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Commissioner of Income-tax Vs. Srimati Minabati Agarwalla - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 177 of 1966
Judge
Reported in[1971]79ITR278(Cal)
ActsIncome Tax Act, 1922 - Sections 22(2), 22(3), 33B, 34 and 34(3)
AppellantCommissioner of Income-tax
RespondentSrimati Minabati Agarwalla
Appellant AdvocateB.L. Pal and ;S. Sen, Advs.
Respondent AdvocateS. Mitra and ;Saraf, Advs.
Cases ReferredState of Assam v. Devaprasad Barua
Excerpt:
- arun k. mukherjea, j.1. this reference under section 66(1) of the income-tax act arises in connection with the assessment years 1953-54 to 1956-57. the short facts of the case on which the present reference arises are as follows:on 9th august, 1961, shrimati minabati agarwalla, who is the assessee concerned, filed returns of income suo motu for the assessment years 1953-54 to 1961-62 before the income-tax officer, 'd' ward, howrah. the assessee filed a declaration along with these returns in which she tried to explain the source of her income during all these years. we are not concerned with that explanation in this reference. on the very day these returns were filed, the income-tax officer issued notices under section 23(2) fixing the date ftf hearing on 16th august, 1961. the.....
Judgment:

Arun K. Mukherjea, J.

1. This reference under Section 66(1) of the Income-tax Act arises in connection with the assessment years 1953-54 to 1956-57. The short facts of the case on which the present reference arises are as follows:

On 9th August, 1961, Shrimati Minabati Agarwalla, who is the assessee concerned, filed returns of income suo motu for the assessment years 1953-54 to 1961-62 before the Income-tax Officer, 'D' Ward, Howrah. The assessee filed a declaration along with these returns in which she tried to explain the source of her income during all these years. We are not concerned with that explanation in this reference. On the very day these returns were filed, the Income-tax Officer issued notices under Section 23(2) fixing the date ftf hearing on 16th August, 1961. The assessments for the years 1953-54 to 1960-61 were completed on 16th August, 1961, and the assessment for the assessment year 1961-62 was completed on 19th August, 1961. While making the assessments the Income-tax Officer accepted the declaration of the assessee regarding the source of her income and indeed the assessment for 1953-54 practically incorporated the declaration itself. On 12th July, 1963, the Commissioner of Income-tax issued a combined notice to the assessee proposing to take action under Section 33B of the Income-tax Act and fixing the hearing for 2nd August, 1963. No one appeared before the Commissioner, on the date of hearing and on 2nd August, 1963, the Commissioner after considering the various contentions made by the assessee in her letter dated 29th July, 1963, in reply to the Commissioner's notice, passed a consolidated order. The Commissioner in that order pointed out that the Income-tax Officer had made all the assessments without making any enquiry or investigation into the antecedents of the assessee or into the truth or falsehood of the assessee's story and indeed even without considering the question of jurisdiction. The Commissioner cancelled all the assessments and directed the Income-tax Officer ' to do fresh assessments according to law after making proper enquiries and investigation with regard to the jurisdiction, possession of initial capital, carrying on of business and the investments made in the name of the assessee '. The assessee appealed against this order of the Commissioner to the Tribunal. The Tribunal hlld that the Commissioner was justified in initiating proceedings under Section 33B. The Tribunal, however, held at the same time that in so far as the returns for the assessment years 1953-54 to 1956-57 are concerned, since they had been filed on 9th August, 1961, i.e., beyond the period of four years from the end of the relevant assessment years, those returns were not valid returns under Section 22(3) of the Income-tax Act. The Tribunal invoked the authority of the Supreme Court decision in Commissioner of Income-tax v. Raman Chettiar, : [1965]55ITR630(SC) . for this proposition. The Tribunal, accordingly, held that the returns filed by the assessee for those four years and the assessments made thereon were bad and invalid. The Tribunal modified the Commissioner's order by cancelling the assessments altogether and without giving any direction for making fresh assessments for these years. On these facts and circumstances, the Tribunal, at the instance of the Commissioner of Income-tax, has referred the following question to this High Court for opinion : ' Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the returns filed by the assessee for the assessment years 1953-54 to 1956-57 on 9th August, 1961, were invalid and that no fresh assessments could be made on the basis of the Commissioner's order under Section 33B of the Indian Income-tax Act, 1922 '

