Law: Income Tax Act, 1922

Section: 34

Section 153 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922] - Assessment - Time limit for completion of - Assessment year 1942-43 - Whether section 34 of 1922 as amended in 1948 had retrospective operation and applicable to assessments for years ended before amendment came into force - Held, yes - Whether, therefore, proceedings under section 34 of 1922 Act initiated on 25-7-1949 to assess amount which escaped assessment during relevant assessment year by failure of assessee to submit return, were valid in law - Held, yes FACTS During the accounting year relevant to the assessment year in question, the respondent assessee received certain amount from her husband, who was residing abroad. The respondent submitted no return of her income as she was bound to do and the amount became taxable under section 4(2) of the 1922 Act. In 1949, the ITO on receipt of definite information that such income had escaped assessment issued on 25-7-1949 a notice under section 34 of the 1922 Act as amended by the Amending Act of 1948. On appeal, the AAC confirmed the assessment. A further appeal to the Tribunal, was also unsuccessful. On reference, the High Court held that the limitation of eight years prescribed by section 34 of the 1922 Act as amended by the Amending Act of 1948 did not apply to the case of the assessee which was a case of failure to submit the return and the period of four years had expired before 30-3-1948, when the amendment in section 34 was made by the Amending Act of 1948. It was also held that section 31 of the Amending Act of 1953 was not applicable. HELD PER A.K. SARKAR, M. HIADAYATULLAH AND RAGHUBIR DAYAL, JJ (MAJORITY VIEW) The Amending Act of 1948 was passed on 8-9-1948, but it was given retrospective effect from 30-3-1948. The Amending Act repealed the existing section 34 of the principal Act and substituted for it a new section. It was quite clear that the pre-existing section 34 which was repealed by the 1948 amendment could not have applied to proceedings commenced after the repeal. There was no question of applying the pre-existing law to such proceedings. But where the proceedings related to a period…

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