COMMISSIONER OF INCOME-TAX, CALCUTTA versus BIDHU BHUSHAN SARKAR (DEAD) THROUGH HIS LEGAL REPRESENTATIVE MIHIR KUMAR SARKAR

Citation: [1967] 1 S.C.R. 685 · Decided: 03-10-1966 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A 
COMMISSIONER OF INCOME-TAX, CALCUTTA 
B 
c 
D 
E 
F 
G 
H 
l'. 
BIDHU BHUSHAN SARKAR (DEAD) 'fllJlOUGH HIS 
LEGAL REPRESENTATIVE MIHIR KUMAR SARKAR 
October 3, 1966 
( J. C. SHAH, V. RAMASWAMJ AND V. BHARGAVA, JJ.] 
Income-tax Act, 1922, ss. 5(7A), 34-Proceeding pursuant to notice 
under s. 34 "filed" by Additional Income-tax Officer as another prloceed-
ing for same year pending before Principal income-tax Officer-Latter 
Issuing another notice under s. 34-Whether proceeding on first notice 
still pending-Whether second notice and assessment thereafter val/4-
Whether transfer under s. 5(7A) only possible when proceedings pend-
ing-Notice under s. 34 iust before expiry of eight years-Assessment 
completed within one year thereafter-Whether valid or barred by limit~ 
tion. 
In proceedings pursuant to a notice under s. 34 of the Income-tax 
Act, 1922, the Additional 
Income-tax Officer passed an order to the 
effect that the income should be taken in the assessment on a second re-
turn for the same year pending before the Principal Income-tax Officer, 
for which tbete was another file and that the case was, therefore, "filed". 
The Principal Officer, after issuing a n<>tice 
under s. 34, passed an 
assessment order, but in an appeal against that order, he himself pointed 
out that he had no jurisdiction to make the order. The Appellate Assis-
tant Commissioner therefore set aside the assessment order. 
The Com-
missioner thereafter transferred the case from the Additional Officer to 
the Principal Officer. The latter then issued another notice to the assessee 
under s. 34 and in pursuance of that notice passed an assessment order. 
The assessee appealed against this order to the Appellate Assistant 
Commissioner on the grounds, 
that (i) the notice under s. 34 of the 
Principal Officer was invalid 'because the proceedings instituted on the 
first notice by the Additional Officer were still. pending; and (ii) if tb.e 
first n<>tice of the Additional Officer was still 
effective, the assessment 
made was barred by time. The Appellate Assistant Commissioner accept-
ed these contentions and allowed the appeal but the Tribunal reversed this 
decision. The High Court, on a reference held in faVC>ur of the assessee. 
On appeal to this Court, 
HELD : (i) In the circumstances of the case the word "filed"' in the 
order of the Additional Officer was equivalent to "disposed of', so that 
after that Qrder no proceedings on the basis of his notice remained pend-
ing. What the Additional Officer intended 
and did, in effect, was 
to 
terminate the 
proceedings before him without making 
any order of 
assessment on the ground that the order of assessment in respect of the 
income in question would be made by the Principal Officer in the proceed-
ings before him. 
[690 G-691 A] 
Esthuri Aswathiah v. Income-tax 
Officer, 
Mysore State, [1961] 2 
S.C.R. 911; 41, I.T.R. 539 and Ha;i Mohamed Main v. C.l.T. Calcutta, 
(Calcutta High Court, Income-tax 
Reference 
No. 128 of 1961, judg-
ment dated Feb. 23, 1955), referred to. 
685 
686 
SUPRBMI! COURT REPORTS 
(1967] I S.C.R. 
P. T. Ank/esaria and Ors. v. CJ.T., Bombay Sout/1, 
35 !.T.R. 532, 
A 
distinguished. 
Even if the order of the Additional Officer were to be regarded "" in-
valid; its effect could not be that the proceedings 
before him must be 
held to have continued after that order was made. by him. 
Even an in-
valid order terminating proceedings has the effect of terminating them; 
and in such a. case the appropriate method for correcting the illegality 
committed is to have that order vacated by appellate or other higbel' 
authorities having jurisdiction to intervene. [692 E-F] 
The High Court erred in holding that the proceedings on the notice 
issued by the Additional Officer were pending 
on the view that unless 
there was a case pending, there could be 
no transfer of s case under 
s. 5(7A). The word "case" in s. 5(7A) is used 
in a comprehensive 
•ease including both pending proceedings 
as well as proceedings to be 
instituted in future. 
[693 B-D] 
(ii) The order of assessment was not barred 
by time. 
The notice 
having been validly issued by the Principal Officer within the period of 
eight years prescribed by s. 34( 3), the actual order of assessment could 
be made vahdly before the expiry of one year from the date of the notice. 
t693 HJ 
CIVIL APPELLATE ]URISDJrTION : Civil Appeal No. 401 of 
1965. 
Appeal from the judgment and order dated January 10, 1962 
of th

Excerpt shown. Read the full judgment & AI analysis in Lexace.