2. Mr. Pal, appearing for the Commissioner of Income-tax, sought to raise a preliminary point. It appears that the Commissioner of Income-tax had in his application prayed for reference of two questions of law to the High Court. The first question was as follows :

' Whether, on the facts and in the circumstances of the case, the Tribunal exceeded its jurisdiction under Section 33(4) of the Indian Income-tax Act, 1922, in allowing the appeal of the assessee on a ground which was not raised before it either by the assessee or by the Commissioner '

3. The Tribunal, however, refused to refer this question to the High Court. Mr. Pal sought to contend that the Tribunal was not right in refusing to refer this question for answer' to the High Court. Mr. Pal, however, abandoned this point after some time and we need not, therefore, concern ourselves with this question,

4. Mr. Pal's main contention in this reference was as follows: The liability of an assessee to be assessed to income-tax arises under Sections 3 and 4 and, though there are various sections providing for the machinery to assess and to collect taxes, the assessee can waive the machinery and submit to assessment without recourse to the machinery sections. Mr. Pal contended that Section 22 is not the only section under which returns are or can be made and that an assessee may file returns independently of Section 22. He further argued that a condition attaching to Section 34 does not apply, do Section 33B. Mr. Pal spoke of three situations. In the first situation, an assessee files his return of income-tax in time and assessment is made on the basis of that return within four years from the end of the relevant assessment year. In such a case, of course, no difficulty arises at all. In the second situation, though the return is filed in time, the Income-tax Officer concerned does not bring it to assessment within four years from the expiry of the relevant assessment year. In such a case, Section 34(3) is a fetter on the jurisdiction of the Income-tax Officer to make an assessment on the basis of that return. There is, however, a third possible situation in which the assessee voluntarily submits his return beyond time. The question is whether assessment can be made oil such a return at a point of time which is beyond the limits laid down in Section 34(3), i.e., beyond the four years from the end of the relevant assessment year. According to Mr. Pal, in this particular situation, the Income-tax Officer can assess an assessee, for the liability to be assessed arises independently of the machinery section under the charging provisions of Sections 3 and 4 and it is quite within the competence of the assessee to waive the machinery section of the Income-tax Act and submit his returns voluntarily to the Income-tax Officer and ask him to assess on the basis of those returns. Mr. Pal argued that, so long as the liability is there, nothing can prevent an assessee from submitting to the jurisdiction of the Income-tax Officer for assessment of that liability without taking recourse to the machinery sections.

5. Mr. Pal relied on the well-known case of Chatturam v. Commissioner of Income-tax, [1947] 15 I.T.R. 302, 308 (F.C.) The Federal Court held in that case that the liability to pay income-tax and the jurisdiction to assess to income-tax are not conditional on the validity of the notice issued under Section 22 of the Income-tax Act. The income-tax assessment proceedings commence with the issue of a notice under Section 22 of the Income-tax Act. But the issue or receipt of the notice is not the foundation of the jurisdiction of the Income-tax Officer to make the assessment nor is such issue or receipt the foundation of the liability of the assessee to pay tax. The liability to pay such taxes is founded on Sections 3 and 4 of the Income-tax Act which are the charging sections. Section 22 and other connected sections are machinery sections to determine the amount of tax. This decision, of course, follows the celebrated judgment of Lord Dunedin in Whitney v. Commissioners of Inland Revenue, where Lord Dunedin refers to three stages in the imposition of a tax, namely, the declaration of liability, the assessment of it and finally its recovery. Lord Dunedin made it quite clear in that judgment that liability does not depend on assessment. Indeed, assessment is only for the purpose of quantifying the liability. Their Lordships of the Federal Court also refer to the judgment of Lord Hanworth M.R. in W.H. Cockerline & Co. v. Commissioners of Inland Revenue, [1926] A.C. 37 ; [1925] 10 T.C. 88 (H.L.) where this same principle had been clearly enunciated. Their Lordships cite a passage from the judgment of Lord Justice Sargant in the case of Williams v. Henry Williams, [1930] 16 T.C. 1, 59 (C.A.) an unreported decision which had been quoted with approval by Lord Hanworth :

