Case: Banarasi Devi Vs. Income Tax Officer &amp; Others

The material facts lie in a small compass and they are as follows. For the assessment yearthe appellant in Civil Appeal No. 142 of 1963 filed a return of her income before theOfficer, District IV, Calcutta, and the assessment was completed sometime in 1948 as a result whereof it was found that no tax was payable by her. On April 2, 1956, theOfficer served on her a notice dated March 19, 1956 under S. 34 (1) of the IndianAct, 1922, hereinafter called the Act, on the ground of escaped assessment. The date of the notice fell within 8 years from the end of the relevant assessment year i.e., March 31, 1948; but it was served beyond 8 years from that date and, therefore, was clearly out of time under the provisions of the said section.2. In Civil Appeal No. 143 of 1963, for the assessment yearthe appellant was assessed on a total income of Rs. 28,993/on December 30, 1948, by theOfficer and the tax thereon amounting to Rs.was deposited on behalf of the appellant in the Reserve Bank of India. On April 2, 1956, the appellant was served with a notice dated March 19, 1956, by theOfficer purporting to be under S. 34 of the Act on the ground of escaped assessment. The date of the notice fell within 8 years from the end of the relevant assessment year, i. e., March 31, 1956; but it was served beyond 8 years from that date and was, therefore, clearly out of time under the provisions of the said section.3. The appellants in the two appeals filed two petitions in the High Court of Calcutta under Art. 226 of the Constitution for quashing the said notices and for other appropriate reliefs. On March 20, 1957, Sinha, J., of that Court issued rules nisi on the said two applications to theOfficer, the Commissioner ofand the Union of India. On September 11, 1958 the said Judge made the rules absolute. The respondents to the applications preferred appeals from the judgment of Sinha, J., to a Division Bench of that Court. Pending the appeals, on March 12, 1959, S. 34 of the Act was amended by S. 2 of the Amending Act. After the said amendment the appeals were heard by a Division Bench of the High Court, consisting of Bose, C. J. and G. K. Mitter, J. Relying upon the said amendment the learned Judges held that the said notices though served on the appellants after the prescribed time, were saved under S. 4 of the Amending Act. In that view they set aside the orders of Sinha, J., and dismissed the writ petitions. Hence the appeals.

Reasoning:
To the present case the general rule of construction of fiscal Acts would apply, and not the exception engrafted on that rule; for S. 4 of the Amending Act cannot be described as a provision laying down the machinery for the calculation of tax. In substance it enables theess a persons income which has escaped assessment, though the time within which he could have so assessed had expired under the Act before the amendment of 1959. It resuscitates barred claim. Therefore the same stringent rules of construction appropriate to a charging section shall also apply to such a4 of the Amending Act of 1959, therefore, was enacted for the sole purpose of saving the validity of such notices in respect of all escaped incomes relating to any year commencing from the year ending on March 31, 1941, though they were issued beyond the prescribed time. If the construction sought to be placed by the learned counsel for the appellants be accepted, it would defeat the purpose of the amendment in some cases. If the words were clear and exclude the class of cases where the notices were sent before 8 years from the date of assessment, but served thereafter, this court has to give them the saidcrucial word in the said section is "issued". The section says that though a notice was issued beyond the time within which such notice should have been issued, its validity could not be questioned. If the word "issued" means "sent", we find that there is no provision in the Act prescribing a time limit for sending a notice, for, under Section 34 (1)(a) of the Act a notice could be served only within 8 years from the relevant assessment year. It does not provide any period for sending of the notice. Obviously, therefore, the expression "issued" is not used in the narrow sense of "sent". Further, the said expression has received, before the amendment, a clear judicial interpretation. Under S. 34(1) (a) of the Act theOfficer may in cases falling under cl. (a) at any time within 8 years serve on the assessee a notice. The proviso to that section says that where the notice under s. 34 (1) (a) is within time therein limited, the assessment orto be made in pursuance of such notice may be made before the expiry of one year from the date of the service of the notice even if such period exceeds the period of 8 years or 4 years, as the case may be.4 the Amending Act was enacted for saving the validity of notices issued under Section 34(1) of the Act. When that section used a word interpreted by courts in the context of such notices it would be reasonable to assume that the expression was designedly used in the same sense. That apart, the expressions "issued" and "served" are used asterms both in dictionaries and in other statutes.would be seen from this provision that Parliament used the word "serve", "give" and "send" aswords. So too, in Ss. 553, 554 and 555 of the Calcutta Municipal Act, 1951 the two expressions "issued to" or "served upon" are used as equivalent expressions. In the legislative practice of our country the said two expressions are sometimes used to convey the same idea. In other words, the expression "issued" is used in a limited as well as in a wider sense. We must, therefore, give the expression "issued" in S. 4 of the Amending Act that meaning which carries out the intention of the Legislature in preference to that which defeats it. By doing so we will not be departing from the accepted meaning of the expression, but only giving it one of its meanings accepted, which fits into the context or setting in which it appears.11. With this background let us give a closer look to the provisions of S. 4 of the Amending Act. The object of the section is to save the validity of a notice issued beyond the prescribed time. Though the time within which such notice should have been issued under S. 34(1) of the Act as it stood before its amendment by S. 18 of the Finance Act of 1956, had expired, the said notice would be valid. Under S. 34(1) of the Act as we have already pointed out, the time prescribed was only for service of the notice. As the notice mentioned in S. 4 of the Amending Act is linked with the time prescribed under the Act, the section becomes unworkable if the narrow meaning is given to the expression "issued". On the other hand, if we give wider meaning to the word, the section would be consistent with the provisions of S. 34(1) of the Act. Moreover the narrow meaning would introduce anomalies in the section : while the notice, assessment orwere saved, the intermediate stage of service would be avoided. To put it in other words, if the proceedings were only at the stage of issue of notice, the notice could not be questioned, but if it was served, it could be questioned; though it was served beyond time if the assessment was completed, its validity could not be questioned. The result would be that the validity of an assessment proceeding would depend upon the stage at which the assessee seeks to question it. That could not have been the intention of the Legislature. All these anomalies would disappear if the expression was given the wider meaning.12. To summarize : The clear intention of the Legislature is to save the validity of the notice as well as the assessment from an attack on the ground that the notice was given beyond the prescribed period. That intention would be effectuated if the wider meaning is given to the expression "issued". The dictionary meaning of the expression "issued" takes in the entire process of sending the notice as well as the service thereof. The said word used in S. 34(1) of the Act itself was interpreted by courts to mean "served". The limited meaning, namely, "sent" will exclude from the operation of the provision a class of cases and introduce anomalies. In the circumstances, by interpretation, we accept the wider meaning the word "issued" bears. In this view, though the notices were served beyond the prescribed time, they were saved under S. 4 of Amending Act. No other point was raised before us.