Case: K. L. Varadarajan Vs. The Commissioner Of Income-Tax, Madras

think it should be taken in the context of Section 13 (1) of the Finance Act, 1950, it would include re-assessment made under the provisions of the Act. Such `re-assessment will without doubt come within the expression `levy, assessment and collection of income-tax. In this speech in Commr. for General Purposes of Income-tax for the City of London v. Gibbs, 1942 AC 402at p. 406 Lord Simon has pointed out that the word `assessment is used in the English Income-tax Code in more than one sense; and sometimes within the bounds of the same section, two separate meanings of the word may be found. One meaning is the fixing of the sum taken to represent the actual profit and the other the actual sum in tax which the taxpayer is liable to pay.It has been contended before us that the Finance Act and the Income-tax Act should be read together as forming one code, and so read the words assessment and `re-assessment acquire definite and distinct connotations. We are unable to agree, for the reasons which we have already given, that even if we read the Finance Act along with the Income-tax Act the word assessment can be given a restricted meaning. To repeat those reasons: the Income-tax Code itself uses the word assessment in different senses, and in the context and collocation of the words of the Finance Act, the word `assessment is capable of bearing a comprehensive meaning only."In the context of Section 17 (1) of the Act the word "assessment" must necessarily include the reassessment under Section 34 of the Act. To hold otherwise would result in an anemalous situation. This can best be illustrated by taking a concrete case. An assessee files a declaration under Section 17 (1) of the Act in respect of the assessment year 1955-56. Supposing his assessment for the year 1956-57 is reopened and an order for reassessment is made. In case the declaration made under Section 17 (1) can be availed of only for the original assessments and not for reassessments under Section 34 of the Act, the result would necessarily be that the declaration would have to be excluded from consideration in making the reassessment for the year 1956-57 even though the declaration had been filed much earlier. This could hardly have been the intention of the legislature. The entire scheme of Section 17 (1) as well as the context in our opinion clearly shows that the word "assessment" in Section 17 (1) has been used in a comprehensive sense so as to include reassessment.8. It may also be observed that there are indications in the Act that whenever the legislature intended that the word "assessment" should not include reassessment, it used express words for the purpose. Section 33-B of the Act empowers the Commissioner of Income-tax if he considers any order passed by the income-tax officer to be erroneous and prejudicial in the interest of revenue to make inter alia in order after complying with the requirements of that section, cancelling the assessment and directing a fresh assessment. Sub-section (2) of that section makes it clear that no order can be made under that section to revise an order of reassessment made under the provisions of Section 34. If the order of assessment did not include an order of reassessment made under the provisions of Section 34, there would have been hardly any necessity of making a provision in sub-section (2) of Section 33-B that no order can be made under sub-section (1) of that section to revise an order of reassessment made under the provisions of Section 34.9. According to Section 67 of the Act, no suit shall be brought in any Civil Court to set aside or modify any assessment made under the Act. It is obvious that the protection afforded by that section would be available not only for the original assessments but also for reassessments made under Section 34 of the Act even though the word used in the section is assessment and not reassessment. Likewise, the fact that the legislature has used the word "assessments" and not "re-assessments" in the second proviso to Section 17 (1) of the Act would not exclude the applicability of that proviso to cases of reassessments subsequent to the filing of the declaration.10. The matter may also be looked at from another angle. Proceedings under Section 34 of the Act can be initiated if the Income-tax officer has reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under; the Act or excessive loss or depreciation allowance has been computed. The first of the above five contingencies deals with income, profits and gains chargeable to income-tax escaping assessment. In such an event the income-tax officer would after initiating proceedings under Section 34 make assessment of such income, profit or gain. In the order four contingencies, the order made by the income-tax officer would be for re-assessing such income, profit or gain or re-computing the loss or depreciation allowance. If the view propounded on behalf of the revenue were to be accepted that assessment does not include reassessment made under Section 34 of the Act, the result would be that the benefit of the declaration made under Section 17 (1) of the Act, in case other conditions are fulfilled, would be available only in the first contingency mentioned above relating to escapted assessment and not in the remaining contingencies because they pertain to reassessment. This would certainly be anomalous for it would result in placing persons whose income has escapted assessment in a better position compared to persons whose income has been under-assessed or assessed at too law a rate or has been the subject of excessive relief under the Act or in; whose cases excessive loss or depreciation allowance has been computed. This could hardly have been the intention of the legislature.