' I cannot see that the non-assessment prevents the incidence of the liability, though the amount of the deduction is not ascertained until assessment .... The subsequent provisions as to assessment and so on are machinery only. They enable the liability to be quantified and, when quantified, to be enforced against the subject, but the liability is definitely and finally created by the charging section and all the materials for ascertaining it are available immediately. '

6. Their Lordships of the Federal Court observe that these pronouncements have been accepted without reservation as laying down the true principles of taxation under the Income-tax Act in India.

7. We have no doubt in our minds that the distinction between the attribute of taxability on the one hand and the payability and quantification of the tax on the other hand under the scheme of the Indian Income-tax Act, 1922, is well-recognised. In the case of Chatturam Horilmm Ltd. v. Commissioner of Income-tax, : [1955]27ITR709(SC) the Supreme Court had reiterated the principle laid down by the Federal Court in Chatturam v. Commissioner of Income-tax, [1947] 15 I.T.R. 302 (F.C.) In that case also a clear distinction is made of chargeability and the actual operation of the charge. The Supreme Court has held that it is by virtue of Section 3 that the actual levy of the tax and the rates at which the tax has to be computed are determined each year by the annual Finance Acts. But, Section 3 assumes the pre-existence of chargeable income as indicated in Section 6. ' Hence, according to the scheme of the Act, the quality of chargeability of any income is independent of the passing of the Finance Act. ' The result is that, if the Finance Act is not extended to any particular area during any year there would be no legal authority for quantifying and imposing the tax on the assessee though this does not mean that the income of the assessee was not chargeable for that relevant year.

8. In a recent Supreme Court decision, namely, Kesoram Industries and Cotton Mills Ltd. v. Commissioner of Wealth-tax, : [1966]59ITR767(SC) the Supreme Court had to decide regarding the point of time when the income-tax liability of an assessee ripens into a ' debt owed ' within the meaning of that expression in the Wealth-tax Act. Accepting the definition given by Lindley L.J. of debt, as ' a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in praesenti, solvendum in futuro ', the Supreme Court held that a tax liability arises on the last day of the accounting year even though the quantum of tax to be charged is determined in accordance with the rates prescribed under the Finance Act which may be passed later on. This is because, according to the Supreme Court, Section 3 of the Income-tax Act is the charging section and the Finance Act only prescribes the rate of tax payable. Liability to tax is founded on the charging section though quantification of the amount payable is postponed because the Income-tax Act under which liability arises during the accounting year has no operative effect till the Finance Act is passed. We have, therefore, no reason to doubt that under the scheme of the Income-tax Act there is a clear distinction between chargeability and the actual operation of the charge which is dependent upon the machinery sections. But that is no warrant, in our opinion, for holding that we can ignore the express bar in Section 34(3) and permit an assessment or reassessment beyond the period specified therein.

9. Mr. Pal then contended that the period mentioned in Section 34(3) of the Act is not like a period of limitation and an assessment proceeding is not in the nature of a suit for adjudication of a civil dispute. Therefore, he argued, if an individual assessee submits himself to the jurisdiction of the Income-tax Officer,, there is no reason why that officer in exercise of his power and function as a limb of the administrative authorities who are required by the statute to ascertain theiaxable income of individuals and to assess tax on the same should not be able to assess and recover taxes, provided, of course, the assessee concerned is liable to taxation. Mr. Pal drew our attention to certain observations of the Supreme Court in S.S. Gadgii v. Lal & Co., : [1964]53ITR231(SC) and in Ahmedabad Manufacturing and Calico Printing Co. v. S.G. Mehta, Income-tax Officer, : [1963]48ITR154(SC) . I set out below the observation on which Mr. Pal relies :

