Law:

Section:

JUDGMENT Shah, J.-The assessee was a resident of the former State of Raigarh in the Province of Madhya Pradesh. By a notification, dated 31st July, 1944, issued by the Ruler of the Raigarh State, the Indian Income-tax Act, 1922, with all the amendments made till that date, as in operation in British India, was made applicable to the territory of the Raigarh State. It was also provided by the notification that all future amendments made in the Indian Income-tax Act, 1922, will be applicable "automatically" to the Raigarh State. The assessee was assessed to income-tax for the assessment years 1946-47 and 1947-48. As accepted on a concession made by the Department by the Income-tax Appellate Tribunal, the Raigarh State merged with the Central Provinces and Berar on 1st April, 1949. In March, 1954, the Income-tax Officer, Special Circle I, Nagpur, initiated proceedings under section 34 of the Indian Income-tax Act for reassessment of the assessee's income on the view that certain income of the assessee for the relevant assessment years had escaped assessment. Before the Income-tax Officer it was contended by the assessee that as required by section 34(1) of the Indian Income-tax Act, 1922, as amended by the Income-tax and Business Profits Tax (Amendment) Act, 1948, the sanction of the Commissioner of Income-tax should in the first instance be obtained before commencing action under section 34 and no such sanction having been obtained, the proceedings were without jurisdiction. The Income-tax Officer negatived that contention and reassessed the income of the assessee. That order was upheld by the Appellate Assistant Commissioner. The Tribunal, however, accepted the plea of the assessee that sanction, as required, of the Commissioner of Income-tax was not obtained before the commencement of proceedings and, therefore, the proceedings under section 34 were without jurisdiction. At the instance of the Commissioner, the following question has now been referred: "Whether on a true construction of the Raigarh Darbar Notification No. 89/44/D/Raigarh, dated July 31, 1944, section 34 of the Indian Income-tax Act, 1922, as amended by the Income-tax and Business Profits Tax…

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