Commissioner Of Income Tax, West Bengal v. Balkrishan Malhotra

Section: CONCLUSION COMMISSIONER OF INCOME TAX, WEST BENGAl. BALKRISHAN MALHOTRA July 28, 1971 [K. S. HEGDE AND A. N. GROVER, JJ.J Income-tax Act, 1922, s. 34(3)-.Assessment' meaning of-Whether assessment completed on day of computation of income by Income-tu Officer or when the tax due is computed. The original assessment of the assessee for the assessment year 1944-45 was made sometime before March 13, 1953. Subsequently after ob-taining the sanction of the Commissioner of Income-tax, the Income-tax Officer reopened the assessment nnder s. 34(l)(a) of the Income-tax Act, 1922. On March 13, 1953 he issued a notice to the assessee under s. 34 read with s. :.'!2(2) of the Act. After considering .the objection of the assessee, the Incon1e-tax Officer made an assessment order under s. 34 read with s. 23 (4) of the Act on March 8, 1954 in which he computed the income of the assessee. But on that day he' did not determine the tax due from the assessee. He determined the tax and issued a notice under s. 28(3) in Form 30 only on March 31. 1954. The assessee contended that the assessment was barred under s. 34(3). The contention was rejected by the authorities under the Act incluping the appellate tribunal but the High Court gave ils advisory opinion in favour of the assessee. In appeal to this Court by the Revenue the main question for consideration was whether the assessment was complete on the date when the income was assessed by the Income-tax Officer or on the date when the tax was computed. HELD: The appeal must fail. As long back as September 24, 1953 the High Court of Madras in Vishwanathan Chettiar's case came to the conclusion that the word 'assess-ments' in the proviso to s. 34(3) means not merely the computation of the income of the assessee but also the determination of the tax payable by him. No other High Court has taken a different view. The Revenue must have in all these years acted on the basis of that decision of the Madras High Court. Interpretation of a provision in a taxing statute rendered years back and accepted and acted upon by the department sh~uld not be easily departed from. The corresponding provisions of the 1961 Act are materially different fro111 the provisions of the 1922 Act. Under these circumstances this Court would not be justified in departing from the inter-pretation placed by the High Court in Viswanathan Chettiar's case though a different view of the law may be reasonably possible. [954F-H] RM.P .R.. Viswanathan Chettiar v. Commissioner of Income-tax, Mad-ras, 25 I.T.R. 79, affirmed. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1391 of 1967. Appeal from the judgment and order dated May 31, 1963 of the Calcutta High Court in Income-tax Reference No. 4 of 1%0. Jagadish Swarup Solicitor-Oeneral, B. Sharma, for the appellant. D. Ahuja and B. D. . Sukumar Mitra, and Rameshwar Nath, for the respondent. The Judgment of the Court was delivered by Hegde, J.-This appeal by certificate by the Revenue is direc-ted against the order made by the High Court of Calcutta in a reference under s. 66(1) of the Indian Income Tax Act, 1922 (to be hereinafter referred to as the Act). At the instance of the assessee, the Income-tax Appellate Tribunal 'A' Bench, Ca)cutta referred to the High Court for its c opinion two questions of law viz. : "(I) Whether the assessment is complete on the date when the income is assessed by the Income-tax Officer or on the date when the tax is computed by him and the challan demanding the tax is issued ? (2) Whether on the facts admitted or found in this case, the assessment was time barred under the first pro-viso to section 34(3) of the Indian Income-tax Act ?" TART TARA, There eter aaaAARON ATTATAT (Commissioner of Income-tax, West Bengal Balkrishan Malhotra) (28 4eg, 1971) (FAlo Fo Tao ATs BT To gHo War) wireita araaet afafaa, 1922, ater 23 (1), (3) ate (4)—gan aga ‘Praia’ site“faatfedt’aedt at atsite afefa—afafaan & fafeer carat at saat ga meal at faea-fra afar 2|(ii) ater 34 (3) RawgeFHogee faut’weeatfiat| (iii) staat er fadaa—at fafa & staeq a fataa—eraaala & feat soary & G8 fraaa g a aat oa frat seq carataa 3fear gt aat fae argaa fear & edtere wed gas arare at wa fearal avaat & faaaa aat fearon ana z frie ag 1944-45 & fag fraifedt