First-

' The income-tax authorities who have power to assess and recover tax are not acting as judges deciding a litigation between the citizen and the State: they are administrative authorities whose proceedings are regulated by statute, but whose function is to estimate the income of the taxpayer and to assess him to tax on the basis of that estimate. Tax legislation necessitates the setting up of machinery to ascertain the taxable income, and to assess tax on the income, but that does not impress the proceeding with the character of an action between the citizen and the State.' Secondly, speaking of Sections 34 and 35 of the Income-tax Act, the Supreme Court observes: ' Both these sections which enable reopening of back assessments provide their own periods of time for action but all these periods of time, whether for the first assessment or for rectification, or for reassessment, merely create a bar when that time passed against the machinery set up by the Income-tax Act for the assessment and levy of the tax. They do not create an exemption in favour of the assessee or grant an absolution on the expiry of the period. The liability is not enforceable but the tax may again become exigible if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reason of a new power. '

10. As far as I could understand Mr. Pal, he sought to argue on the strength of these observations that, since the liability of an assessee exists even when the machinery for assessment and realisation of the tax becomes non-available due to the expiry of the periods mentioned in the machinery sections which include Section 34 of the Act, it is open to an assessee to waive the machinery and to invite the department to realise from him tax which has already accrued.

11. We cannot persuade ourselves to accept this argument of Mr. Pal which is sought to be founded on certain observations of the Supreme Court which have been torn out of their context. Thus, the Supreme Court has categorically stated that Section 34 imposes a fetter upon the income-tax authorities to bring to tax escaped income. This is a statutory fetter which, in our opinion, is not for the assessee to relax or waive. Further, the observations of the Supreme Court in Ahmedabad Manufacturing and Calico Printing Co.'s case, which we have already set out, are preceded by the following statements:

' It must be remembered that if the Income-tax Act prescribes a period during which the tax due in any particular assessment year may be assessed, then on the expiry of that period the department cannot make an assessment. Where no period is prescribed the assessment can be completed at any time but once completed it is final. Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record (section 35) or to reassess where there has been an escapement of assessment of income for one reason or' another (section 34). '

12. It is quite clear to us that whatever may be the nature of the jurisdiction exercised by the income-tax authorities, their power to make assessments lapses completely upon the expiry of the periods prescribed in the Income-tax Act. The observation of the Supreme Court that the sections prescribing the periods ' do not create an exemption in favour of the assessee or grant an absolution on the expiry of the period ' and that ' the liability may again be exigible ' must be read with the words that follow immediately, viz., ' if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reason of a new power '.

13. We are confirmed in our opinion by the Supreme Court decision in the case of Commissioner of Income-tax v. Raman Chettiar, which has been relied upon by the Tribunal at the time of their passing the order of 30th March, 1966. In that case, it may be remembered, upon a return filed by an assessee pursuant to a notice under Section 34 of the Indian Income-tax Act, 1922, the proceedings for assessment for one particular year were dropped as infructuous as the income shown in the return was below the taxable limit. Subsequently, however, in the proceedings relating to the following assessment years, the Appellate Tribunal held that the assessee was in fact assessable for a particular sum even in respect of the earlier assessment year and, thereupon, a notice was issued under Section 34 by the Income-tax Officer in respect of the earlier assessment year and an order passed assessing the assessee to tax in respect of that year. The question was whether this later notice under Section 34 was valid. The Supreme Court held that, though the notice under Section 34 issued on the earlier occasion was invalid, the return submitted pursuant to that notice was a valid return within the meaning of Section 22(3), that the Income-tax Officer could not ignore and disregard that return and issue another notice under Section 34 on the assumption that there has been a failure or omission on the part of the assessee to make his return of income under Section 22. On these grounds the Supreme Court held that the assessment under Section 34 completed on the second occasion to be invalid. The short question which the Supreme Court had to decide in that case was whether the earlier return dated 4th September, 1948, could be treated as a valid return under Section 22(3) of the Act. The Supreme Court observes :

' Section 22(3) permits an assessee to furnish a return at any time before the assessment is made. By virtue of Section 34(3), as it stood in 1949, assessment could have been made at least up to March 31, 1949, if the return was valid. Therefore, it may be implied, as laid down in S. Santosha Nadar v. First Additional Income-tax Officer, Tuticorin, [1961] 42 I.T.R. 715 (Mad.) and Commissioner of Income-tax v. Bhagwandas Amersey, : [1959]36ITR569(SC) . that the return must-be filed before the time mentioned in Section 34(3).'

