Law:

Section:

Section 148 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922] - Income escaping assessment - Issue of notice for - Whether where notice was issued by ITO within prescribed period of limitation but it was not served within this limitation period, ITO would have no jurisdiction to continue proceedings under section 34 - Held, yes FACTS On 31-3-1955 the ITO issued two notices under section 34 to the petitioners in respect of the year ending the 31-3-1947. The ITO issued these notices on the last day of the maximum period of the eight years within which a notice can be issued under section 34 of the 1922 Act. The notice was delivered next day, i.e., after expiry of limitation period. On writ the petitioners challenged the issue of notice under section 34 on the grounds, inter alia, that the proceedings were beyond limitation. HELD Had it been the intention of the Legislature that the assumption of the jurisdiction by the ITO should be dependent on the mere issue of a notice to the assessee it would have been a simple matter, when this section was redrafted in 1948, for the Legislature to have put the matter beyond doubt by using the word "issue" in place of the word "serve". It must be remembered that between 1922, when the Act, came into force, and 1948 when for the second time section 34 was substantially changed, the obligation on the ITO was to serve on and not merely to issue a notice to the person liable to payment. The provisions of section 34 as originally read, imposed an ITO who proposed to take action under that section an obligation to serve on the person liable to pay tax notice within one year of the end of the year in respect of which income had escaped assessment. In 1939 a new section 34 was substituted for the original section 34. The sub-section (2) of section 34 leaves no room for doubt that the notice which the ITO was required to issue had to be served within one or the other of the prescribed periods of eight or four years. Sub-section (1) of the new section provided, inter alia, that the ITO might in any case in which he had reason to believe that the assessee had concealed the particulars of his…

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