CHOPRA, J. - The following question of law has been referred by the Income-tax Appellate Tribunal for decision of this court under section 66(1) of the Indian Income-tax Act :
Whether, on the facts and in the circumstances of this case, the revised assessment was unsustainable on the ground that the second notice of February 8, 1954, under sub-section (1) of section 34, was issued while the proceedings which had commenced with the issue of the first such notice of May, 1953, were yet pending and had not been completed ?
The facts which gave rise to the reference are these : Messrs. Atma Ram Bindra Ban, the assessee, is a Hindu undivided family and the assessment in question was revised assessment for the year 1947-48, made in terms of section 34 of the Indian Income-tax Act. The original assessment for this year was made on August 8, 1951. Subsequently, on the examination of the books of the assessee in certain other proceedings it transpired that certain cash credits amounting to Rs. 37,880 entered in the assessees personal account had escaped consideration in the original assessment. A notice under sub-section (1) of section 34 of the Income-tax Act was issued. Some time later, viz., on February 8, 1954, while the proceedings started on the first notice were still pending, the Income-tax Officer served on the assessee yet another notice, purporting to be issued under the same sub-section, for the purpose of bringing to tax the annual letting values of two properties which had escaped attention in the original assessment. A revised assessment in pursuance of both these notices was then made. The assessees contention, in the appeal filed before the Appellate Tribunal, was that the issue of the second notice February 8, 1954, was illegal inasmuch as the proceedings commenced on the first notice of March 12, 1953, were still pending and had not yet been completed. The contention was turned down by the Appellate Tribunal and on the assessees application the above question was referred.
The relevant portion of sub-section (1) of section 34 of the Income-tax Act says :
'(1) If -
(a) the Income-tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable to income-tax have escaped assessment for that year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act, or excessive loss or depreciation allowance has been computed, or
(b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income, profits or gains chargeable to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed,
he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section :...'
A simple reading of the sub-section leaves no doubt that it places no limit to the number of notices that may be issued, so long as they are within the time limit specified in the section. There can be no restriction as to the number of proceedings that can be taken to reopen the assessment where it is found that any income of the assessee has for one reason or another escaped assessment. Similarly, there can be no bar to a fresh notice being given even though proceedings on a previous notice are still pending and have not been finally disposed of. In Commissioner of Income-tax v. Jagan Nath Maheshwary, it was held by this court that when a notice was issued under section 34 of the Indian Income-tax Act, 1922, based on a certain item of income that had escaped income-tax, it was permissible for the Income-tax Officer to include other items of escaped income in the assessment in addition to the item which had initiated and resulted in the notice under section 34. If other items of escaped income can be included and taken into consideration in the proceedings started on a notice under section 34, where is then the bar to do the same after issue of a fresh notice, which certainly is to the benefit of the assessee ?
The first proviso to sub-section (3) of section 34, on which reliance is being placed on behalf of the assessee, refers merely to the time during which the assessment or reassessment had to be made in pursuance of a notice under the section and has no relevancy to the point in question. In In re Lachhiram Basantlal, the decision relied upon by the counsel, it was held that income could not be said to have escaped assessment if proceedings for the assessment of the assessees income were still pending and had not terminated in a final assessment. This relates to the original assessment and has no bearing to the facts of this case.
The assessee had presented an application under sub-section (2) of section 66 for certain other questions also to be referred. But the application is not being pressed and the same is accordingly dismissed.
I would answer the question in the negative and dismiss the reference with costs.
FALSHAW, J. - I agree.
Question answered in the negative.