14. For the purpose of the instant case we derive two cardinal principles from the Supreme Court decision in Raman Chettiar's case. They are as follows:

(i) All returns except those which are filed upon a valid notice under Section 34 are to be treated as returns within Section 22(3). The distinction that is often made between a return made under Section 22(3) in response to a notice under Section 22(1) or Section 22(2) and a return made in response to a notice under Section 34 by describing the former return as voluntary and the latter as not voluntary is rejected by the Supreme Court.

(ii) A return under Section 22(3) must be filed before the time mentioned in Section 34(3).

15. Once we accept these principles I fail to see how we can escape the conclusion that in the instant case the Tribunal was right in holding that the returns filed by the assessee for the assessment years 1953-54 to 1956-57 on 9th August, 1961, were invalid.

16. The Supreme Court has in the case of Commissioner of Income-tax v. Ranchhoddas Karsondas, : [1959]36ITR569(SC) dealt with Sub-sections (1), (2) and (3) of Section 22 and with Section 34 of the said Act. In that case, it will be remembered, the question arose whether a notice issued under Section 34 of the Act by the Income-tax Officer on a certain date after the assessee had filed a voluntary return was valid in law and whether an assessment completed on a date four years after the end of the relevant assessment year was valid in law. Both these questions were answered in the negative by the Bombay High Court. On appeal, the Supreme Court confirmed the answers of the Bombay High Court. The Supreme Court observed :

' It is a little difficult to understand how the existence of a return can be ignored, once it has been filed. A return showing income below the taxable limit can be made even in answer to a notice under Section 22(2). The notice under Section 22(1) requires in a general way what a notice under Section 22(2) requires of an individual. If a return of income below the taxable limit is a good return in answer to a notice under Section 22(2)t there is no reason to think that a return of a similar kind in answer to a public notice is no return at all. The conclusion does not follow from the words of Section 22(1). No doubt, under that sub-section only those persons are required to make a return, whose income is above taxable limits, but a person may legitimately consider himself entitled to certain deductions and allowances, and yet file a return to be on the safe side. He may show his income and the deductions and allowances he claims. But it may be that on a correct processing his income may be found to be above the exempted limit. No doubt, it is futile for a person not liable to tax to rush in with a return, but the return in law is not a mere scrap of paper. It is a return, such as the assessee considers represents his true income.'

17. The Supreme Court held that the return in answer to the general notice under Section 22(1) ' could be filed under Section 22(3) before the assessment and for this there is no limit of time '. In speaking of a return in answer to the notice under Section 22(1) the Supreme Court must have referred to a return which could be acted upon. While speaking of Section 34, the Supreme Court observes:

'Section 34(3) of the Act provides that no assessment except the assessment within Clause (a) of Sub-section (1) thereof or under Section 23 to which Clause (c) of Sub-section (I) of Section 28 applies, shall be made after the expiry of four years from the end of the year in which income, profits or gains were first assessable. A proviso, however, allows one year from the date of the service of the notice for the completion of the assessment....

It is, therefore, quite clear that the extra period is available only if a notice under Sub-section (1) of Section 34 has been issued within the time therein limited. This takes us to Section 34(1)....

It would appear ... that if the return filed . , , was a return of income, there was no failure or omission on the part of the assessee, so as to bring the matter within Section 34(1 )(a) of the Act, and Sub-section (3) of Section 34 would then apply to the case limiting the period to four years.'

18. As a result of a series of Supreme Court decisions the position is now very clear that Sub-section (3) of Section 34 in effect withdraws the power of assessment from the Income-tax Officer after a period. It is futile to say that the machinery of assessment is there. As Mr. Mitra suggested, the machinery after the expiry of the period is like a motor without any fuel.

19. At this stage we must briefly refer to the decision of the Madras High Court in the case of S. Santosha Nadar v. First Additional Income-tax Officer, Tuticorin and the decision of the Bombay High Court in Commissioner of Income-tax v. Bhagwandas Amersey as the Supreme Court has specifically referred with approval to these decisions in support of the principle that the Supreme Court laid down in Raman Chettiar's case that the return must be filed before the expiry of the period mentioned in Section 34(3) and that otherwise the return is a nullity in the eye of law.

