Full Judgment Text
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PETITIONER:
THE COMMISSIONER OF INCOME-TAX, BIHAR & ORISSA.
Vs.
RESPONDENT:
MAHARAJA PRATAPSINGH BAHADUR OF GIDHAUR.
DATE OF JUDGMENT:
29/11/1960
BENCH:
HIDAYATULLAH, M.
BENCH:
HIDAYATULLAH, M.
KAPUR, J.L.
SHAH, J.C.
CITATION:
1961 AIR 1026 1961 SCR (2) 760
CITATOR INFO :
D 1965 SC1031 (4)
D 1965 SC1431 (11)
D 1978 SC 209 (12)
ACT:
Income Tax-Escaped income--Notice issued by Income-tax
Officer without approval of Commissioner--Subsequent
amendment of enactment providing for Commissioner’s
approval--Assessment based on original
notice--Validity--General Clauses Act, 1897 (10 of 1897), s.
6--Income-tax and Business Profits Tax (Amendment) Act, 1948
(48 of 1948), ss. r, 8--Indian Income-tax Act, 1922 (11 of
1922), s. 34, as amended by Act 48 of 1948.
HEADNOTE:
The appellant who had agricultural income from his Zamindari
was assessed to income-tax for the four assessment years,
1944-45, to 1947-48. The income-tax authorities did not
include in his assessable income, interest received by him
on arrears of rent, in view of a decision of the Patna High
Court, but subsequently this view of law was reversed by the
Privy Council. On August 8, 1948, the Income-tax Officer
issued notices under s. 34of the Indian Income-tax Act,
1922, for assessing the escaped income. Before the notices
were issued the Income-tax Officer had not put the matter
before the Commissioner for his approval as the section then
did not require it and the assessments were completed on
those notices. In the meantime, certain amendments were
made to the Indian Income-tax Act by Act 48 of 1948, which
received the assent of the Governor-General on September 8,
1948. The Amending Act substituted a new section in place
of S. 34, which among other changes, added a proviso to the
effect that "the Income-tax Officer shall not issue a
notice...... unless he has recorded his reasons for doing so
and the Commissioner is satisfied on such reasons that it is
a fit case for the issue of such notice", and also made it
retrospective by providing that the new section "shall be
deemed to have come into force on the 30th day of March,
1948". The question was whether the notices issued by the
Income-tax Officer on August 8, 1948, without the approval
of the Commissioner, were rendered void by reason of the
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operation of the amended s. 34. The Commissioner claimed
that s. 6 of the General Clauses Act, 1897, saved the
assessments as well as the notices.
Held, that s. 6 of the General Clauses Act, 1897, was in-
applicable as the Amending Act of 1948 indicated a different
intention within the meaning of that section, inasmuch as
the amended S. 34 of the Indian Income-tax Act, 1922,
provided that it shall be deemed to have come into force on
March 30, 1948.
Lemm v. Mitchell, [1912] A.C. 400, distinguished,
761
Held, further, that the notices issued by the Income-tax
Officer on August 8, 1948, and the assessments based on them
were invalid.
Venkatachalam v. Bombay Dyeing & Mfg. Co., Ltd., [1959]
S.C.R. 703, applied.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 650 of 1957.
Appeal from the judgment dated July 13, 1956, of the Patna
High Court in Miscellaneous Judicial Case No. 665 of 1954.
R. Ganapathy Iyer and R. H. Dhebar, for the appellant.
A. V. Viswanatha Sastri and R. C. Prasad, for the
respondent.
1960. November 29. The Judgment of the Court was delivered
by
HIDAYATULLAH, J.-This is an appeal by the Commissioner of
Income-tax with a certificate against the judgment and order
of the High Court at Patna answering two questions of law
referred to it under s. 66(1) of the Income-tax Act by the
Tribunal, in the negative. Those questions were:
"(1) Whether in the circumstances of the case assessment
proceedings were validly initiated under s. 34 of the Indian
Income-tax Act?
(2) If so, whether in the circumstances of the case the
amount received from interest on arrears of agricultural
rent was rightly included in the income of the assessee ?"
The assessee, the Maharaja Pratapsingh Bahadur of Gidhaur,
had agricultural income from his zamindari for the four
assessment years 1944-45 to 1947-48. In assessing his
income to income-tax, the authorities did not include in his
assessable income interest received by him on arrears of
rent. This was presumably so in view of the decision of the
Patna High Court. When the Privy Council reversed the view
of law taken by the Patna High Court in Commissioner of
Income-tax v. Kamakhya Narayan Singh (1), the Income-tax
Officer issued notices under S. 34 of the
(1) [1948] 16 I.T.R. 325.
762
Indian Income-tax Act for assessing the escaped income.
