COMMISSIONER OF INCOME-TAX, NEW DELHI versus RAO THAKUR NARAYAN SINGH

Citation: [1965] 1 S.C.R. 990 · Decided: 30-10-1964 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Dismissed

Judgment (excerpt)

990 
COMMISSIONER OF INCOME-TAX, NEW DELm 
A 
v. 
RAO 1HAKUR NARAYAN SINGH 
October 30, 1964 
(K. SUBBA RAo, 1, C. SHAH ANDS. M. SIKRI JJ.) 
Income-tax Act, 1922 (II of 1922), s. 34(1)-Two ii.ms of iltcome 
escaped assessment taxed subsequently-Tribunal considered taxability of 
only one item-By mistake set a.side rht entire order in respect of borh 
items- -No rectification of mi<take-Whether /rah notice under s. 34( I) 
valid. 
The Incomc·tax Officer issued a notice to the assessee under s. 34 op 
1he ground that rwo itc1.1s of 1he assessee's income, namely forest income 
and interest income, were not included in the original ac;.sessment for the 
year 1942-43. 
In response the assessee filed a return fully di.tclosing his 
interest income hut raised the plea that his forest income was not tax.able. 
The Income-tax Officer however. assessed both items to tax. 
On "l'P""I. 
the Appellate Tribunal in its order dated April 25. !961, although dealing 
only with the forest income and holding that the lccome--tax Officer had 
no jurisdiction to initiate proceedini?S under s. 34 in 
rcst>CCt 
of mch 
income, by inadvertence or by mistake, set aside the entire order of 
re-<1ssessmcnt both in re,pect of forest income. as well as the interest in-
come. The Departmeot did oot take any steps to rectify the mistake UDder 
s. 35 or to have the question of illegality referred to the High Court. Having 
allowed the order of t~ Tribunal to become final. the Income-tu Officer 
initiated fresh proceedings uoder s. 34 in reopect of the interest 'income 
•ind made a revised assessment order which included this income. The 
Appellate Tribunal confirmed the a=sment but the High Court, on a 
reference to it under s. 66(1 ), took the view that fresh proceedings under 
s. 24 could not be taken for the reason, inter a/ia, that the Tribunal's order 
dated April 25, 1949 had become final. 
HELD : The Tribunal had committed a mistake in setting aside the 
re-assessment order in respect of interest income also, but the income..(ax 
omcer did not resort to the obvious remedy of haviog the mistake rec:tilled 
as provided for under s. 35 and allowed the Tribuoal's order dated April 
25, 1949 to become final. 
He could not in the cir'cum5tances, roopen the 
assessment by initiating proceedings under !t 34, as othernise theie would 
he an unrestricted power of re,iew in the hands of the Inoome-tax Officer 
to go hehiod the findings of a hierarchy of Tribunals and Courts. (995 E-F; 
996 F-H] 
C.l.T. Bombay and Aden v. Khemchand Ramdas, (1938)6 l.T.R. 414 
and Cl.T. West Punjab v, Th• Tribunl! Trust, Lahor., (1948) 16 l.T.R. 214, 
referred to. 
R. K. Das & Co. v. r:.I.T., West Bengal, (1956)30 l.T.R. 439 3Jld 
C.I .. T .. Bihar & Oris.ra v. Maharaja Pratapsingh 
Bahadur of GidliaMr, 
(1961) 41 J.T.R. 421. di.:inguished. 
CML APPELLATE JURISDICTION: Civil Appeal No. 95.; of 
1963. 
On appeal from the judgment and decree da,ted March 
9,-
1964, of the Allahabad High Court in Income-ta.X Miscellaneous 
Case No. 143 of 1954. 
' 
B 
c 
D 
E 
F 
G 
H 
I ..
• 
• 
C.I.T. DELIIl v. NARAYAN SINGH (Subba Rao J.) 
991 
A 
K. N. Rajagopala Sastri, R. H. Dhebar and R. N. Sachthey, 
B 
for the appellant. 
A. V. Viswanatha Sastri, Z. S. Meeratwal, B. P. Singh and 
Naunit Lal, f0r the respondent. 
The Judgment of the Court was delivered by 
Subba Rao J. This appeal by special. leave is directed 
against the order of a Division Bench of the High Court of Judi-
cature at Allahabad holding that the Income-tax Officer, in the 
circumstances of the case, went wrong in initiating proceedings 
under s. 34 ( 1) of the Indian Income-tax Act, 1922, hereinafter 
C called the Act, in respect of the assessment year 1942-43. 
The facts may· briefly be stated. 
The assessee was a holder 
of an impartible estate in the district of Ajmer. On March 25, 
~944, the Income-tax Officer assessed him to income-tax for the 
D 
year 1942-43. On April 5, 1945, on the ground that two items 
of the assessee's income, namely, syar (forest) income 
and 
interest income, ·were not included in the original assessment, 
' 
a notice. under s. 34 of the Act was issued to him. In response 
to the said notice, the assessee filed a return wherein he disclosed 
fully and completely the particulars of his interest income, but 
E raised the plea that his forest income 
was not taxable. · TJ;ie 
Income-tax Officer, by his order dated July 12, 1945, made~ 
revised assessment including both the incomes. 
The res

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