20. In the case of S. Santosha Nadar, the Madras High Court held that, ' where an assessee had filed his return before the completion of assessment within the period of limitation allowed by law, proceedings cannot be commenced by the assessing authority under Section 34 of the Act.' Their Lordships observed that:

'Section 22(3) of the Act which permits a return to be filed at any time before the assessment is made, even if no return was filed in response either to the general notice under Section 22(1) or any individual notice under Section 22(2), carries its own limitation. What Section 22(3) permitted the assessee was to file his return at any time before the assessment could be lawfully made. The normal period of limitation, barring the exceptions for which Section 34(3) provides, for making an assessment being four years, the contention of the learned counsel for the department was that the return filed after a period of four years could not lead to any lawful assessment, and it should, therefore, be treated as non est in law. '

21. The Madras High Court held that the principle laid down in the case of Ranchhoddas Karsondas cannot be extended to a case where the return was filed by the assessee after the expiry of the period of four years.

'After the expiry of four years from the end of the assessment year 1945-46, no assessment could have been made on the petitioner without recourse to Section 34(1) and recourse could be had to Section 34(1) only on the ground that no return had been filed, i.e., that no return had been filed before the assessment could be lawfully completed without recourse to Section 34(1).'

22. In the case of Commissioner of Income-tax v. Bhagwandas Amersey a Division Bench of the Bombay High Court, following the Madras decision we have just cited, namely, S. Santosha Nadar v. 1st Additional Income-tax Officer, Tuticorin held that a voluntary return of income filed by an assessee after the period of four years from the end of the year in which the income was first assessable is non est in law and does not preclude the Income-tax Officer from initiating proceedings under Section 34 of the Income-tax Act and making an assessment order thereon, ignoring the voluntary return. It was specifically held that the principle laid down by the Supreme Court in the case of Ranckhoddas cannot be extended to cases where the voluntary return is submitted after the expiry of four years from the proper assessment year.

23. In Commissioner of Income-tax v. S. Raman Chettiar the Supreme Court had an occasion to consider the same point and also to consider the effect of their own judgment in Ranchhoddas's case as well as the Madras High Court judgment in the case of Santosha Nadar and also the judgment in the case of Bhagwandas Amersey. The Supreme Court held that the condition made in both the Madras and the Bombay cases that the return must be filed before the time mentioned in Section 34(3) was satisfied in the case before the Supreme Court. By implication, therefore, the Supreme Court accepted the correctness of the judgment in Santosha Nadar's case.

24. In this connection we should also refer briefly to a few recent decisions of different High Courts of India in which the same principle has been clearly reaffirmed.

25. In the case of Venkatamma v. 1st Income-tax Officer, Bangalore, a Division Bench of the Mysore High Court followed the case of Santosha Nadar v. 1st Additional Income-tax Officer, Tuticorinl, and held that:

' Even though Section 22(3) provides that a return or revised return can be made ' at any time before the assessment is made ', no assessment can be made under Section 23 on the basis of a return filed after the expiry of four years from the end of the year in which the income, profits or gains were first assessable, in view of the provisions of Section 34(3). The filing of a return after the expiry of four years from the year in which the income was first assessable would not, therefore, prevent an assessment of that income under Section 34 or make such reassessment illegal.'

26. Their Lordships agreed with the judgment in Santosha Nadar's case a, and observed :

' Otherwise, Section 34 can be made ineffective by purporting to have recourse to Section 22(3) after the period of limitation mentioned in Section 34.'

27. In Commissioner of Income-tax v. L.A, Patel the Gujarat High Court held that Section 22(3) which permits the filing of a return by an assessee who has not furnished it within the time allowed by Sub-section (1) or (2) of Section 22 at any time before the assessment is made, postulates that the return must be filed at a point of time when the assessment can be lawfully made. Hence, a voluntary return to be valid must be filed before the expiration of four years from the end of the assessment year, i.e., the normal period of limitation for making an assessment.

