Case: Kalawati Devi Harlalka Vs. Commissioner Of Income-Tax, West Bengal &amp; Ors

1. On January 24, 1963, the Commissioner of Income-tax, West Bengal, sent the following notice to Smt. Kalawati Harlalka, appellant before us, hereinafter referred to as the assesseeIncome-tax assessments of 1952-53 to 1960-61. Assessments erroneous and prejudicial to the interests of revenue - Revision of assessments under Sec. 33B of the Indian Income-tax Act 1922- proposal for- Notice. regarding"On calling for and examining the records of your case for the assessment years 1952-53, 1953-54, 1954-55, 1855-56, 1956-57, 1957-58, 1958-59, 1959-60 and 1960-61 and other connected records, I consider that the orders of assessment passed by the Incometax Officer D Ward, Howrah, on 7th February, 1961, are erroneous in so far as they are prejudicial to the interest of revenue for the following reasons amongst others.Enquiries made have revealed that no business as alleged was carried on from the address declared in the return. Also the said Income-tax Officer was not justified in accepting the initial capital, the acquisition and sale of jewellery, the income from business, gift made by you etc. without any enquiry or evidence whatsoever.3. I, therefore, propose to pass such orders thereon as the circumstances of the cases justify after giving you an opportunity of being heard under the powers vested in me under Section 33B of the Income-tax Act, 1922. The cases will be heard at 11 a m. on 1st February, 1963 at my above office when you are requested to produce the necessary evidence in support of your contentions. Objections in writing accompanied by necessary evidence, if any, received on or before the appointment for personal hearing will also be duly considered.Please note that no adjournment of the hearing will beassessee on February 1,1963, protested to the Commissioner against the issue of the notice and stated that the said notice was absolutely bad in law, illegal and void. On the same date the assessee filed an application under Article 226 of the Constitution in the High Court at Calcutta, inter alia praying that the said notice, dated January 24, 1963, be quashed or set aside and the Commissioner of Income-tax be restrained from giving effect to the said notice. The petition was heard by Banerjee, J., and three points were urged beforeThat the Income-tax Act, 1922 - hereinafter referred to as the 1922 Act - having been repealed by Income-tax Act, 1961- hereinafter referred to as the 1961 Act - which came into force on April 1, l962, the Commissioner of Income-tax had no power, authority or jurisdiction to initiate the proceedings under Section 33B of the 1922 Act;(2) Section 6 of the General Clauses Act in no way authorises the initiation of the said proceedings inasmuch as no steps were taken in respect thereof when the 1922 Act was in force and/or prior to its repeal; and(3) The powers under Section 298 of the 1961 Act can only be exercised in respect of the matters dealt with by Section 287 of the 1961 Act which does not deal with proceedings under Section 33B of the 1922 Act.Appeal, reference or revision proceedings in respect of orders passed under the repealed Act.-(1) Proceedings by way of the first or subsequent appeals, reference or revision in respect of any order made under the Indian Income-tax Act, 1922 (11 of 1922) (hereinafter referred to as the repealed Act) shall be instituted and disposed of as if the repealing Act had not been passed;(2) Any such proceedings instituted under the repealing Act after the 31st day of March, 1962, and before the date of this Order shall be deemed to have been instituted under the repealed Act and shall be disposed of as if the repealing Act had not been passed :Provided that if any such proceeding has been disposed of before the date of this Order under any provision of the repealing Act, it shall be deemed to have been disposed of under the corresponding provision of the repealed Act and any appeal, reference or revision in respect of the proceeding so disposed of shall be instituted and disposed of as if the repealing Act had not been passed.The learned Judge held that the expression "proceedings for the assessment" in section 297 (2) (a) of the 1961 Act had a comprehensive meaning and included proceedings under Section 33A or Section 33B of the 1922 Act. He also held that Cls. (c) and (d) of Section 297 (2) of the 1961 Act must be deemed to have been enacted by way of abundant caution. In view of his findings, he did not consider it necessary to determine whether Section 6 of the General Clauses Act saved the power under S. 33B of the 1922 Act, but he observedit had been necessary so to do I would have no hesitation in holding that such power would be saved under Section 6 Clauses (c) and (e) of the General Clauses Act, there being no indication to the contrary in the repealing Act ofaccordingly dismissed the petition.The assessee appealed and the Division Bench dismissed the appeal. The Division Bench came to the conclusion that"the provisions for assessment are contained in Chapter IV of the Act of 1922 and S. 33B finds place in this Chapter and the expression "proceedings for the assessment" indicates that any of the proceedings relating to assessment as contemplated in Chapter IV can be initiated and continued under Cl. (a) of sub-section (2) of Section 297 including the proceeding by way of Revision under Section 33B of the Act."The Division Bench repelled the contention of the assessee that Clause (c) affected the scope of Clause (a). It concluded that Cls. (d) and (f) had been inserted by way of abundant caution. It also repelled the contention that Clause (4) of the Income-tax (Removal of Difficulties) Order, 1962, was bad, and observed that"what clause (4) has done is simply to make explicit what was implicit in Clause (a) and it is with the object of removing the doubt or difficulty, if any, existing in respect of the construction of Clause (a) of sec. 297 (a) that a specific provision like clause (4) was introduced in the Removal of Difficulties Order."In view of these conclusions the Division Bench felt that"it is not necessary to express any definite opinion on the point whether section 6 ofthe General Clauses Act, 1897, is available for the purpose of interpreting the provisions of the Act of 1961."In the result the appeal before the Division Bench failed and was dismissed. The assessee having obtained a certificate of fitness under Article 133 of the Constitution, the appeal is now before us.

