Case: S.B. Jain, I.T.O. Nagpur Vs. Mahandera

This appeal was filed under the following circumstancesCivil Appeal No. 1981 of 1968 was brought on the strength of a certificate issued by the High Court. That certificate, being not in accordance with law in as much as the High Court gave no reason in support of the same, the appeal filed on the strength of that certificate turned out to be not maintainable. Hence the appellant had to move this Court for special leave to appeal against the judgment of the High Court. The same having been granted he has brought Civil Appeal No. 1301 of 7 1. Hence these two appeals against the same judgmentNow coming to the merits of the case, the Income-tax Officer issued a notice to the respondent on January 5, 1962 under section 34(1) (a) of the Indian Income-tax Act, 1922 seeking to reopen his assessment for the assessment year 1946-47 the relevant accounting year being the calender year 1945. The assessee respondent challenged the validity of that notice by means of a writ petition under Article 226 of the Constitution before the High Court of Bombay. The High Court accepted that writ petition , and quashed the impugned notice by its order dated March 6, 1963. On April 1, 1962the Income-tax Act, 1961came into force. Thereafter the Income-tax Officer again issued a notice on March 26, 1963 under section 148 of the new Act in respect of the very assessment which he earlier unsuccessfully sought to reopen by means of a notice under section 34(1) (a) of the 1922 Act. The assessee again challenged the validity of the notice issued to him by means of another writ petition, before the High Court of Bombay. The High Court quashed that notice on the ground that the Income-tax Officer was not competent to issue that notice. It is against that decision, the present appeals have been brought to this Court.

Court's reasoning:
What section 297 (2) (a) (ii) requires is the factual pendency of a proceeding under section 34 of the repealed Act. The question whether that proceeding was barred by limitation or not is irrelevant. It is not denied that those proceedings were initiated by a competent authority. Those proceedings were quashed for the reason that notice under section 34 of 1922 Act was issued beyond the time prescribed by law. Hence it cannot be said that no proceeding under section 34 of the 1922 Act either factually or legally was pending at the time when the new Act came into force.Our above conclusion receives support from the decision of this Court in Raja Kulkarni and others v. The State of Bombay([1954] S.C.R. 384.). Therein the question that arose for decision was whether an appeal under section 24 of the Industrial Disputes Act, 1950 can be said to have been pending if that appeal was incompetent or invalid for some reason. This Court ruled that what was necessary was the factual pendency of the appeal and not that it should have been a valid or competent one under the provisions of the limitation Act or such other adjectival lawThe proceedings pending before a competent authority cannot be said to be not pending merely because that no relief can be granted in that proceedings because of the bar of limitation. In Mela Ram &Sons v. Commissioner of Income Tax, Punjab(29 I.T.R. p. 607.) it was contended before this Court that any appeal which is barred by limitation cannot be considered as an appeal properly presented under Section 30 of the Indian Income Tax Act, 1922. This Court rejected that contention observing:"it an appeal is not presented within that time (within the prescribed time) does that cease to be an appeal as provided under section 30(1) ? It is well established that rules of limitation pertain to the domain of adjectival law, and that they operate only to bar the remedy but not to extinguish the right. An appeal preferred in accordance with Section 30(1) must, therefore, be an appeal in the eye of law, though having been presented beyond the period mentioned in section 30(2) it is liable to be dismissed in limine."We have no doubt in our mind that the proceedings initiated under Section 34(1) (a) of the 1922 Act were pending at the time 1961 Act came into force and that being so the Income- tax Officer was not competent to issue any fresh notice under section 148 of the 1961 Act.