the Incometax Act 1922 hereinafter referred to as the Act  to the appellant for the assessment year 1948 49
By his order dated April 20 1959 he rejected the contention of the appellant that the assessment was barred by limitation and assessed the sum of Rs 25000 as income from other sources
The appellant took the matter in appeal to the Appellate Assistant Commissioner who by his order dated February 23 1960 allowed the appeal
He took the view that there was no finding in the order of the Appellate Assistant Commissioner that the credit represented the income of the appellant or that the same credit should be assessed in the assessment year 1948 49
He further held that the notice under section 34 issued on November 3 1958 was bad in law and was not saved by the second proviso to section 343 of the Act
The Commissioner of Incometax preferred an appeal against the order of the Appellate Assistant Commissioner to the Income tax Appellate Tribunal which allowed the appeal holding that the order of the Appellate Assistant Commissioner in the appeal against the assessment for 1949 50 should be taken to contain a finding that the sum of Rs 25000 represented income of the assessee to be considered in the assessment year 1948 49
At the instance of the appellant the Appellate Tribunal referred the following questions of law for the opinion of the High Court under section 661 of the Act 1 Whether on the facts and in the circumstances of the case the proceedings initiated against the assessee for the assessment year 1948 49 under section 34 and the assessment for the said year are barred by limitation and
hence not lawful 2 Whether the proceedings initiated against the assessee for the assessment year 1948 49 under section 34 and the assessment made under section 34 for the assessment year 1948 49 could be justified in law as for the purpose of giving effect to a finding or directions in the order of the Appellate Assistant Commissioner in ITA No 134 of 1958 59 3 Whether on the facts and in the circumstances of the case the assessment made is saved from the bar of limitation under the second proviso to section 343 By its judgment dated January 2 1964 the High Court answered the questions in favour of the respondent and against the appellant
The High Court followed an earlier decision in AS Khader Ismail vs Income tax officer1 in which it had held that the word finding in the proviso to section 343 of the Act must be given a 1 2 20 wide significance so as to include not only findings necessary for the disposal of the appeal but it would apply to cases where it is held that the income in question was in respect of an earlier year which was not the subject matter of the appeal before the appellate authority
On behalf of the appellant Mr Swaminathan put forward the argument that the decision of the High Court is contrary to the view taken by this Court in Income tax Officer A Ward Sitapur vs Murlidhar Bhagwan Das1 in which it was held that the expressions finding and direction in the second proviso to section 343 meant respectively a finding necessary for giving relief in respect of the assessment for the year in question and a direction which the appellate or revisional authority as the case may be was empowered to give under the sections mentioned in that proviso
A finding therefore could only be that which was necessary for the disposal of an appeal in respect of an assessment of a particular year
The Appellate Assistant Commissioner might hold on the evidence that the income shown by the assessee was not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal
The finding in that context was that the income did not belong to the relevant year
He might incidentally find that the income belonged to another year but that was not a finding necessary for the disposal of an appeal in respect of the year of assessment in question
It was further held that the second proviso to section 343 did not save the time limit prescribed under section 341 in respect of an escaped assessment of a year other than that which was the subject matter of the appeal or revision as the case may be and accordingly the notice issued under section 341 a in that case was barred by limitation and was not saved by the second proviso to section 343
In the course of its judgment this Court overruled the judgment of the Madras High Court in A section Khader Ismail vs Income tax Officer1
It follows therefore that the view taken by the High Court in the present case is not correct in law and must be overruled
On behalf of the respondent however Mr Veda Vyasa con tended that in answering the reference the effect of section 2 of the Income tax Amendment Act Act 1 of 1959 must be taken into consideration and in view of the amendment made by that section of the amending Act the questions referred to the High Court must be answered necessarily against the appellant
Section 2 of the Amendment Act
1959 inserted in section 34 of the Act a new sub section 4 which provides A notice under clause a of sub section 1 may be issued at any time notwithstanding that at the time of the issue of the notice the period of eight years specified 152 ITR 335
2 21 in that subsection before its amendment by clause of section 18 of the Finance Act 1956 18 of 1956 had expired in respect of the year to which the notice relates
Section 4 of the Amending Act 1959 read as follows No notice issued under clause a of sub section 1 of section 34 of the principal Act at any time before the commencement of this Act and no assessment reassessment or settlement made or other proceeding taken in consequence of such notice shall be called in question in any court tribunal or other authority merely on the ground that at the time the notice was issued or at the time the assessment or re assessment was made the time within which such notice should have been issued or the assessment or re assessment should have been made under that section as in force before its amendment by clause a of section 18 of the Finance Act 1956 18 of 1956 had expired
 Mr Veda Vyasa referred to the decision of the Bombay High Court in Onkarmal Meghraj vs CIT Bombay I1 in which it was held that there was nothing in section 2 or 4 of the Amendment Act of 1959 to restrict the terms of the words at any time occurring in section 4 of that Act as meaning at any time after April 1 1956 viz the date on which the amendments made by the Finance Act 1956 came into force and there was nothing in the provisions of the Amendment Act of 1959 which limited the retrospective operation of section 4