ar qa faster13 ard, 1953% qq feat aaa gar ar) aaa mast orgza at laf Har maxafaaret 9 fate a arial tga: sree fear ate8 ard, 1954 ayfratfedt pt srr at treat 60,000 waa ati. faatfedt 3 sfaare far fxug fratey aaa ater are afaa 81 ae oofearfeat car afewey Afraal aetter at atfest az fear feeg sea eararaa y agat errata F faaifedtmt cette at edtare we frat | gah fees atta at ag 81 ada a aferHa eT,| afafaatfta—afafaaa Yo “frat? ag“faatfedt’’ wea fafacoat & fafaer cat F sgaa fae agg1 wa: feel saaee H oa medt aT atae aT & fre at ga san ay frat ag geq wget gar @ aan ag waite. fad oreq azar arafaa & Faar Mar| ae 23 st srarer (1), (3)aar (4)~“man afar & ater aeat& fe ag “fraifedt at gar ora fraifea Fe aieON)gad grea afer saafea at”| gat meal Hoga ooaeat HC faaifea ae”mez fraifedt at arr al aauaT Sta F araea H saad sure a fe Tas HTalfaea ® aaTVN H araea Ay (Fz 6)freq are 34 (3) F faaifea wea” mez ar aT aat gar & afer‘efaafea’ mez ar sat gar 21 fata & fae wea ae ff ga wer BT AF|aur 2) ara ge cararag ar fasararaa feat ara ara Hag fasee ar|fis arer 34 (3)Boeqa Fo wer “Prater” ar ad “frail” a aa atATMA BAT AIA Tal & afew SIRT WA GAH ZIT WaT HL FT AAT TAT*ay 2) feet ger gee cargreaa F gah fata wa ae exaa fHar 31 Agrasea eararaa & ya fauta & gare az used A zat faraayfABwry farAq) feat weet waafeat soaea } 0a feaaa a Tt aah ga fear watay ate fae faant AF catare wx fear zt ate sae arare ge are fear zt,azaat & faaaa vat far at axa 21 fafa at gatl afte 8 eaar ara zianal 2 fag fafa Bae feat sara at fo1 wT fra agi ga, fafaseaar azBTA e xia fer au %, sa ox gafaare Hea TAT eqaTaT va alfa Bl seeroad|ag wy wet cqee and @ Sat fe oe ww afafram are feat 1961 a gat & grant fafa at afafaaa afeat aay sre a fatfadat aaa wz fear|mat 21 1961 & afafaan & aearat rare ga fafasesoaearT aaiftaay eqH fara &1 sa ofefeafaat F em ard J fH favararaa Sfgare ara arma Ffac au gee qrotaa } fda & fase arar sfaa at at safe fafa &art % afeagar wT & ead fred ag at wat g1(Fz 6) fafase faz.tr25 BTEo Eto WIXo 79 :«4 AI 6Bito THo To Mito fasaaray afeme Tar Blaseate swnn zea, waTa (R, M. P. R. ViswanathanChettiarVsCommissionerofIncomeTax,Madras);. fafa adtet afaarfcat:1967 et dear 1391 ate fafae ada 1960 ® sraax fade dear 4 ¥ HaHa sea earsaT Barta 31 aE,1963 ara fauta ate arem F fave wate|aMRA Bt MT ast anda caeq, VaFR arfafaee Fata,|aTAT AAA ato So HEAT WIT alo So watTAA Bt WITaaa FHA faat, TAA als|eqratag at fata earatfacta Ho cao eae A fear) amafagia FrZ— "Assessed as per assessment order on a total income of Rs. 60,000 for the 311sessment year 1944-45 under s. 34/23(4)" But on that date the Income-tax Officer did not determine the tax due from the assessee. It appears that he determined the tax due from the assessee and issued a notice under s. 28(3) in Form 30 only on March 31, 1954. The assessee contended that the assessment is barred under s. 34(3). That contention WaB rejected by the authorities under the Act including the appellate tribunal but on a reference made by the tribunal to the High Court, the High Court following the decision of the Madras High Court in RM. P. R. Viswanathan Chettiar v. Commissioner of Income Tax, Madras(') accepted the contention of the assessee while giving its advisory opinion on the questions of law referred to it by the appellate tribunal. This appeal is directed against that decision. The provisions of law which are material for deciding the point in issue are ss. 23 and 34(3) of the Act. Those provisions at the material time read as follows : "23(1). If the Income-tax Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that a return made under section 22 is correct and complete, he shall assess the total in-come of the assessee, and shaU determine the sum paya-ble by him on the basis of such return. (2) If the Income-tax Officer is not satisfied without requiring the presen~e of the person who made the return or the production of evidence that return made under section 22 is correct and complete, he shall serve on such person a notice requiring him, on a date to be therein specified, either to attend at the Incomertax Officer's Office or to produce, or to cause to be there produced, any evidence on which such person may rely in support of the return. (3) On the day specified in the notice issued under sub-section (2) or as soon afterwards as may be, the Income-tax