These notices were issued on August 8, 1948. The
assessments after the returns were filed, were completed on
August 26, 1948. Before the notices were issued, the
Income-tax Officer had not put the matter before the
Commissioner for his approval, as the section then did not
require it, and the assessments were completed on those
notices. Section 34 was amended by the Income-tax and
Business Profits Tax (Amendment) Act, 1948 (No. 48 of 1948),
which received the assent of the Governor-General on Sep-
tember 8, 1948. The appeals filed by the assessee were
disposed of on September 14 and 15, 1951, by the Appellate
Assistant Commissioner, before whom no question as regards
the validity of the notices under s. 34 was raised. The
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question of the validity of the notices without the approval
of the Commissioner appears to have been raised before the
Tribunal for the first time. In that appeal, the Accountant
Member and the Judicial Member differed, one holding that
the notices were invalid and the other, to the contrary.
The President agreed with the Accountant ’Member that the
notices were invalid, and the assessments were ordered to be
set aside.
The Tribunal then stated a case and raised and referred the
two questions, which have been quoted above. The High Court
agreed with the conclusions of the majority, and the present
appeal has been filed on a certificate granted by the High
Court.
Section 34, as it stood prior to the amendment Act No. 48 of
1948, did not lay any duty upon the Income-tax Officer to
seek the approval of the Commissioner before issuing a
notice under s. 34. The amending Act by its first section
made ss. 3 to 12 of the amending Act retrospective by
providing "sections 3 to 12 shall be deemed to have come
into force on the 30th day of March, 1948........ Section 8
of the amending Act substituted a new section in place of s.
34, and in addition to textual changes with which we are not
concerned, also added a proviso to the following
effect :
"Provided that-
763
(1) the Income-tax Officer shall not issue a notice under
this sub-section unless he has recorded his reasons for
doing so and the Commissioner is satisfied on such reasons
that it is a fit case for the issue of such notice."
The question is whether the notices which were issued were
rendered void by the operation of this proviso.-’ The
Commissioner contends that s. 6 of the General Clauses Act,
particularly cls. (b) and (c) saved the assessments as well
as the notices. He relies upon a decision of the Privy
Council in Lemm v. Mitchell (1), Eyre v. Wynn-Mackenzie (2)
and Butcher v. Henderson (3) in support of his proposition.
The last two cases have no bearing upon this matter; but
strong reliance is placed upon the Privy Council case. In
that case, the earlier, action which had been commenced when
the Ordinance had abrogated the right of action for criminal
conversation, had already ended in favour of the defendant
and no appeal therefrom was pending, and it was held that
the revival of the right of action for criminal conversation
did not invest the plaintiff with a right to begin an action
again and thus expose the defendant to a double jeopardy for
the same act, unless the statute expressly and by definite
words gave him that right. The Privy Council case is thus
entirely different.
No doubt, under s. 6 of the General Clauses Act it is
provided that where any Act repeals any enactment, then
unless a different intention appears, the repeal shall not
affect the previous operation of any enactment so repealed
or anything duly done thereunder or affect any right,
obligation or liability acquired, accrued or incurred under
any enactment so repealed. It further provides that any
legal proceedings may be continued or enforced as if the
repealing Act had not been passed. Now, if the amending Act
had repealed the original s. 34, and merely enacted a new
section in its place, the repeal might not have affected the
operation of the original section by virtue of s. 6. But the
amending Act goes further than this. It
(1) [1912] A.C. 400. (2) (1896) 1 Ch. 135.
(3) (1868) L.R. 3 Q. B. 335.
764
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repeals the original s. 34, not from the day on which the
Act received the assent of the Governor-General but from a
stated day, viz., March 30, 1948, and substitutes in its
place another section containing the proviso above
mentioned. The amending Act provides that the amending
section shall be deemed to have come into force on March 30,
1948, and thus by this retrospectivity, indicates a
different intention which excludes the application of s. 6.
It is to be noticed that the notices were all issued on
August 8, 1948, when on the statute book must be deemed to
be existing an enactment enjoining a duty upon the Income-
tax Officer to obtain prior approval of the Commissioner,
and unless that approval was obstained, the notices could
not be issued The notice were thus invalid. , The principle
which was applied by this Court in Venkatachalam v. Bombay
Dyeing & Mfg. Co. Ltd. (1) is equally applicable here.
No question of law was raised before us, as it could not be
in view of the decision of this Court in Narayana Chetty v.
Income-tax Officer (2), that the proviso was not mandatory
in character. Indeed, there was time enough for fresh
notices to have been issued, and we fail to see why the old
notices were not recalled
and fresh ones issued.
For these reasons, we are in agreement with the High, Court
in the answers given, and dismiss this appeal with costs.
A appeal dismissed.
(1) [1959] S.C.R. 703. (2) [1959] 35 I.T.R. 388.
765