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]6. After hearing the learned counsel for the parties, we are of the opinion that the submission made by Mr. Desai is well founded. The assessee, as mentioned earlier, filed the declaration in the course of assessment proceedings relating to the year 1958-59 on March 24, 1959. Although the above declaration was rejected by the income-tax officer, the Appellate Assistant Commissioner on appeal in respect of assessment for the assessment year 1958-59 held that there was sufficient cause for the assessee in not making the declaration on the first occasion on which he became assessable and that his failure to make much declaration had not resulted in reducing his liability to tax for any year. The assessee was accordingly allowed to make the declaration after the expiry of the prescribed period. According to the second proviso to Section 17 (1) of the Act, once the assessee is allowed to make the declaration after the expiry of the period specified "such declaration shall have effect in relation to the assessment for the year in which the declaration is made (if such assessment had not been completed before such declaration) and all assessments thereafter". The words of the second proviso to Section 17 (1) reproduced above make it clear that the declaration would be operative not only for the assessment for the year in which the declaration is made if such assessment had not been completed before such declaration, but also for all assessments to be made thereafter. The words "all assessments thereafter", in our opinion, signify not only assessments for the subsequent years but would also cover assessments for the earlier years in case the assessments for those earlier years are being made subsequent to the filing of the declaration. The words "all assessments thereafter" have a wide amplitude and we see no cogent reason for not giving them their natural meaning or for restricting their scope. Those words would include within their ambit all assessments made subsequent to the filing of the declaration and it would be wrong to so construe them as if the legislature had used the words "all assessments for the subsequentthe context of Section 17 (1) of the Act the word "assessment" must necessarily include the reassessment under Section 34 of the Act. To hold otherwise would result in an anemalous situation. This can best be illustrated by taking a concrete case. An assessee files a declaration under Section 17 (1) of the Act in respect of the assessment year 1955-56. Supposing his assessment for the year 1956-57 is reopened and an order for reassessment is made. In case the declaration made under Section 17 (1) can be availed of only for the original assessments and not for reassessments under Section 34 of the Act, the result would necessarily be that the declaration would have to be excluded from consideration in making the reassessment for the year 1956-57 even though the declaration had been filed much earlier. This could hardly have been the intention of the legislature. The entire scheme of Section 17 (1) as well as the context in our opinion clearly shows that the word "assessment" in Section 17 (1) has been used in a comprehensive sense so as to include reassessment.8. It may also be observed that there are indications in the Act that whenever the legislature intended that the word "assessment" should not include reassessment, it used express words for the purpose. Section 33-B of the Act empowers the Commissioner of Income-tax if he considers any order passed by the income-tax officer to be erroneous and prejudicial in the interest of revenue to make inter alia in order after complying with the requirements of that section, cancelling the assessment and directing a fresh assessment. Sub-section (2) of that section makes it clear that no order can be made under that section to revise an order of reassessment made under the provisions of Section 34. If the order of assessment did not include an order of reassessment made under the provisions of Section 34, there would have been hardly any necessity of making a provision in sub-section (2) of Section 33-B that no order can be made under sub-section (1) of that section to revise an order of reassessment made under the provisions of Section 34.9. According to Section 67 of the Act, no suit shall be brought in any Civil Court to set aside or modify any assessment made under the Act. It is obvious that the protection afforded by that section would be available not only for the original assessments but also for reassessments made under Section 34 of the Act even though the word used in the section is assessment and not reassessment. Likewise, the fact that the legislature has used the word "assessments" and not "re-assessments" in the second proviso to Section 17 (1) of the Act would not exclude the applicability of that proviso to cases of reassessments subsequent to the filing of the declaration.10. The matter may also be looked at from another angle. Proceedings under Section 34 of the Act can be initiated if the Income-tax officer has reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under; the Act or excessive loss or depreciation allowance has been computed. The first of the above five contingencies deals with income, profits and gains chargeable to income-tax escaping assessment. In such an event the income-tax officer would after initiating proceedings under Section 34 make assessment of such income, profit or gain. In the order four contingencies, the order made by the income-tax officer would be for re-assessing such income, profit or gain or re-computing the loss or depreciation allowance. If the view propounded on behalf of the revenue were to be accepted that assessment does not include reassessment made under Section 34 of the Act, the result would be that the benefit of the declaration made under Section 17 (1) of the Act, in case other conditions are fulfilled, would be available only in the first contingency mentioned above relating to escapted assessment and not in the remaining contingencies because they pertain to reassessment. This would certainly be anomalous for it would result in placing persons whose income has escapted assessment in a better position compared to persons whose income has been under-assessed or assessed at too law a rate or has been the subject of excessive relief under the Act or in; whose cases excessive loss or depreciation allowance has been computed. This could hardly have been the intention of the legislature.