1. This petition has been filed for a writ or direction under article 226 of the Constitution to quash and set aside a notice dated 30th October, 1963, issued by the respondent, an Income-tax officer in Bombay, under section 34(1) (a) of the Indian Income-tax Act, 1922. The notice is in respect of an amount of Rs. 56,000, which was received by the petitioner on or about 23rd March, 1944, and which, according to the department, was the undisclosed income of the petitioner. As the amount was less than Rs. 1,00,000, a notice under section 34(1) (a) of the said Act ought to have been issued, as laid down in the proviso to section 34(1), within eight years of the expiry of the assessment year in which the said amount should have been brought to tax. In view of the fact that the amount of Rs. 56,000 was received by the petitioner on or about 23rd March, 1944, the accounting year for the said amount was 1943-44 and the assessment year was 1944-45. It follows that no notice under section 34(1) (a) could have been issued by the Income-tax Officer in respect of the said amount of Rs. 56,000 after 31st March, 1953.
2. Now prior to the present impugned notice of 30th October, 1963, the Income-tax Officer had issued a previous notice to the petitioner on 29th July, 1953, which was also a notice under section 34(1) (a), and was in respect of the same amount of Rs. 56,000, but the assessment year for which the notice was issued was the year 1945-46. It will be observed that even on the date of the previous notice (29th July, 1953), more than eight years had expired from the end of the assessment year 1944-45 in which the amount of Rs. 56,000 could have been brought to tax. Reassessment proceedings which commenced on the previous notice of 29th July, 1953, reached the Income-tax Appellate Tribunal in appeal, and the Tribunal by its decision dated 16th August, 1963, accepted the contention of the petitioner that 'the proper year of assessment in regard to the sum of Rs. 56,000 was the assessment year 1944-45 and not 1945-46.' It was after this decision of the Appellate Tribunal, which resulted in the quashing of the previous notice of 29th July, 1953, that he Income-tax Officer issued the impugned notice of 30th October, 1963, under the same section of the Income-tax Act and in respect of the same amount of Rs. 56,000. Thus in the year 1963 the Income-tax Officer has issued a notice which could not have been issued after 31st March, 1953.
3. This fantastic step is sought to be justified by the Income-tax Officer by recourse to the second proviso of sub-section (3) of section 34 of the Income-tax Act of 1922. This proviso, so far as it is relevant, lays down that 'nothing contained in this section limiting the time within which any action may be taken..... shall apply..... to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31......' It is claimed on behalf of the Income-tax Officer that the Appellate Tribunal had given a finding under section 31 that the proper year of assessment in regard to the sum of Rs. 56,000 was 1944-45, that the impugned notice was issued by the Income-tax Officer to 'give effect' to the above finding of the Appellate Tribunal, and that the notice was, therefore, not affected by the time-limit of eight years in view of the said proviso to section 34(3). It is claimed, in effect, that the very finding of the Appellate Tribunal that the previous notice of 29th July, 1953, was beyond time because the proper year of assessment was 1944-45 confers jurisdiction on the Income-tax Officer to issue a fresh notice in 1963 which is unaffected by any limitation of time.
4. That this contention of the Income-tax Officer is clearly untenable is seen from the judgment of the Supreme Court in Income-tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das. In that case the Supreme Court held that the second proviso to section 34(3) of the Income-tax Act, 1922, did not save the time-limit prescribed under section 34(1) in respect of an escaped assessment of a year other than that which was the subject-matter of the appeal or revision, as the case might be. In the present case the assessment year which was the subject-matter of the appeal before the Appellate Tribunal was 1945-46. The amount of Rs. 56,000, which is claimed to have escaped assessment, could have been assessed in the assessment year 1944-45 and not in the assessment year 1945-46. Since the amount was not assessable for the assessment year 1945-46, which was the subject-matter of the appeal before the Appellate Tribunal, no finding given by the Appellate Tribunal in that case can be utilized to invoke the application of the second proviso to sub-section (3) of section 34 so as to save the time-limit of eight years.
5. On behalf of the respondent, the Income-tax Officer, Mr. R. J. Joshi urged that the appellate Tribunal has given a 'finding' when they decided that 'the proper year of assessment in regard to the sum of Rs. 56,000 was the assessment year 1944-45 and not 1945-46.' According to Mr. Joshi, the impugned notice of 30th October, 1963, was issued in order to give effect to the said finding of the Appellate Tribunal and was, therefore, unaffected by any time-limit in view of the said proviso to sub-section (3) of section 34. It was, however, held by the Supreme Court in above case that the expression 'finding' in the said proviso means 'a finding necessary for giving relief in respect of the assessment for the year in question.' Subha Rao J., who delivered the majority judgment in that case, observed :
'A 'finding', therefore, can be only that which is necessary for the disposal of an appeal in respect of an assessment of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question.'
6. In the present case also the finding which it was necessary for the Appellate Tribunal to give was that the proper year of assessment in regard to sum of Rs. 56,000 was not the assessment year 1945-46. In giving its reason in support of this finding the Appellate Tribunal stated that the proper year of assessment for the said amount was 1944-45. But that statement of the Appellate Tribunal cannot be regarded as a 'finding given by them.
7. Mr. R. J. Joshi placed reliance on a decision of a Division Bench of this court in General Construction and Supply Co. v. The Income-tax Officer (8th), C-Ward, Section III, Bombay. Obviously, I cannot rely on this decision in preference to the authority of the Supreme Court mentioned above.
8. In the result this petition must be allowed and the impugned notice set aside. Accordingly, the rule is made absolute in terms of prayer (a). The respondent to pay the petitioner's costs.
9. Petition allowed.