Case: Commissioner Of Income Tax, West Bengal, Vs. Balkrishan Malhotra

3. The original assessment of the assessee for the assessment year 1944-45 was made sometime before March 13, 1953. Subsequently after obtaining the sanction of the Commissioner of Income-tax, the Income-tax Officer reopened the assessment under S. 34 (1) (a) of the Act. On March 13, 1953 he issued a notice to the assessee under S. 34 read with S. 22 (2) of the Act. After considering the objection of the assessee, the Income-tax Officer computed the income of the assessee under S. 34 read with S. 23 (4) on March 8, 1954 at Rs. 60,000/-. The note made by the Income-tax Officer on that day in the order sheetas per assessment order on a total income of Rs. 60,000/- for the assessment year 1944-45 under S. 34/23 (4)".But on that date the Income-tax Officer did not determine the tax due from the assessee. It appears that he determined the tax due from the assessee and issued a notice under S. 28 (3) in Form 30 only on March 31, 1954. The assessee contended that the assessment is barred under S. 34 (3). That contention was rejected by the authorities under the Act including the appellate tribunal but on a reference made by the tribunal to the High Court, the High Court following the decision of the Madras High Court in RM. P. R. Viswanathan Chettiar v. Commr. of Income Tax, Madras, 25 ITR 79  - (AlR 1954 Mad 928)  accepted the contention of the assessee while giving its advisory opinion on the questions of law referred to it by the appellate tribunal. This appeal is directed against that decision.

Reasoning: 6. It has been stated over and over again by this Court as well as by the Judicial Committee that the words "assessment" and the "assessee" are used in different places in the Act with different meaning. Therefore in finding out the true meaning of those words in any provision, we have to see to the context in which the word is used and the purpose intended to be achieved. It is true that sub-ss. (1), (3) and (4) of S. 23 require the Income-tax Officer to "assess the total income of the assessee and determine the sum payable by him." In other words in those provisions the word "assess" has been used with reference to computation of the income of the assessee and not the determination of his tax liability. But in S. 34 (3) the word used is not "assess" but "assessment". The question for decision is what is the meaning of that word? As long back as September 24, 1953, the High Court of Madras in Viswanathan Chettiars case, 25 ITR 79  = (AIR 1954 Mad 928 ) (supra) came to the conclusion that the word "assessment" in proviso to S. 34 (3) means not merely the computation of the income of the assessee but also the determination of the tax payable by him. No other High Court has taken a contrary view. The Revenue must have in all these years acted on the basis of that decision of the Madras High Court.Interpretation of a provision in a taxing statute rendered years back and accepted and acted upon by the department should not be easily departed from. It may be that another view of the law is possible but law is not a mere mental exercise. The courts while reconsidering the decisions rendered long time back particularly under taxing statutes cannot ignore the harm that is likely to happen by unsettling law that had been once settled. We may also note that the Act has been repealed by the that the Act, 1961.The corresponding provisions of the 1961 Act are materially different from the provisions referred to earlier. Under these circumstances we do not think that we would be justified in departing from the interpretation placed by the Madras High Court in Viswanathan Chettiars case, 25 ITR 79  = (AIR 1954 Mad 928 ) (supra) though a different view of the law may be reasonably possible.