Case: Commissioner Of Income-Tax,Madras Vs. Janabha Muhammad Hussainnachiar Ammal

The respondent is the wife of one Sheikh Abdul Khadar who was residing abroad in Bangkok from September 1940 to July 1947. During that period he remitted moneys in the name of his agent for payment to the respondent. In the account year the aggregate amount so remitted was Rs. 9, 180/-. The respondent submitted no return of her income as the was bound to do and the amount became taxable under s. 4(2) of the Income-tax Act, hereinafter referred to as the "Act". In 1949 the Income-tax Officer on receipt of definite information that such income had escaped assessment issued a notice under s. 34 of the Act as amended by the Amending Act of 1948 and an appeal was taken to the Appellate Assistant Commissioner but the assessment was confirmed. A further appeal to the Income-tax Appellant Tribunal Madras, was also unsuccessful. The reference was thereupon made to the High Court and one of the questions referred wasthe proceedings under section 34 of the Indian Income-tax Act initiated on 25th July, 1949 to assess the amount of Rs. 9, 180/- which escaped assessment during the year 1942-43 by failure to submit a voluntary return are valid in law"was held that the limitation of eight years prescribed by s. 34 as amended by the Amending Act of 1948 did not apply to the case of the assessee which was a case of failure to submit the return and the period of four years had expired before March 30, 1948, when the amendment in s. 34 was made by Amending Act of 1948. It was also held that s. 31 of the Amending Act of 1953 was not applicable and the question was therefore answered in the negative. Against that judgment and order the Commissioner of Income-tax has come in appeal to this Court.

Court's reasoning:
It seems to me quite plain that s. 31 of the 1953 Act applies sub-ss. (1) and (3) of s. 34 of the Income-tax Act, 1922 (hereafter called the principal Act), as it stood after the 1948 amendment, to assessment proceedings in respect of years ending before April 1, 1948 where the proceedings commenced after September 8, 1948 and makes the validly of the proceedings depend on that section as so amended. Indeed, the contrary has not been contended at the bar. It has to be remembered that the amending Act of 1948 was passed on September 8, 1948 but it given retrospective effect from March 30, 1948. It may be stated that the amending Act repealed the existing s. 34 of the principal Act and substituted for it a new section. I think it is quite clear that the pre-existing s. 34 which was repealed by the 1948 amendment could not have applied to proceedings commenced after repeal. There was no question of applying the pre-existing law to such proceedings. But where the proceedings related to a period when the pre-existing law was in force, there might be some doubt as to which law was to apply. Section 31 was enacted to remove that doubt and to make s. 34 of the principal Act as it stood after the 1948 amendment applicable to these proceedings. That is why the words "shall always be deemed to have applied" are used; they emphasise that the amended section is deemed always to have applied to amendment had not been made. The latter part of s. 31 also makes this view equally clear. It says that no notice or order of assessment shall be called in question on the ground that s. 34 did not apply in respect of assessment for a year prior to April 1, 1948. Section 34 here contemplated must be the section as amended in 1948, for if it was not so, then it would be the pre-existing section which of course would have applied, if not repealed, to an assessment for a year ending prior to April 1, 1948 and no question of its not so applying would have arisen.I thus arrive at the conclusion that under s. 31 of the 1953 Act, the provisions of sub-ss. (1) and (3) - I leave sub-s. (2) out as irrelevant - of s. 34 of the principal Act as amended in 1948 are to be applied and deemed always to have applied to assessment proceedings in respect of a year ended before April 1, 1948 where the proceedings were commenced after September 8, 1948, A notice issued and an order of assessment made in such proceedings are to be held valid if the notice is issued "in accordance with sub-section (1)" of s. 34 as it stood after the 1948 amendment and the assessment is "completed in pursuance of such notice within the time specified in sub-section (3)" of the same s. 34. Now the notice and assessment in the present case satisfy all these conditions. To them, therefore, s. 34 as amended in 1948 applies. Judged by that section, admittedly the notice and assessment order aremy view, for these reasons, s. 34 of the principal Act as amended in 1948 applies to the notice issued and the assessment order made in this case. Both of them are valid under s. 34 as so amended. The High Court should have answered the question framed in the affirmative.In the result, I would allow the appeal and set aside the order of the High Court. The appellant will however pay the respondents costs of this appeal as it agreed to do so as appears from the certificate on which this appeal has been admitted.