Law: Income Tax Act, 1922

Section: 2(11)cl.(c),

Income tax Act (XI of 1922)---S. 2 (11) cl. (c), first proviso--¬Applicability Determination of "previous year" by Central Board of Revenue by Notification dated 24 8 1951 Assessee starting jute business on 19th November, 1950, required to furnish return for "previous year " ending on 30th June, 1951 -Liability of assessee becomes determinable with enforcement of Finance Act Notification issued after, not operative Subsequent alteration of liability only by direct retrospective legislation : [P L D 1960 Dacca 233 : 1960 P T D 253 Commissioner of Income tax East Pakistan v. Radhashyam Agarwala reversed]. The basic feature of the Income tax Act is that the various liabilities created by it arise only when their extent is determined try the Finance Act. The machinery provided by the Act for the enforcement of a liability comes into motion only when the Finance Act determines the rate or rates of tax on the total incomes of different classes of assessees for the previous year. When these rates have been specified, then by virtue of section 3 tax at those rates has to be charged for the assessment year in question in accordance with the provisions of the Income tax Act in respect of the total income of the "previous year" of different classes of assessees. If there be no Finance Act, the Income tax Act remains a dormant statute, but with the passing of the Finance Act it comes at once into activity and the machinery created by it immediately gets into gear to enforce the liabilities of different classes of assessees. Once the liabilities of the assessees have come into existence they cannot be altered in quantum, extent or character except w direct retrospective legislation. The assessee started jute business on 16th September, 1950 and closed his accounts on 29th June, 1951. The Central Board of Revenue by a Notification dated 24th August, 1951, determined the previous year for the assesseess carrying on business in jute as ending on the 30th June, 1951. By a notice the assessee was required to furnish his return for the period commencing from the date on which he started his business upto 29th June, 1951, that is, for the period for which he had made up his…

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