Law:

Section:

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34(1)(a) of the Indian Income-tax Act, 1922] - Income escaping assessment - Position prior to 1-4-1989 - Assessment year 1946-47 - Assessee-firm carrying on business in Sarguja State was dissolved and a notice under section 34(1)(a) of 1922 Act was issued to assessee on 26-3-1952 for re-assessment of escaped income in relevant assessment year - Whether saving in section 7 of Taxation Laws (Extension to Merged States and Amendment) Act, 1949, has effect of continuing Sarguja Act for purpose of earlier assessment but it will have to be read as referring to Income-tax Act as it stood at commencement of that Act in 1949 and subsequent amendments will have to be ignored - Held, yes - Whether therefore, in 1949, limitation for a notice under section 34(1)(a ) was eight years only and since said period had expired long before impugned notice, it was not competent for income-tax authorities to issue impugned notice - Held, yes FACTS The assessee-firm carried on the business in Sarguja State. The assessee was dissolved on 25-7-1947. For the assessment year 1946-47, a notice under section 34(1)(a) was issued to the assessee on 26-3-1952 for re-assessment of escaped income as it was discovered that the firm had made a declaration of high denomination notes. The income was ultimately assessed to income-tax. The assessee went up in appeal before the AAC who held that the income could not be assessed in the year 1947-48 but was liable to assessment for the year 1946-47. The matter was taken up to the Tribunal but the order of the AAC was maintained. On reference: HELD After the repeal of the Sarguja Act, it ceased to apply to proceedings for assessments commenced after 1949 but it was preserved in relation to assessments for earlier years. The expression "amendments made from time to time", if literally interpreted, is comprehensive enough to include amendments made at any time but the difficulty arises in the context of amendments made in the Indian Income-tax Act after the repeal of the Sarguja Act. The amendments subsequent to the repeal cannot be read in the Sarguja Act. Amendments can be made only in an…

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