Law:

Section:

Section 149, read with Income-tax Act, 1961 section 153 of the Income-tax Act, 1961 [Corresponding to section 34(1), read with section 34(3) of the Indian Income-tax Act, 1922] - Income escaping assessment - Time-limit for issuance of notice - Assessment year 1943-44 - Whether if conditions laid down in proviso to section 34(3) of 1922 Act are satisfied, a further period of one year is given to taxing authorities to make assessment and assessment may be made one year from date of service of notice even though such period may go beyond period of eight years laid down in section 34(3) of 1922 Act - Held, yes - Whether, however if notice is served beyond time limited by section 34 of 1922 Act, then said notice is bad and any proceedings taken pursuant to that notice are also bad - Held, yes FACTS The assessment for the assessment year 1943-44 was completed on 17-7-1944. It was then discovered that the assessee had not shown a certain income. Under the circumstances the ITO issued a notice on 20-3-1952, and this notice was served on 16-4-1952. This assessment was completed on 28-3-1953. The assessment was challenged on the ground that the notice pursuant to which this assessment was made was not valid, and the Tribunal held that the challenge was justified and held that the assessment could not be sustained. On reference : HELD The notice was actually served on 16-4-1952, and, therefore, it was clear that the notice was not served within eight years as required by section 34. A notice under section 34 is a condition precedent to the assessment to be made under this section, and as the notice was not served as required by section 34, any assessment made pursuant to that notice must be invalid. But what was relied upon by the Commissioner was the proviso to sub-section (3) of section 34. Now sub-section (3) of section 34 provided that no assessment under section 34 shall be made after the expiry of eight years from the end of the year in which the income, profits or gains were first assessable. As the year in which the income, profits or gains were first assessable ended on 31-3-1944, the order of assessment would have to be made under this sub-section by 31-3-1952.…

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