Case: The First Additional Income-Tax Officer, Mysore Vs. H.N.S. Iyengar

. . . . . . . . . . . . . . . . . ." It is quite clear from this section that according in 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, 1948, and the assessment was for the year ending on March 31, 1949 under sub-secs. (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. 6. Coming now to S. 22(1) it is there provided thatS. 22 (1) "The Income-tax Officer shall, on or before the 1st day of May in each year give notice by publication in the press and by 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 not being 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. 7. When under S. 34 (l)(a) a return is required the return has to be made under S. 22 for any year, and when the reference is to omission to make a return of the income under S. 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-s (1) to S. 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 S. 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. 8. With due respect to the learned Judges of the High Court who gave the decision, the view taken by them as to the meaning of "any year" was erroneous, and the correct way of interpreting S. 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 S. 34(1) (a) have reference to the assessment year and not the accounting year. 9. Our attention was drawn to a judgment of this court in Pannalal Nandlal v. Commr. of Income-tax. Bombay City, (1961) 41 ITR 76 : (AIR 1961 SC 446 ). In that case it was held that once a notice is given in the prescribed manner under S. 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 S. 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 S. 34 was applied the assessment was not barred by the law of Limitation. It was also observed at Page 79 (of ITR) : (at p. 448 of AIR) that "the appellant not having submitted a return in pursuance of the notice issued under S. 22(1) the Income-tax Officer was competent under S. 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". 10. The appellant also relied upon C. W. Spencer v. Income-tax Officer, Madras, (1957) 31 ITR 107 : ((S) AIR 1957 Mad 133). It was there observed :"The period of limitation, whether it is eight years for cases falling under S. 34(1)(a) or four years falling under S. 34(1)(b), has to be computed from the end of that year. Though the expression "year" has not been further defined by S. 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." 11. In our opinion therefore, the view taken by the Madras High Court in C. W. Spencers case, (1957) 31 ITR 107 : ( (S) AIR 1957 Mad 133 ) is the correct view and the view taken by the learned judges of the Mysore High Court is erroneous.

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

Explanation:
1[ds]It is quite clear from this section that according in 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, 1948, and the assessment was for the year ending on March 31, 1949 under sub-secs. (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 1948It 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 yearyear. 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 S. 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 year8. With due respect to the learned Judges of the High Court who gave the decision, the view taken by them as to the meaning of "any year" was erroneous, and the correct way of interpreting S. 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 S. 34(1) (a) have reference to the assessment year and not the accounting yearIn our opinion therefore, the view taken by the Madras High Court in C. W. Spencers case, (1957) 31 ITR 107 : ( (S) AIR 1957 Mad 133  ) is the correct view and the view taken by the learned judges of the Mysore High Court is erroneous.