Officer, after hearing such evidence as such person may produce and such other evidence as the Income-tax Officer may require, on specified points, shaJl by an order in writing, assess the total income of the assessee, and determine the sum payable by him on the basis of such assessment. (4) If any person falls to make the return required by any notice given under sub-section . (2) of section 22 and has not made a return or a revised return under sub-section (3) of the same section or fails to comply with all the terms of a notice issued under sub-section (4) of the saime section or, having made a return, fails to comply with all the terms of a notice issued under sub-section (2) of the section, the Icome-tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessec on the basis of such assessment. Section 34(3)-No order of assessment under section 23 to which clause (c) of sub-section (!) of section 28 fang gat saaTHT area THT HL array TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F gat saaTHT area THT HL array TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer FTHT area THT HL array TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F area THT HL array TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F THT HL array TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F HL array TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F array TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F TS FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F FS afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F afafaay, ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F ATA PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F PAK 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F 1922 (fa Ges saa eqaag art afefaaq F ga Meg eer F (fa Ges saa eqaag art afefaaq F ga Meg eer F Ges saa eqaag art afefaaq F ga Meg eer F saa eqaag art afefaaq F ga Meg eer F eqaag art afefaaq F ga Meg eer F art afefaaq F ga Meg eer F afefaaq F ga Meg eer F F ga Meg eer F ga Meg eer F Meg eer F eer F F Y -TAT g) BT ater 66 (1) & aela fag ae oH fea FH feat ar 2. faatfeal F aqda we Hana saat ata afar, dealsa et sea eqraraa at ay fafe geal oe gaat ua aaafaa fadfar fera, wali—. “) gar faaiza ga artaast agfta at aa % wa ma azafaare ara at fratea at tard at ag sa arta sl aga darawa fe aq at al SATA Hear 2 TAT BTC HY ATT HA AAT AAT ATTfRat war & ? (2) Far ga are FH eatare fee ae ar grea geal B arare azargad frala aredta araat afafaan at are 34(3) & sam TeGE& adia ara ara are afaa & 2” 3. fruity ay 1944-45 % fac fraffedt ar qa fratea13 and,1953 % qq feat aay feat mar ary) Tere HTT age AY HAT PASTeit & rsa saat afsare A afafry at arer 34 (1) (#)¥® adaFrater al areata ga: areew at i gaa afafaam at arer 22 (2) & araqfea arer 34 % aefta fratfedt a1 13 ard, 1953 a we gaa att atfratfedt at arafa ot faare wet F ovary maa afrardl A are 23 (4)%ara asd ae 34% welt 8 ATs,1954atfaatfedtat ora at ant60,000 waa atsafer are-cae Fo arqatafaardt a ay fecrm fear,az FA THT J —| “arer34/23(4) % ala fraker ag1944-45%fad60,000 ea4 at ga ara oz, fratea ae & agar fastfea fearTar| applies or of assessment or re-assessment in cases falling within clause (a) of sub-section (!) of this section shall be made after the expiry of 8 years and no order of assessment or re-assessment in any other case shall be made after the expiry of 4 years from the end of the year in which the income, profits or claims were first assessable : Provided that where a notice under sub-section (I) has been issued within the time therein !Unite<', the assessment or re-assessment to be made in pursuance of such notiee may be made before the expiry of one year . from the date of the service of the notice even if such period exceeds the period of 8 years or 4 years as the case may be". It has been stated over and over again by this Court 36 well as by the Judicial Committee that the words "assessment" and the "assessee" are used in different places in the Act with different meaning. Therefore in finding out the true meaning of those words in any provision, we have to see to the context in which the word is used and the purpose intended to be achieved. It is true that sub-ss. I, 3 and 4 of s. 23 require the Income-tax Officer to "assess the total income of the assessee and . determine the sum payable by