Appeal No 509 of 1958
Appeal from the judgment and order dated February 22 1956 of the Madras High Court in Case referred No 6652
K N Rajagopal Sastri and P D Menon for appellant
T section Venkataraman and M K Ramamurthi for respondents
139 1962
December 12
The following judgments were delivered
section K Das J J L Kapur J and A K Sarkardelivered separate judgments
The judgment of M Hidayatullah and Raghubar Dayal JJ was delivered by Hidayatullah J section K DAS J
The facts of this appeal have been stated by my learned brother Kapur J and as I am in agreement with him I need not re state the facts
The relevant assessment year was 1942 1943
The proceedings under section 34 of the Indian Income tax Act 1922 were initiated with the issue of a notice on July 25 1949
The assessee s contention was that the initiation of proceedings on July 25 1949 was invalid as the department s right to revive the assessment was governed by old section 34 where the period of limitation prescribed was only four years in the case of a failure to file a return and this period having expired on March 311947 and the Amending Act of 1948 XLVIII of 1948 having come into force on March 30 1948 the eight years  provided period therein could not be invoked
The High Court upheld this contention and said  In our opinion the contention of the learned counsel for the assessee is well founded that the new rule of limitation of eight years prescribed by the amended section 34 would not apply to the case of the assessee before us whose was an instance of a failure to submit a return when the period of four years had ran out long before 30th March 1948 when the amended section 34 came into force as part of the Income tax Act with effect from that date 30th March 1948
The learned counsel for the Department next referred to section 31 of Act XXV of 1953 140 in support of his contention that the notice issued on 25th July 1949 was valid
The learned counsel himself had to realise that section 31 of Act XXV of 1953 did not enlarge the scope of the amended section 34 nor did it purport to amend it
The validity of the notice dated 25th July 1949 will still have to be decided with reference to the provisions of the amended section 34
Section 31 of Act XXV of 1953 does not therefore affect the question at issue whether the extended period of limitation of eight years would apply to the assessee when the period of limitation applicable to the assessee had expired before the amended section 34 came into force on 30th March 1948
 For the reasons given by me in section C Prashar Income tax Officer vs Vasantsen Dwarkadas 1 C A 7051957 in which judgment has been delivered today I think that the High Court correctly answered the question referred to it
I would therefore dismiss the appeal with costs
KAPUR J This is an appeal against the judgment and order of the High Court of  Madras
The appellant is the Commissioner of Income tax and the respondent is the assessee and the year of assessment is 1942 43
The respondent is the wife of one Sheikh Abdul Khadar who was residing abroad in Bangkok from September 1940 to July 1947
Daring that period he remitted moneys in the name of his agent for payment to the respondent
In the account year the aggregate amount so remitted was Rs 9180 
The respondent submitted no return of her income as she was bound to do and the amount became taxable 1 1964 Vol 1 SCR 29 141 under section 4 2 of the Income tax Act hereinafter referred to as the Act in 1949 the Income tax Officer on receipt of definite information that such income had escaped assessment issued a notice under section 34 of the Act as amended by the Amending Act of 1948 and an appeal was taken to the Appellate Assistant Commissioner but the assessment was con firmed
A further appeal to the Income tax Appellate Tribunal Madras was also unsuccessful
The reference was thereupon made to the High Court and one of the questions referred was  Whether the proceedings under section 34 of the Indian Income tax Act initiated on 25th July 1949 to assess the amount of Rs 9180 which escaped assessment during the year 1942 43 by failure to submit a voluntary return are valid in law It was held that the limitation of eight years prescribed by section 34 as amended by the Amending Act of 1948 did not apply to the case of the assessee which was a case of failure to submit the return and the period of four years  had expired before March 30 1948 when the amendment in section 34 was made by Amending Act of 1948
It was also held that section 31 of the Amending Act of 1953 was not applicable and the question was therefore answered in the negative
Against that judgment and order the Commissioner of Income tax has come in appeal to this Court
This case is governed by the decision in C A No 705 57 section C Prashar Income tax Officer vs Vasantsen Dwarkadas 1 the judgment in which has been delivered today
