Law:

Section:

JUDGMENT Chagla, CJ.-The question that arises on this reference is a question of limitation and what was contended by the assessee was that certain notices served by the Income-tax Officer under section 22 (2) of the Act read with section 34 were out of time and therefore the assessment pursuant to these notices was invalid in law. The two rival contentions we have to consider are, one that the period of limitation is eight years as contended by the Department and the other is that the period of limitation is four years as contended by the assessee ; and turning to section 34 the period of limitation would be eight years if the case falls under section 34 (1)(a) and the period of limitation would be four years if the case falls under section 34 (1)(b). A case falls under section 34 (1)(a) if there is an omission or failure on the part of the assessee to make a return of his income under section 32 ; and admittedly in this case the assessee has made no return of his income under section 22. Section 34 (1)(b) applies where there has been no omission or failure as mentioned in clause (a), in other words, where the assessee has made a return and the conditions laid down in sub-clause (b) are satisfied. The first contention of Mr. Palkhivala is that the case does not fall under sub-clause (a) because there has been no omission or failure on the part of the assessee, and this contention is based on this that there was a public notice given under section 22(1), that there was no individual notice under section 22(2), that the public notice did not bind the assessee and that there was no obligation on the part of the assessee in response to the public notice to make any return and therefore there was no omission or failure on the part of the assessee as contemplated by section 34 (1)(a). The Legislature has advisedly used two expressions "omission" and "failure" on the part of the assessee. Failure must connote that there is an obligation which has not been carried out and if there was no obligation upon the assessee to make a return then it would not be a failure on his part to carry out that obligation. But the Legislature has also used the expression "omission," and…

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