ICE & GENERAL MILLS v. INCOME TAX OFFICER, CENTRAL CIRCLE II, MEERUT (2)

Citation: [1980] 2 S.C.R. 236

Court: Supreme Court of India

Bench: V.D. TULZAPURKAR, E.S. VENKATARAMIAH

Case summary

The appellant challenged the notice by filing a writ petition in the Allahabad High Court, inter alia, on the ground that no reassessment proceedings could be undertaken under s....

Judgment text

ICE & GENERAL MI. LLs v. ! " ceeding was barred by lim. ita· tion or not was irrelevant. Though the earlier proceeding Wall quashed --.. f. for the reason that notice on which the proceeding was based was i&sued beyond time, it could not be said that no proceeding under s. 34 of. the 1922 Act was either factually or legally pending at the time when the 1961 Act came into force and since the proceedings initiated (I) 83 I. T. R. 104. (2) 84 I. T. R. 251. . ICE & GENERAL MILLS v. r. r. o. (Tulzapurkar, J. ) 239 under s. 34(1) (a) of the 1922 Act were pending at the time when - 1961 Act came into force, the Income-Tax Officer was not competent to issue any fresh notice under s. 148 of the 1961 Act. In Gujar Mal Modi's case (supra) the notice under s. 34(1) (a) of the 1922 Act for reopening the assessment of the deceased assessee was served only on one of the heirs of the deceased assessee.

The Assistant Appellate Commissioner set aside the assessment made pursuant to that notice on the ground that it was necessary to issue notices to all the legal representatives of the deceased assessee. In the meantime the 1961 ""-Act came into force and, t)lereafter the Income-Tax Officer issued notice , under s. 148 of that Act to all the heirs of the deceased assessee. This Court held that since the proceedings under s. 34(1}(b) bf the 1922 c· Act were pending on April 1, 1962, the second notice was incompetent. In other words in bo):h the cases this Court laid emphasis on the factual pendency of the proceedings under s. 34 on the relevant date, and not their legality as being material for purposes of s. 297(2)(d) (ii) of the 1961 Act. In the case before us admittedly proceetlings under s. 34(l) of the 1922 Act in respect of the item of Rs. 1,00,000 (which was said to have escaped assessment) were factually pending on April 1, 1962 and, therefore: the notice under s.

148 of the 1961 Act would he incompetent. An attempt was made by counsel for the Revenue to distinguish the aforesaid. decisions on the ground that in the instant case the earlier proceedings under s. 34 of the 1922 Act being without jurisdiction, must be regarded as non est inasmuch as the· Assistant Appellate , Commissioner had annulled the revised assessment made by the Income-tax Officer on the ground that the initiation of the proceedings (which was in respect of property income that had escaped assessmeμt) was not justified inasmuch as it was not a case of omission or failure on the part of the assessee to furnish full particulars of the property income. The submission, in our view, is factua! y incorrect. The reassessment order made by the Income Tax Officer on December 22, 1965 clearly shows that he had initiated the proceedings (in respect of property income) under s. 34(1) (b) i. e.

in consequence of informa· tion gathered by him from Assistant Appellate Commissioner'8 order .. _,. for an earlier year and not under s. 34(1)(a) on account of any omission or failure on the part of the assessee to make a full discl~ure and during the proceedings so initiated he came across the item of Rs. 1,00,000 being the income from undisclosed source which he held had been concealed and was liable to be included wider s. 34(1)(a). 8 Therefor9, the initiation of the proceedings under s. 34 by the Income Tax Officer cannot be regarded as being without jurisdiction and hence non est. As stated earlier the Department allowed the Assistant Appel- \.? -'"· late Commissioner's order whereby the reassessment order was quashed to become final. Instead of challenging that order a fresh notice under s. 148 of the 1961 Act was issued, which, in our view, the Income-tax Officer was not entitled to do in view of the fact that proceedings under 11.

34 of the 1922 Act were factually pending on April 1, 1962 when the new Act came into force. In the result the order passed by the High Court is set aside and the impugned notice under s. 148 of the 1961 Act is quashed. It is . obvious, that if any orders are passed pursuant to the impugned notice~· tho11e will be of no avail to the Revenue. The appeal is allowed but in the circumstances there will be no order as to costs. S. R. Appeal allowed. f