28. In S.S. Gadgil v. Lal and Co. the Supreme Court had specifically held that the period prescribed by Section 34 for assessment is not a period of limitation. According to the Supreme Court that

' section in terms imposes a fetter upon the power of the Income-tax Officer to bring to tax escaped income. It prescribes different periods in different classes of cases for enforcement of the right of the State to recover tax.'

29. Shah J., who delivered the judgment of the Supreme Court in this case, recites certain observations made in an earlier Supreme Court judgment in Ahmedabad . v. S.G. Mehta, Income-tax Officer, which are very apposite for our purpose in this case. The observations are as follows :

' It must be remembered that if the Income-tax Act prescribes a period during which the tax due in any particular assessment year may be assessed, then on the expiry of that period the department cannot make an assessment. Where no period is prescribed the assessment can be completed at any time but once completed it is final. Once a final assessment has been made, it can only be reopened to rectify a mistake apparent from the record (section 35) or to reassess where there has been an escapement of assessment of income for one reason or another (section 34). Both these sections which enable reopening of back assessments provide their own periods of time for action but all these periods of time, whether for the first assessment or for rectification, or for reassessment, merely create a bar when that time passed against the machinery set up by the Income-tax Act for the assessment and levy of the tax. They do not create an exemption in favour of the assessee or grant an absolution on the expiry of the period. The liability is not enforceable but the tax may again become exigible if the bar is removed and the taxpayer is brought within the jurisdiction of the said machinery by reason of a new power. This is, of course, subject to the condition that the law must say that such is the jurisdiction, either expressly or by clear implication. If the language of the law has that clear meaning, it must be given that effect and where the language expressly so declares or clearly implies it, the retrospective operation is not controlled by the commencement clause.'

30. In view of these various decisions of the Supreme Court, the case of S. Santosha Nadar and also in view of the decision of the Supreme Court in Commissioner of Income-tax v. Raman Chettiar we have no manner of doubt in our minds that the phrase ' at any time ' with regard to the voluntary submissions of returns under Section 22(3) must mean at any time within the period prescribed by other provisions of the statutes and that once the period mentioned in Section 34(3) is over there is an absolute bar to any order of assessment or reassessment unless, of course, it comes within the exceptions mentioned in the proviso to Sub-section (3) of Section 34. In our opinion, therefore, for the purpose of assessment an Income-tax Officer can use the ordinary machinery up to four years from the end of the assessment year; he can, however, start functioning again and exercise his power of assessment if he can come within the ambit of Section 34.

31. Before concluding, we must, however, deal with a very recent judgment of the Supreme Court from which Mr. Pal sought to seek support. I am referring to the decision in State of Assam v. Devaprasad Barua, : [1970]75ITR18(SC) . That was a case under the Assam Agricultural Income-tax Act, 1939. Sections 19 and 20 of that Act are in the same terms as Sections 22 and 23 of the Indian Income-tax Act. Section 30 is in the following terms :

' If for any reason any agricultural income chargeable to agricultural income-tax has escaped assessment for any financial year, or has been assessed at too low a rate (or has been the subject of undue relief under this Act), the Agricultural Income-tax Officer may, at any time within three years of the end of that financial year, serve on the person liable to pay agricultural income-tax on such agricultural income or, in the case of 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 19, and may proceed to assess or reassess such income, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that section.'

32. The Supreme Court held that the words ' at any time ' in Section 19(3) of the Assam Agricultural Income-tax Act, 1939, are not to be limited to the year of assessment. If a return of agricultural income is voluntarily submitted by an assessee under Section 19(3) after the expiry of the relevant assessment year, then Section 30 of that Act relating to escapement of income will not apply and an assessment on the basis of the return submitted by the assessee can be completed even after the expiry of the three years mentioned in Section 30. In such a case no notice either under Section 19(2) or under Section 30 need be given. This case, in our opinion, cannot help Mr. Pal for the simple reason that the return in this case had actually been filed on 31st May, 1958, which was within the period of three years from the end of the relevant financial year.

33. In the light of the foregoing considerations, we come to the conclusion that the answer to the question referred to us for opinion must be in the affirmative. Each party will pay and bear its own costs.

Sabyasachi Mukharji, J.

I agree.


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