Case: Bhanji Bagawandas Vs. Commissioner Of Income-Tax, Madras

reference the effect of Section 2 of the Income-tax (Amendment) Act (Act I of 1959) must be taken into consideration and in view of the amendment made by that Section of the amending Act the question 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 in that sub-section before its amendment by clause (a) 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, re-assessment 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 Vyas referred to the decision of the Bombay High Court in Onkarmal Meghraj v. Commr. of Income-tax, Bombay-1, (1960) 38 ITR 369 = (AIR 1960 Bom 163 ) in which it was held that there was nothing in Section 2 or 4 of the Amending 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 34 (1) (a). On behalf of the respondent reference was also made to the decision of this Court in S. C. Prashar v. Vasantsen Dwarkadas, (1963) 49 ITR (SC) 1 = (AIR 1963 SC 1356 ), in which it was held that Section 4 of the Amendment Act, 1959 operated on and validated notices issued under Section 34 (1) (a) 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 S. 34(1)(a) 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 filed 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 objection raised on behalf of the appellant. One of the questions referred to the High Court is "whether on the facts in the circumstances of the case, the assessment made is saved from the bar of limitation under the second proviso to Section 34 (3)?"It is true that the impact of the Amending Act, l959 (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 Commr. of Income-tax, Bombay v. Scindia Steam Navigation Co. Ltd., 1961-42 ITR 589 = (AIR 1961 SC 1633 ) 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 66 (1) 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 far the purpose of S. 66 (1) 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. 5. 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 l959).

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

Explanation:
1[ds]It follows therefore that the view taken by the High Court in the present case is not correct in law and must be overruledWe do not think there is any substance in the objection raised on behalf of the appellantIt is true that the impact of the Amending Act, l959 (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 CourtWhere 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 far the purpose of S. 66 (1) 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 advanced5. 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 l959).