Law: Income Tax Act, 1922

Section: 34

Income-tax------Re-assessment-Proceedings under new Act of 1961 whether can be commenced in respect of a period prior to 1962-63-Income-tax Act, 1961, Ss. 147(a) & 297(2)(d)(ii)- so Indian Income-tax Act, 1922, S. 34. By reason of section 297(2)(d)(ii) of the Income-tax Act, 1961, proceedings for the asse5ament or re-assessment of escaped income could be commenced under section 147 in respect of a period antecedent to the assessment year 1962-63 to which section 147(a) expressly refers in a case where no proceeding under section 34 of the old Act was still pending on the date on which the now Act came into force, provided the assessment year is not earlier than the year ending on March 31, 1940. S. C. Magavi v. Commissioner of Income-tax (1967) 64 I T R 409 distinguished. [Case-Law referred].                                                                                                                         JUDGMENT SOMNATH, IYER, J.-----An assessee under the Income-tax Act is the petitioner before us and he asks to quash the proceedings by which the Income-tax Officer of Central Circle II, Bangalore, proposed to assess escaped income in respect of the assessment year 1960-61. A notice for that purpose was sent to the assessee by the Income-tax Officer under section 148 of the Income-tax Act, 1961. The assessee is a private company called Bedi & Co. (P.) Ltd., which engaged itself in the activity of promoting the formation of a public company called the Mandya National Paper Mills Ltd. In that context this private company arranged for the purchase of machinery required for the public company from a company in Canada called Parsons and Wittemore Company Ltd. In the assessment proceedings, the assessee-company stated that during the negotiations for that purchase, a sum of Rs. 32,58,500 was advanced by the Canada company to the assessee-company to purchase…