The appeal is therefore dismissed with costs
The appellant was granted the certificate by the High Court expressly on the condition that he would pay the costs of this appeal in any event to which he had agreed
11964 Vol
1 SCR 29
142 SARKAR J
The respondent in this appeal is the assessee
She is the wife of one Sheikh Abdul Khader who lived in Siam
In the year 1941 42 she received from her husband from Siam a sum of Rs 9180 
It is not disputed that this amount constituted  income in her hands within section 4 2 of the Income tax Act 1922
She did not however submit any return in respect of it
On July 25 1949 a notice under section 34 of the Act was issued to her asking her to file a return
Thereafter she was assessed on the aforesaid income on October 24 1949
She appealed from that order but was unsuccessful in having the assessment set aside
At her request the Appellate Tribunal submitted the following question to the High Court at Madras for its decision Whether the proceedings under section 34 of the Indian Income tax Act initiated on 25th July 1949 to assess the amount of Rs 9180 which escaped assessment during the year 1942 43 by failure to submit a voluntary return are valid in law  The High Court answered the question in the negative
The revenue authorities have therefore come up in appeal
Section 34 contains provisions for assessment and re assessment in cases where income for any year has not in the relevant assessment year been fully assessed for the reasons mentioned in it
With these reasons it is not necessary to trouble ourselves in this appeal
Sub section 1 of section 34 deals with the period of time within which a notice calling for a return of the escaped income may be served and sub section
3 deals with time within which the assessment can be made
This section was amended by the Income tax and Business Profits Tax Amendment Act 1948
This Act was passed on 143 September 8 1948 but the section which amended section 34 of the Income tax Act was brought into force retrospectively from March 30 1948
It is not in dispute that under section 34 as it stood before the amendment the time to issue the notice calling for a return and to make the assessment in this case had expired on March 31 1947 that is on the expiry of four years after the year in which the escaped income was first assessable namely 1942 43
It is not in dispute either that under section 34 as it stood after the amendment in 1948 the notice could be served and an assessment made within eight years from the end of that year that is in this case within March 31 1951
The notice and the assessment order impugned in this case have therefore to be held to be valid if section 34 after its amendment in 1946 was applicable
It is the contention of the appellant that it was so applicable
The High Court held that the time having already expired under the existing law the amended section 34 could not be given retrospective operation to validate the notice and the order of assessment
Now on May 24 1953 was passed the Income tax Amendment Act 1953 XXV of 1953 which was brought into force retrospectively from April 1 1952
This Act contained a section namely section 31 which to my mind makes section 34 as amended by the 1948 amending Act applicable to the proceedings in this case
I am unable to accept the High Court s view to the contrary and regret my inability to comprehend the reasons on which that view is based
That section also amended sub section
3 of section 34 so as to include in it provisions regarding the time of the issue of the notice but we will not be concerned with this amendment in this appeal
Now section 31 is in these terms  Section 31 For the removal of doubts it is hereby declared that the provisions of 144 sub sections 1 2 and 3 of section 34 of the principal Act shall apply and shall be deemed always to have applied to any assessment or re assessment for any year ending before the 1st day of April 1948 in any case where proceedings in respect of such assessment or re assessment were commenced under the said sub sections after the 8th day of September 1948 and any notice issued in accordance with sub section 1 or any assessment completed in pursuance of such notice within the time specified in sub section3 whether before or after the commencement of the Indian Income tax Amendment Act 1953 shall notwithstanding any judgment or order of any Court Appellate Tribunal or Incometax authority to the contrary be deemed to have been validly issued or completed as the case may be and no such notice assessment or re assessment shall be called in question on the ground merely that the provisions of section 34 did not apply or purport to apply in respect of an assessment or re assessment for any year prior to the 1st day of April 1948 No question as to sub section
2 of section 34 mentioned in this section arises in this appeal and that sub section may be left out of consideration