Reasoning:
It seems to us that the High Court is right in holding that Section 297 (2) (a) of the 196l Act includes within its scope a proceeding under Section 33B of the 1922 Act. There is no doubt that the word "assessment" does have subject to the context a very wide meaning.It is quite clear from the authorities cited above that the word "assessment" can bear a very comprehensive meaning, it can comprehend the whole procedure for ascertaining and imposing liability upon the tax-payer.It There then anything in the context of Section 297 which compels us to give to the expression "proceedings for the assessment" the narrower meaning suggested by the learned counsel for the appellants In our view, the answer to this question must be in the negative.It seems to us that Section 297 is meant to provide as far as possible for all contingencies which may arise out of the repeal of the 1922 Act.It deals with pending appeals, revisions, etc. It deals with non-completed assessments pending at the commencement of the 1961 Act and assessments to be made after the commencement of the 1961 Act as a result of returns of income filed after the commencement of the 1961 Act, Then in Cl. (d) it deals with assessments in respect of escaped income; in Clauses (f) and (g) it deals with levy of penalties Clause (h) continues the effect of elections or declarations made under the 1922 Act; Cl. (i) deals with refunds; Clause (j) deals with recovery; Cl. (k) deals generally with all agreements, notifications, orders issued under the 1922 Act Clause (1) continues the notifications issued under Section 60 (1) of the 1922 Act and Clause (m) guards against the application of a longer period of limitation prescribed under the 1961 Act to certain applications, appeals, etc. It is hardly believable in this context that Parliament did not think of appeals and revisions in respect of assessment orders already made or which it had authorised to be made under Clause (a) of Section 297our view, Section 6 of the General Clauses Act would not apply because Section 297(2) evidences an intention to theis true that whether a different intention appears or not must depend on the language and content of section 297 (2).It seems to us, however, that by providing for so many matters mentioned above some in accord with what would have been the result under Section 6 of the General Clauses Act and some contrary to what have been the result wider Section 6, Parliament has clearly evidenced an intention to theIt Section 6 of the General Clauses Act is out of the way, there is no doubt that Parliament should not be credited with the intention of not providing for appeals and revisions, etc. against the assessment orders made under the 1922 Act. In this context, we must give the expression "proceedings for the assessment of that person" in Cl. (a) of Section 297 (2) a very comprehensive meaning.At any rate, if the Income Tax (Removal of Difficulties) Order, 1962, is valid, para 4 of the said order clearly covers the present case and would give jurisdiction to the Commissioner to issue the impugnedour view, the present case is covered by the decision of this Court in Commr. of Income-tax v. Dewan Bahadur Ramgopal Mills Ltd., (1961) 41 ITR 280   = (AIR 1961 SC 388) where a similar order called the Taxation Laws (Part B States (Removal of Difficulties) Order, 1950, made under Sec. 12 of the Finance Act, 1950, wasis true that in that case the attack was on the notification and not on the section itself, but it seems to us that the ratio given by the Court is appropriate to cover the validity of the section itself. Furthermore, the terms of section 37 of the Payment of Bonus Act 1965 are different and the Bonus Act is not a taxing law.