CHANDRA REDDI C.J. - The question that arises for consideration in this reference is as to the starting point of the period of limitation under section 34(1) (a) of the Indian Income-tax Act, i.e., whether the eight years period has to be computed from the expiry of the accounting year or the assessment year.
This very question fell to be decided by a Bench of this court Talluri Raghavaiah v. First Additional Income-tax Officer, Bapatla. After referring to the various provisions of the Indian Income-tax Act and several of the decided cases, we reached the conclusion that the year contemplated by section 34(1) (a) is the assessment year and not the accounting year.
Sri Narasinga Rao for the section contends that the judgment of the Supreme Court in Pannalal Nandlal Bhandari v. Commissioner of Income-tax throws doubt on the correctness of the principle enunciated in Talluri Raghavaiah v. First Additional Income-tax Officer, Bapatla. We have to demur to this proposition. Far from rendering the judgment in Talluri Raghavaiah v. First Additional Income-tax Officer, Bapatla, doubtful, the ruling cited above lends support to it. At page 78 of the report, their Lordships observed :
'Admittedly, the notices issued by the Income-tax Officer for the years in question were issued within eight years from the end of the years of assessment and if clause (1) (a) of section 34 applied, the assessment was not barred by the law of limitation.'
Sri Narasinga Rao thinks that the sentence with which the judgment commences, namely, 'To the appellant who was a non-resident for the purposes of the Indian Income-tax Act, 1922, has accrued on the assessment years 1943-44, 1944-45, 1946-47 and 1947-48 certain dividend income within the taxable territory of British India,......' indicates that the starting point of limitation is from the expiry of the accounting year. We do not think that there is any basis for this argument. Their Lordships observed that dividends had accrued in the assessment years for purposes of the Act, which only means that dividends were chargeable to tax for the assessment years. That does no in any way justify the conclusion that the period of limitation commenced from the expiry of the year in which the dividends were received, as already observed, this judgment does not lend any colour to the argument of the learned counsel for the assessee.
Sri Narasinga Rao has not adduced any fresh reasons to enable us to change our mind and go back upon the decision rendered by us in Talluri Raghavaiah v. First Additional Income-tax Officer, Bapatla.
If so, the notice issued to the assessee under section 34(1) (a) is valid and cannot be impugned.
For these reasons, the question referred to us is answered in favour of the department and against the assessee. There will be no order as to costs.
Reference answered accordingly.