It seems to me quite plain that section 31 of the 1953 Act applies sub sections
1 and 3 of section 34 of the Income tax Act 1922 hereafter called the principal Act as it stood after the 1948 amendment to assessment proceedings in respect of years ending before April 1 1948 where the proceedings commenced after September 8 1948 and makes the validity of the proceedings depend on that section as so amended
Indeed the contrary has not been contended at the bar
It has to be remembered that the amending Act of 1948 was passed on September 8 1948 145 but it was given retrospective effect from March 30 1948
It may be stated that the amending Act repealed the existing section 34 of the principal Act and substituted for it a new section
I think it is quite clear that the pre existing section 34 which was repealed by the 1948 amendment could not have applied to proceedings commenced after repeal
There was no question of applying the pre existing law to such proceedings
But where the proceedings related to a period when the per existing law was in force there might be some doubt as to which law was to apply
Section 31 was enacted to remove that doubt and to make section 34 of the principal Act as it stood after the 1948 amendment applicable to these proceedings
That is why the words shall always be deemed to have applied are used they emphasise that the amended section is deemed always to have applied to proceedings even in respect of a period when the amendment had not been made
The latter part of section 31 also makes this view equally clear
It says that no notice or order of assessment shall be called in question on the ground that section 34 did not apply in respect of assessment for a year prior to April 1 1948
Section 34 here contemplated must be the section as amended in 1948 for if it was not so then it would be the pre existing section which of course would have applied if not repealed to an assessment for a year ending prior to April 1 1948 and no question of its not so applying would have arisen
I thus arrive at the conclusion that under section 31 of the 1953 Act the provisions of sub sections
1 and 3 I leave sub section
2 out as irrelevant of section 34 of the principal Act as amended in 1948 are to be applied and deemed always to have applied to assessment proceedings in respect of a year ended before April 1 1948 where the proceedings were commenced after September 8 1948 A notice issued and an order of assessment made in such proceedings are to 146 be held valid if the notice is issued in accordance with sub section 1 of section 34 as it stood after the 1948 amendment and the assessment is completed in pursuance of such notice within the time specified in sub section 3 of the same section 34
Now the notice and assessment in tie present case satisfy all these conditions
To them therefore section 34 as amended in 1948 applies
Judged by that section admittedly the notice and assessment order are unexceptionable
It is true that in the present case when the notice was issued and the assessment made the time to do either under the law as it stood before the 1948 amendment had expired
It may be that law would have applied to it if the 1953 Act had not been passed
It may also be as was said in the Calcutta Discount Co 1 case that by itself the 1948 amendment of section 34 would not have permitted assessment proceedings in respect of 1942 43 to be commenced in 1949 when under the previous law the time to issue a notice and to make an assessment for that year had expired before the 1948 amendment had come into force
All this however is to no purpose
No such question arises here
The legislature had undoubtedly the power to makes
34 as amended in 1948 apply to an assessment for 1942 43 by giving it a retrospective operation inspite of the time to issue a notice and to make an assessment fixed by the preexisting law having expired before the amendment came into effect
The question really is one of interpretation namely whether the legislature had given such retrospective operation
Now it seems to me that section 31 of the 1953 Act clearly gives section 34 of the principal Act as amended in 1948 such retrospective operation
It plainly makes section 34 as so amended applicable to assessments for years ended before the amendment came into force
It does not say that section 34 as amended is to apply to assessments for these years only when the time to 1 IAR 147 issue the notice or make the assessment in respect of these years under the pre existing law had not expired
It applies the amended section 34 to any assessment for any year ending before the 1st day of April 1948 in an case where proceedings    were commenced after the 8th day of September 1948
Likewise any notice and any assessment in respect of any year ending before April 1 1948 is to be held valid if valid under section 34 as amended in 1948
