COMMISSIONER OF INCOME-TAX, PATIALA & ORS. versus M/S. SHAHZADA NAND & SONS & ORS.

Citation: [1966] 3 S.C.R. 379 · Decided: 19-01-1966 · Supreme Court of India · Bench: K. SUBBA RAO · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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A 
COMMISSIONER OF INCOME-TAX, PATIALA & ORS. 
B 
c 
D 
E 
F 
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H 
v. 
M/s. SHAHZADA NAND & SONS & ORS. 
January 19, 1966 
[K. SUBBA RAO. M. HIDAYATULLAH AND 
R. S. BACHAWAT, JJj 
Indian Income-tax Act, 1922 (11 of 1922), &. 34, sub-s. 34(l)(a) as 
amended by the Finance Act 1956; sub"S. 34(1A)-Field of operation of 
the two sub-sections whether overlapping in respect of war years-Whe-
ther s. 34(1A) as a special provision over-rides s. 34(1) (a) in respect of 
.the -war ytars. 
On March 26, 
1954 the Income-tax authorities issued a notice to the 
respondents under s. 34(1) (a) of the Indian Income-tax Act, 1922 in 
respect of assessment year 1945-46. The assessment made pursuant to 
the notice was set aside by the appellatte authorities on the ground that 
the notice under s. 34(1)(a) was time baned because the assessment year 
in question was beyond the period of 8 years covered bys. 34(l)(a). 
Sub-s<>. (IA) to (ID) were imerted in s. 34 by the Income-tax (Amend-
ment) Act 1954. By sub-s. (IA) power was given 
to the Income-tax 
authorities to issue notice in respect of escaped income of the previous 
years within the period September 1, 1939 to March 31, 
1946. By the 
Finance Act 1956 with effect from April 1, 1956 s. 34(1) (a) was amend-
ed so that notices in respect of """!IPed income could be issued 'at any 
time' subject to certain conditions. ·-0n July 25, 
1958 
tho Income-tax 
Officer again issued a notice to the respondents calling upon them to 
file a return for tho as3CSSment year 1945-46. An appeal to the Centrll 
Board of Revenue by some of respondents failed. Thereupon they filed a 
petition und"" Art. 226 of the Constitution challenging the notice on 
various grounds. Their main contention 
Wat that no notice 
under 
s. 34(l)(a) couid be issued in respect of the war years as tbe escapee.I 
income of the said war years was governed by '· 34(lA), whereunder 
notices could be issued only up to March 31, 1956. The High Coutt 
having taken a view favourable to the respondents, the Revenue appealed 
to this Court by special leave. 
It was contended on behalf of the appellant that the terms of s. 
34(1)(a) after its amendment in 1956 were clear and unambiguous and 
the scope of the expression 'at any time' could not be curtailed by cons' 
truction and that s. 34( IA) did not operate to restrict the operation of 
s. 34(1)(a) in respect of the war years. On behalf of tbe respondents 
it was contended thats. 34(1A) was a species of which s. 34(1)(a) was 
genus that in respect of the war years 
th..-e was a conflict between. the 
two sub-sections, and that in view of the maxim, generalia specialibus non 
_derogant, s. 34( IA) should prevail. 
HElD: 
(i) It would not be appropriate to describe subJS. (IA) aJJ 
one carved out of sub-s. (l)(a) or to call it a species of which sub-s. 
(!)(a) is the genus. 
When s. 34(1A) was enacted s. 34(1)(a) bad 
practically ceased to function in respect of the war years. 
Again wheri 
S· 34(1)(a) was amended 
with effect from April 1, 
1956 s. 34(1A) 
had practically ceased to operate as no notices under it could be issued 
after March 31, 195 6. 
There is no conflict between the two sub-sections. 
after that date. The wide phraseology of the amended s. 34(1) (a) take•. 
379 
380 
SUPREME COURT REPORTS 
(1966] 3 S.C.R. 
in all the escaped concealed incomes during all the yeara oommencing from 
1941 and confers power on the lncome-iax Officer to give notice there· 
under in respect of the •aid income without any bar of limitation. 
[390 C-FJ 
(ii) Sub.Section (IA) does not really preocribe any period of lirnita· 
tion. It enables the Income-tu Officer to !&kc proceedings within a 
panicular time, though the period of limitation had expired. It conferred 
a special power on the Income-tax Officer which expired on April I, 
1956. The non.obstante clause in llllH. (IA) indicatea that it waa enacted 
to operate notwithstanding that the period of 8 yoan had expired. The 
1aid sub-section served its purpose only when the period of 8 yeara govern-
ed a notice under su!H. (I) (a). But when that bar of limilation was 
removed, sub-s. (IA) bad become otiose. 
(390 G-391 Al 
Funher sub-s. (IB) as 
amended by the Fmance Act of 1956 and 
111b-1. 4 added by tho In4i1D Ino- tu Act (Alllendmcat) Act 19St, 
also reinforces the construction that su!H. 34(l)(a) as amended in 1956 
was applicable to the war years despite sub~. 34(1A). (391 B., D-E] 
(iii) The reason why su!H.
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