Law:

Section:

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922], read with section 7 of the Taxation Laws (Extension to Merged States and Amendment) Act, 1949 - Income escaping assessment - Position prior 1-4-1989 - Assessment years 1946-47 to 1948-49 - Appellant-assessee used to carry on business in state of Nandgaon during relevant assessment years - At that time, provisions of 1922 Act were applicable to Nandgaon State on account of extension of that Act to state in year 1942 - Appellant was assessed to tax for above years under said Act - With effect from 1-8-1949, State merged with Madhya Pradesh by States Merger (Governors Provinces) Order, 1949 ; and by Taxation Laws (Extension to Merged States and Amendment) Act, 1949 - In years 1954-55, the Income-tax Officer issued notices to the appellant under section 34 of the 1922 Act for re-assessment of tax for very same years - Petitioner contested validity of said notices on ground that they were issued under section 34 of 1922 Act which was not in force in accounting periods stated - Whether in view of fact that 1922 Act was extended bodily to Nandgaon State in year 1942, contention raised by appellant was liable to be rejected - Held, yes FACTS The appellant used to carry on business in the State of Nandgaon and did so during the years 1946-47, 1947-48 and 1948-49. At that time, the provisions of the 1922 Act were applicable to the Nandgaon State on account of the extension of that Act to the State in the year 1942. The appellant was assessed to income-tax for the above years under the said Act by three separate orders of the ITO and the tax was duly realised by the State authorities. The State Merged with Madhya Pradesh with effect from 1-8-1949, by the State Merger (Governor's Provinces) Order, 1949; and by the Taxation Laws (Extension to Merged States and Amendment) Act, 1949, the Indian Income-tax Act was extended to the State of Nandgaon with effect from 1-4-1949. In the years 1954 and 1955, the ITO issued three separated notices to the appellant under section 34 of the 1922 Act for re-assessment of tax for the very same years. The petitioner contested the…

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