him". In other words in those provisions the word "Msess" has been used with reference to computation of the income of the assessee and not the determination of his tax liability. But in s. 34(3) the word used is not "assess" but "assessment". The question for decision is what is the meaning of that word ? . As long back as September 24, 1953, the High Court of Madras in Viswanathan Chettiar's case(') came to the conclusion that the word "assessment" in proviso to s. 34(3) means not merely the computation of the income of the assessee but also the deter-mination· of the tax payable by him. No other High Court h36 taken a contrary view. The Revenue must have in all these years acted on the basis of that decision of the Madras High Court. Interpretation of a provision in a taxing sta.tute rendered ~s back and accepted and acted upon by ithe depairtmmt should not be easily departed from. It may be that another view of the law is possible but law is not a mere mental exercise. The courts .while reconsidering the decisions rendered long time back particularly under taxing statutes cannot ignore the' harm that is likely to happen by unsettling law that had been once settled; We may also note that the Act has been repealed by the Income-tax Act, 1961. The corresponding provisions of the· 1961 Act are materially dilfc:rent from the provisions referred «> earlier. Under these clrcumsmnces we do not think that we would'. (ll 25 J.T. R. 79. be justified in departing from the' interpretstion placed by the A Madras High Court in Viswanathan Chettiar's case(') though a different view of the law may be reasonably possible. In the result this appeal fails and the same is dismissed. But in the circumstances of the case we make no order as to costs. Appeal dismissed. 4. far ga ante at arat afaard a ag ax aaarfa adi fear atfaatfcat grer aaa ars tar sda gars fe gat 31 ast, 1951 a ag ae—maatiea fear at fraifeat arer ea at ate are 28 (3) & ala TET 30 Fqa are at) faeifeal + ag acta ag at fe frafem are 34 (3) Fada,ataa ¢1 ag edlea afatran Sadiaoifsarfeat 3 faa eae aditafanea alg, afer at ahfarq atte afew gra yea aararad aface fay AI IT Gea FqTTAT A Mito UA To Miko fazarataa Bfzareaay BARAT AIG THA Sea, Aaa (*) arr ATA A yea carota H fata sy aqaia wrt gu adie afaaze gre fase fafa seal ox aga) curasif caed ey fratfedl ai atta daz at aii adi faa & fase ag ote aTe 21 5. fanaa seq & fafteaa h fae flee si qaagre aiftan 2 8 gsafafaaa ay azr 23 aar34(3) 21 atfaa saga ox fale 83 coaew, saTHT F— *93 (4) (l)—afe faatiza) et eefeafa ar ga are fretarea aT dat at ater fag faar qraax afeard sr aurgry gt war €fe are 22% gaia zy ag fearen dw wie qa s slag fraffdd atga a fasifca stor ale tal facet F oeare Te gaw ger aaaurfer aaarfia #RaT| (2) agiard 22% alafasextrgr eesfara faaifedy wtsafeafa ar gem at tet at ater fan fear oronx afygerdl sr anitnat etarg fe fraxayl stm sitx gal Sagi ag fauifedy oe eh qaaral ania stat free sae ate st arait fa az tet aria at, wtway fafatace ati, at at araaeoofeartt & arafaaFY gfe 21 arale tar arey faa ot faaifzat godt faacel) BandaHFfate rarat oa et ar agi gt oy HUTy (3) Soars (2) & wets art et as qaar F fafafese fea ey arauea TAIT Aig waHe afsardy, Far area gar fasifea! te HzaT tar wea aie fara gre afeardy fafafece arate arseq F gle egal Fag faq wHTT F— *23(4)(1)—If the Income-tax officer is satisfied without requiringthe presence of the assessee or the production by him of any evidencethat a return made undersection 22is correct’ andcomplete, heshall assess the total income of the assessee andshalldeterminethesum payable by him on the basis of such return.(2) If the Incomestax officer is not satisfied without requiringthe presence of the person who made the return or the production ofevidence that return made under section 22 is correct and complete,he shall serve on such person a notice requiring himi, on a date to bethereinproduce, specified, either or to cause to be to attend there produced at the I ayncome-taxevidence officer on which or tesuch person may rely in support of the return, (3) On the day specified in the notice issued under suli-section/2}or as soonafterwards as may be, the Income-taxofficer, afterhearing such evidence as such person may produce and such otherevidence as the Income-tax officer, may require, onspecified points st, gaaosaiq fafad