I find no justification in view of the language used to interpret section 31 as applying section 34 as amended in 1948 only to cases where thetime to issue the notice and make the assessment hadnot expired while the pre existing law was in force
The latter part of section 31 seems to lead independently to the same conclusion
It makes any notice issued in accordance with sub section 1 or any assessment completed in pursuance of such notice within the time specified in sub section 3 valid
All that is necessary is that all notices and assessment orders in respect of years ending before April 1 1948 in proceedings commenced after April 81948 shall comply with the provisions of section 34 as amended in 1948
So a notice and an assessment order valid under section 34 as amended in 1948 would be valid even if the time prescribed in respect of them by section 34 as it stood before the 1948 amendment had expired
In my view for these reasons section 34 of the principal Act as amended in 1948 applies to the notice issued and the assessment order made in this case
Both of them are valid under section 34 as so amended
The High Court should have answered the question framed in the affirmative
In the result I would allow the appeal and set aside the order of the High Court
The appellant will however pay the respondent s costs of this appeal as it had agreed to do so as appears from the certificate on which this appeal has been admitted
148 For the judgment of Hidayatullah and Raghubar Dayal JJ see section C Prashar Income tax Officer vs Vasantsen Dwarkadas ante p 29 By COURT  In accordance with the opinion of the Omajority the appeal is allowed
The appellant will pay the costs of the respondent as was agreed to by the parties
Appeal allowed


Summary:
In the year of account relevant to the assessment year 1942 43 the assessee received Rs 9180  but submitted no return of her income
On July 25 1949 the Income tax Officer on receipt of definite information that such income had escaped assessment issued a notice to her under section 34 of the Indian Income tax Act 1922 as amended by the Indian Income tax and Business Profits Tax Amendment Act 1948
Thereafter she was assessed on the aforesaid income on October 24 1949
She challenged the validity of the proceedings under section 34 initiated on July 25 1949 on the grounds that the right to revive the assessment was governed by the provisions of section 34 before it was amended in 1948 under which the period of limitation prescribed was four years in the case of a failure to file a return and that this period having expired on March 31 1947 and the Amending Act of 1948 having come into force only March 30 1948 the eight years  period provided therein could not be invoked
For the Income tax Authorities the validity of the notice was sought to be sustained by the additional ground that in any case section 31 of the Indian Income tax Amendment Act 1953 validated the notice
Held per Sarkar Hidayatullah and Reghubar Dayal JJ Das and KapurJJ dissenting that section 34 of the Indian Income tax and Business Profits Tax Amendment Act 1948 was applicable to the proceedings in the present case and that the notice dated July 25 1949 was valid
138 Per Das and KapurJJ
The limitation of eight years prescribed by section 34 as amended by the Amending Act of 1948 did not apply to the present assessee which was a case of failure to submit the return when the period of four years had expired before March 30 1948 when the amendment in section 34 was made by the Amending Act of 1948
Section 31 of the mending Act of 1953 did not enlarge the scope of the amended section 34 and did not validate the notice dated July 25 1949
Per Sarkar J By virtue of section 31 of the Amending Act of 1953 a notice issued and an order of assessment made in respect of a year ended before April 1 1948 where the proceedings were commenced after September 8 1948 were to be held valid if the notice was issued in accordance with sub s 1 of section 34 as it stood after 1948 amendment and the assessment was completed in pursuance of such notice within the time specified in sub section
The notice and assessment in the present case satisfied all these conditions and therefore section 34 as amended in 1948 was applicable
Such a notice and an assessment order valid under section 34 as amended in 1948 would be valid even if the time prescribed in respect of them by section 34 as it stood before the 1948 amendment had expired
Per Hidayatullah and Raghubar Dayal JJ
The action was taken after 1948 amendment by which income profits and gains which had escaped assessment by reason of the omission or failure of the assessee to make a return of the income could be brought to tax after serving a notice within eight years from the end of the relevant year
Hence the notice in 1949 was within eight years from 1942 43 and was validly issued section C Prashar Income tax Officer vs Vasantsen Dwarkadas 1964 Vol 1 SCR 29
 relied on