It was also held that since the enactment of the Amendment Act of 1959 a notice issued after April 1 1956 for reopening an assessment by virtue of section 4 could not be permitted to be called in question on the ground that the notice was not issued within the period prescribed by the unamended section 341a
On behalf of the respondent reference was also made to the decision of this Court in section C Prashar vs Vasantsen Dwarkadas2 in which it was held that section 4 of the Amendment Act 1959 operated on and validated notices issued under section 341a as amended in 1948 even earlier than April 1 1956 in other words in respect of assessment years prior to March 31 1956
and therefore notices issued under section 341a of the Income tax Act before April 1 1956 could not be challenged on the ground that they were issued beyond the time limit of eight years from the respective assessment years prescribed by the 1948 amendment
On behalf of the appellant Mr Swaminathan raised the objection that the point was not taken up by the respondent in the High Court nor was there any reference to it in the statement of the case tiled by the respondent
It was also contended that the point raised was outside the scope of the questions of law referred by the Appellate Tribunal to the High Court
We do not think there is any substance in the 1 2   22 objection raised on behalf of the appellant
One of the questions referred to the High Court is whether on the facts and in the circumstances of the case the assessment made is saved from the bar of limitation under the second proviso to section 343 It is true that the impact of the Amending Act 1959 Act 1 of 1959 was not raised before the Appellate Tribunal or before the High Court but it is not a separate question by itself and is only an aspect of the question of limitation which has already been referred by the Appellate Tribunal to the High Court
As pointed out in CIT Bombay V Scindia Steam Navigation Co Ltd1 the question of law referred to the High Court under section 66 may be a simple one having its impact on one point or it might be a complex one involving more than one aspect and requiring to be tackled from different standpoints
All that section 661 requires is that the question of law which is referred to the High Court and which the High Court is to decide must be the question which was in issue before the Tribunal
Where the question itself was under issue there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal and it will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 661 of the Act
In our opinion the argument of the respondent with regard to the legal effect of the Amending Act of 1959 Act 1 of 1959 is within the frame work of the question already referred to the High Court and it is therefore competent to this Court in a case of this description to allow a new contention to be advanced
It is however necessary that the case should be remanded to the High Court for examining the question of law referred to it after considering the impact of the Amending Act of 1959 Act 1 of 1959
For these reasons we allow this appeal set aside the judg ment of the High Court dated January 2 1964 and remand the case to it for further hearing and answering the reference in light of the Income tax Amending Act 1 of 1959
In the circumstances of the case we direct that the respondent should pay the cost of this appeal in this Court Appeal allowed


Summary:
There was a cash credit in November 13 1947 in the capital account of the Appellant assessee whose accounting period was from November 13 1947 to November 1 1948
The Income tax Officer assessed the said credit as income from undisclosed sources in the assessment for the assessment year 1949 50
The Appellate Assistant Commissioner relying on CIT vs Darolia  Sons
held that the amount was not taxable in the assessment year 1949 50
The Income tax Officer thereupon assessed the amount in 1948 49 after having issued in November 1958 a notice under section 341 a of the Indian Income  tax Act 1922
He rejected the appellant s contention that notice under the said section was timebarred
In appeal the Appellate Assistant Commissioner held that in the earlier appeal there was no finding that the credit represented the assessee s income or that it should be assessed in the year 1948 49 and that consequently the notice under section 34 issued in November 1958 was not saved by the second proviso to section 343 of the Act
The appeal filed by the Revenue was allowed by the Tribunal and in reference the Madras High Court relying on its own ruling in AS Khader Ismail vs Income tax Officer upheld the order of the Tribunal
The appellant came to this Court and relied on this Court s decision in Income Tax Officer A Ward Sitapur vs Murlidhar Bhagwandas in which the aforesaid Madras decision had been overruled
The Revenue urged that in answering the reference the effect of section 2 of the Income tax Amendment Act 1959 must be taken into consideration
To this the appellant objected that the point was outside the scope of the questions of law referred by the Appellate Tribunal to the High Court
HELDi The view taken by the Madras High Court as to the scope of the word finding  in A section Khader Ismail s case and followed by it in the present case had been overruled by this Court
Accordingly the department could not take advantage of the second proviso to section 343
20E F Income Tax Officer A Ward Sitapur vs Murlidhar Bhagwan Das  applied iiHowever the impact of section 2 of the Amending Act of 1959 had to be considered before the reference could be properly answered
Although the question had not been raised before the Tribunal or the High Court it was only an aspect of the question of limitation which had been referred
All that section 661 requires is that the question of law which is referred to the High Court and which the High Court is to decide must be the question which was in issue before 18 the Tribunal
When the question itself was under issue there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal and it will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 661 of the Act
22B D CIT Bombay vs Scindia Steam Navigation Co Ltd 42 ITR 589 applied
Onkarmal Mehraj vs CIT Bombay 1  and section C Prashar vs Vasantsen Dwarkadas   referred to
On the above view the case was remanded to the High Court for examining the question of law referred to it after considering the impact of the Amendment Act of 1959