aaa arr, fraifed Ft ga am at giafagifeg sia wiz ta fale F ara oe gay ga aaa wieMTT BUT (4) qrer 22 st grater (2) % aedla at ag feat qaar aver wtfagfagial 23 F mana ware WT Sa are BT STAT (3) al TTT4)adie feacat ot daifad farce adt 2 gare ar rer FT ST-arer (4) & aefta dt we qaar & aa fraeaal ar agaraa eta Haatwear 2, ay faazatl 2 gna ae saree (2) H wis St ae qaar Baafaaeqal wragaaa awa FH gana garg, Tt araHz afaare ATTaaran fataafg ® agare faatea star ale a fratea B areae Izfaaifeat are aaa uta saarhta Bar are 34(3)—arar 23 % vette fratea at, fae arte 28 et ye.arer (1) a1 ass (7) ay 2, at ga arr at soarer (1) * ave (a)Se wata we aa amet F Prato ar ga: fraiza #1 ate aaa saag & geq & faad ara, ara ar ara aasan faateatia & ars ag aT garftaamare att feet ara arse F fratar gacfaaizaa mae waaay & wea F 4 ag al aarftr & avai al fearAIA:shall by an order in writing, assess thetotal income of the assesseeand determine the sum payable by him on the basis of suchassess-ment.Bee (4) If any person fails to make the return required by any noticegiven under sub-section (2) of section 22 and has not made a returnor a revised return under sub-section (3) of the same section or failste comply with all the terms of a notice issued under sub-section (4)of the same section or, having made return, fails to complywithallthe terms ofa notice issued under sub-section(2) of the section, theIncome-tax officer shall make the assessment to the best of his judg-ment and determine the sum payable by the assesee on the basis ofsuch assessment. whichSection clause 34(3). (c) of No sub-section order of assessme (1} of section 28t under applies secti orofn 23 assess- to. ament or re-assessmentincasesfalling withinclause(a)of sub-:section {1} of this section shall be made after the expiry of 8 yearsand no order of assessment orre-assessmentin any other caseshallbe made after the expiry of 4 years from the end of the year in:which the income, profits or claims were first assessable: Teg Het wrara (i) B wea, sayoafedifay ang & waxqaay wrt eT TEzt,agi UA qear ® agaca F fear we rarfrat ar ga: frat quar sy adie at arte A oe ag at aatitaa ga fear ar aha awe tay gale aarfeafe 8 ad ar 4 ag st gataa afay at”|6. Fa ararag aar gisiaaa ehet ger art-are az wer mare feafafaaa 8 fate’sar fralfedy” mez fafa varat F fafaer oat 8Taat PU aC 81 wa: feel staea R ga ast wr adi as aramx B far zhBa wag a} fad ag ast aqaa gar % aar az watsa faa yrea wear gratag faa git | ag wea 8 fH are 23 Ht srarer( 1), (3) aan (4) arzax afa-are & ater audi 3 fe fraifedt a ga ara faalfca wtsite gah greeaaa ule aaarfta sty gat aah A ga soared Fo featfer a2" gesfrafical at ara al aaa aca % ara Ho ogea gar 2a4 fe yak axcfs % waar Harare A1 feeq aver 34(3) # fratfer wea” gee aTwatt aay gard afen “faatca’ geq at sata gar 21faata & fac oea az¢fe ga mezFl aa ag3) 24 faaraz, 1953 HT Aza Sea eqTTIaT aTfaraiatag Befeare(!) area araa Hoag faseg ar fe arer 34(3) & geeFHwaz “frat”ar at fasifedt at aa at anaar aca ara ady & aferSHAT HF GIR BT Aza HT aT aaa Hear Wl 2 fea weg yea enqrearaq gam faqda aa wat eqaa Pear 21 ugra sea cqroraa } ga faata ® gazTt Usaea a ga fama aah F are Pear grat) feat aera waa ® fedt e-ay & 08 faaaa & a af qa Pear nar diate fat fear eftere wefaar at ate sas graze at wy fear a, avaar ¥ faaaa adt feat ar arar@| fafa at cath afee & tear dua at anar% feeg fafa Fae fear waxval @1 ot feats agi qa, fafaszaar az erage ada, fea au F va azgatas Ftd any eararag ga afa at star agy ax ana 2 ay aH are feazal gat fafa ay afeaz aaa & at aed 21 ee ae Wt tad zd fe ag afafaan1961 & araar afafaay are facfaa wx fear war2 11961 % afafaan ®aera sara ga fafase vaaral 3 arftaw wrt aed 2sa ofefeafaatai and @ fe faravaraa Sefeare(') arr raat fae ay gee eararaa & Provided that whereanotice undersub-section{1} has beenissuedment to within be made the in time pursuance therein limited, of such noticethe assessment may be madeorre-assess- beforethe expiry of one year from the date of the service of the notice evenif such period exceeds the period of 8 years or 4 yearsas thecasemay be.”. Seat arate fata ofa [1971] 3 BH fo Go| fagan & faaaa wear ofaa adt dar aafe fafa ® atFH gfeaqad eBaq fuet wa gt aaa zt.farg araet7. afouraeaet at aq afefefaalag ata & aa wane aa aet & fa 8 ars akeagaa afer ae 8a st 8 oredt 31| Y| . aie afer et at ag| ||Fo/fro.