1. In this case, the Commissioner of Income-tax has referred seven questions of law at the request of the assessees. It appears that the original notice under Sub-section (2), Section 22, Income tax Act, was served on the assessees on 16th March 1925. The assessees were required by that notice to give a return of their income for the year 1925-26 October to October, and the income of that year would be the income of the previous year 1924-25. In April 1925, they made a return and upon this there was an order of assessment. Some time later, it appearing that there was a question whether the income of a certain fatka business was or was not income belonging to the assessees, proceedings were started by a notice under Section 34 of the Act and assessment was made under Section 34 of the Act by the Income-tax Officer. This assessment however was cancelled by the Assistant Commissioner but the Assistant Commissioner, after he had cancelled it apparently saw reason to think that his orders were contrary to the merits of the matter and he reported the case to the Commissioner of Income-tax for action under Section 33. On 29th June 1926, the Commissioner issued a notice under Section 33, and on 14th September 192.6 he made an order upon the Income-tax Officer to commence proceedings afresh ab initio by a new notice under Section 34. This new notice was served in September 1926 and it is not contended before us that the new notice served in September 1926 was beyond the time limited by Section 34 of the Act. We have therefore to consider carefully what happened upon the basis of this notice which has never yet been set aside. On the basis of this notice, in November of that year the assessees filed a return. Notice was issued upon them to produce certain evidence and certain books of account. They failed to comply with this notice and consequently on 17th January 1927, an assessment was made upon them on the footing that they had been in default in the matter of producing their account books the figure upon which they were assessed being in excess of Rs. 3,00,000. Thereupon the assessees petitioned the Income-tax Officer under Section 27 of the Act to re-open their assessment. The Income-tax Officer rejected that petition. On 11th April 1927, they appealed from the order of the Income-tax Officer to the Assistant Commissioner and the Assistant Commissioner set aside this assessment on a sum exceeding Rs. 3,00,000. He directed the Income-tax Officer to give a new notice calling upon the assessees to produce any evidence they had in support of their return and calling upon them to produce the account books and he having made that order the proceedings continued afresh in that respect.
2. There are two points which have been taken by Mr. Pugh from among a number of points which the Commissioner was asked to refer to this High Court, He says, first, that if one turns to S..34 of the Act one will find that not merely the notice parallel to the notice under Sub-section (2), Section 22, must be given within the time there limited but the whole proceedings down to assessment on the alleged additional income must be completed within that time. In my judgment the wording of the section is reasonably clear to the contrary. The wording is
The Income-tax Officer may at any time within one year of the end of that year serve on the person liable to pay tax on such income profits or gains a notice containing all or any of the requirements which may be included in a notice under Sub-section (2), Section 22, and may proceed to assess or re-assess such income, profits or gains and the provisions of this Act shall so far as may be apply accordingly as if the notice were a notice issued under that subsection.
3. In my judgment the limitation in point of time is a limitation which applies only to the notice and if a notice calling upon the assessees to file a return of the additional income is given within the time therein limited the rest of the proceedings is not further limited as to time.
4. The second point which Mr. Pugh has taken upon the basis of Section 34 is that under such procedure, while it may be that for failing to file a return of the additional income an assessment thereof may be made in default, the section should not be read as entailing the consequence that if a failure is made to produce the books of account required by the authorities an assessment can be made for a default of that character. In my opinion, the procedure under the notice referred to in Section 34 is to be as far as maybe the same as would be applied in the case of an original notice-under Sub-section (2), Section 22. The failure to make any return at all would have to be dealt with under Sub-section (4), Section 23 and I see no reason to think that the other provisions of Sub-section (4) will have no effect under Section 34 of the Act. In this case, one of the questions which was referred to us was question 13:
When a Section 34 assessment for 1923-26 is cancelled for illegality in the year 1927-28 whether or not the Income-tax Officer is debarred from proceedings to make a fresh assessment, an account of the expiry of the time limit laid down in Section 34 of the Act, and whether or not the words so far as may be in Section 34 nullify the remand order of the Assistant Commissioner under Section 31 (3) (b) of the Act.
5. It is not clear what the latter portion of his question means. But in the present case the notice under Section 34 was the new notice under Section 34 and the notice on the footing of which the assessment has been made was given within the time limited by the Act. That being so, there is no want of jurisdiction by reason of the limit of time in the proceedings before us. The first portion of question 13 is to be answered against the assessees. The second portion I do not propose that we should answer as it is not so expressed that any answer that may be given would be intelligible.
6. The other questions which have been referred by the commissioner have not been raised before us and there is no occasion to answer them.
7. A question, however was intimated by Mr. Pugh as to whether or not the Income-tax Officer making the assessment in this case was the proper Income-tax Officer to deal with the matter. No such question is really raised by the reference before us.'' We have dealt with it on a previous occasion and in the proceedings we cannot deal with it at all.
8. The assessees must pay the costs of this reference.
C.C. Ghose, J.
9. I agree.
10. I agree.