Law: Income Tax Act, 1922

Section: 34(1A)

Section 34(1A) of the Indian Income-tax Act, 1922 - Reassessment - Assessment years 1941-42 to 1946-47 - Whether absence of restriction as to period of limitation under section 34(1A) of 1922 Act introduces any infirmity in said provision - Held, no - Whether therefore section 34(1A) of 1922 Act is valid and has not contravened article 14 of Constitution of India - Held, yes FACTS The assessee-firm, who was served with a notice under section 34(1A) of 1922 Act, filed a writ petition challenging validity of impugned notice on ground that section 34(1A) of 1922 Act was utra vires to the constitution of India. The argument urged in support of the challenge to the validity of the impugned section was that it suffered from the vice of contravening article 14 of the Constitution. It was urged that whereas under section 34(1) of 1922 Act, which deals with similar cases of assessees, the remedy by way of appeals and revisions under the relevant provisions of the Act is available to the assessees, that remedy was denied to the assessees against whom proceedings were taken under the impugned section. Which amounted to unconstitutional discrimination. It was also urged that in regard to cases falling under section 34(1)(a) of 1922 Act as it stood at the relevant time, a period of limitation of 8 years had been prescribed beyond which the assessing authority could not act, but this protection of the prescribed period of limitation was not available to the assessees against whom action was taken under the impugned section. The High Court dismissed the writ petition. On appeal to the Supreme Court : HELD Section 34(1A) of 1922 Act was introduced by an amendment in the Act on the 17-7-1954, and that was because section 5(4) of the Taxation on Income (Investigation Commission) Act, 1947, was struck down by the Supreme Court as unconstitutional on 28-5-1954, in Suraj Mall Mohta v. A.V. Visvanatha Sastri1. After this was pronounced, the legislature intervened and enacted section 34(1A) of 1922 Act. That, however, was not the end of the matter. When section 34(1A) of 1922 Act was introduced in the Act, there remained two statutory provisions dealing with substantially the same…

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