1. In this case, certain assessees were being dealt with for the year of assessment 1927-28. The assesses' year of accounting was Sambat year 1983 and, on 30th April 1927, a notice was issued by the Income-tax Officer of the district in which the assessees' principal place of business was situate he being the officer who had jurisdiction over them for the purpose of income-tax. This was the ordinary notice under Sub-section (2), Section 22 of the Act calling upon the assessees to furnish a return. The assessees did not furnish the return and several reminders were issued by that Income-tax Officer of the district in June 1927 and again in July 1927. On 10th December 1927, the Commissioner purported to appoint Mr. P.L. Bhattacharjee, Special Income-tax Officer to deal with what he conceived to be a class of cases which would include the present case. The order was that he was to:
perform all the functions of an 'Income-tax Officer in respect of those persons in Calcutta whose cases may be made over to him by me from time to time.
2. It has subsequently been held in : AIR1930Cal297 , that that order was not within the power of the Commissioner upon a true construction of the Income-tax Act, and the consequence is that Mr. Bhattacharjee obtained under the Act no power to impose assessment upon these assessees or to deal with their case as an Income-tax Officer at all. On 15th December, the Commissioner recorded an order:
In accordance with my Order No. 7257-C.T. dated 13th December 1927, the ease is made over to Babu Phanindra Lal Bhattacharjee, Income-tax Officer, for necessary action.
3. That order purports to transfer to Mr. Bhattacharjee not the duty of commencing the proceedings all over again but to transfer to him the case as it then stood. A perfectly good notice or rather series of notices under Section 22 (2) had prior to the Commissioner's order been issued by the Income-tax Officer of the assessee's district. The proceedings that took place before the Special Officer and which have now to be treated at the instance of the assessees as wholly nugatory are these: that the Special Officer issued a fresh notice calling for a return, that apparently he did not get the return, that he issued another notice calling upon the assessees to furnish their accounts and that ultimately, on 30th March, he purported illegally, as we now know, to make an assessment upon them to the best of his judgment on their default. That assessment did not conclude the proceeding because, on 14th July 1928, the assessees applied to the Assistant Commissioner against the assessment made by the Special Officer and: this proceeding before the Assistant Commissioner was, as I understand, still pending and in existence at the time when in another case it was determined that Mr. Bhattacharjee had no right to deal at all with cases such as the case of the assessees and that all his acts ware null and void. That being so, on 25th September 1929, the Income-tax Officer of the district who had jurisdiction over the assessees from the beginning and whose jurisdiction never terminated by the illegal order of the Commissioner issued a reminder calling again upon the assessees to file a return. It appears that this time the assessees filed a return on 21st October 1929 but did so under protest. In December of that year, they further produced their books of account and, on 20th January 1930, an assessment was made by the Income-tax Officer of the district under Sub-section (3), Section 23, that is, in the ordinary course and not as an assessment against the asses-sees on the footing of default.
4. Now before the Commissioner of Income-tax, the assessees took the point that it was not open after September 1929 to the income-tax authorities to make any assessment of income-tax upon these assessees and they pointed out to the fact that September 1929 was more than one year from the expiry of the financial year 1927-28. They called in aid Section 34, Income-tax Act and the question which has been referred to us at their instance is whether, in the circumstance, the assessment was valid.
5. In my opinion, the assessment is valid. Section 34, deals with income which has escaped assessment and it may be though it is not necessary for the present purpose to decide it that that income cannot be said to have escaped assessment except in the case where an assessment has been made which does not include the income. do not proceed upon that footing because it is unnecessary for the purpose of the present case. At all events, income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessee's income which have not yet terminated in a final assessment thereof. in the present case, there was a perfectly valid notice issued by the Income-tax Officer of the district on 30th April 1927. Action had been taken by him by way of reminder on three occasions thereafter. The illegal proceedings of the Special Officer in no way have effect to abrogate the notice of 30th April 1927 and, in my judgment, when it was found in August 1929 that the proceedings before the Special Officer were nugatory the position then was that a valid notice having been issued in April 1927 that notice had not yet proceeded to a final assessment and nothing had happened which entitled the assessees to say that the income-tax authorities might no longer rely upon that notice. In my judgment, the position is that the proceedings for assessment were taking a dilatory course having regard to the mistake made about the meaning of Section 5, Income-tax Act, in the Commissioner's order of December 1927. The proceedings are still pending and, in my judgment, the question put to us should be answered in the affirmative and the in-coma-tax authorities should have their costs of this reference against the assessees.
C.C. Ghose, J.
6. I agree.
7. I agree.