K.C.THOMAS, FIRST INCOME-TAX OFFICER, BOMBAY versus VASANT HIRALAL SHAH & ORS.

Citation: [1964] 6 S.C.R. 437 · Decided: 29-01-1964 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Appeal(s) allowed

Judgment (excerpt)

6 S.C.R. 
SUPREME COURT REPORTS 
437 
are, therefore, unable to accept the contention of learned 
counsel. 
For the foregoing reasons we allow the appeal and quash 
the writ of certiorari issued by the High Court. It may be 
mentioned that in the absence of a stay of proceedings by 
the High Court the Income-tax Officer has actually made an 
assessment in 
pursuance of the impugned notice. 
That 
assessment wii.1 stand unless it is modified or annulled in any 
proceeding permitted by law. 
Costs of the appeal and the 
petition before the High Court will be borne by tbe respon-
dent. 
ORDER BY COURT 
In view of the judgment of the majority, the appeal fails 
and is dismissed with costs. 
K. C. 
THOMAS, 
FIRST INCOME-TAX OFFICER, 
BOMBAY 
v. 
VASANT HIRALAL SHAH & ORS. 
(B. P. SINHA, C.J., K. SuBBA RAo, 
RAGHUBAR DAYAL, 
N. RAJAGOPALA AYYANGAR AND J. R. MUDHOLKAR JJ.) 
Income Tax-Escaped income-Notice issued for assessment after expiry 
of 8 years-If sanction required-Indian 
lncom1-tax 
Act, 
1922 
(11 of 1922). ss. 34(i), 34(ii), 34(3) proviso. os amended b1 
Act XXV of 1953 and Act XVIl of 1956. 
The appellant had issued notice to the respondents under s. 34( I) (a) 
of the Income Tax Act, 1922 in respect of an escaped 
income 
of 
Rs. 47,595 for the assessment year 1944-45. The ca.e of tte respondents 
was that the, impugned notice was bad because the Income-Tax Officer 
proceeded against the respondents without obtaining the necessary sanc-
tion of the Central Board of Revenue as required by cl. (iii) of the pro-
viso to s. 34(1) of the Act. The respondents filed a writ petition in the 
High Court challenging the notice issued under s. 34( I) of the Act. 
The respondents succeeded bofore the High Court. 
1964 
1. T. Officer, 
A-Ward, Sitapur 
v. 
Murlidhar 
Bhagwandas, 
Lakhimpurkheri 
M11dho/kar J. 
1964 
January, 
29 
1964 
K. · C. Thomas, 
/, T. O/fic<r, 
Bombay 
.. 
V. H. Shah 
SUPREME COURT REPORTS 
Held: (i) The sanction under cl. (iii) of the proviso to s. 34(1) 
is, however, necessary only where the notice in question is issued under 
cl. (ii) of the proviso. 
That is evidently what the legislature meant 
when it said "in aDf case falling under cl. (ii)". The words "in any case" 
used in cl. (iii) only mean a case in which notice can be issued under 
cl. (ii). Such a notice can be issued only when. the escaped income is 
of one lakh of rupees and over. 
Clause (iii) requires such 
!ianction 
where the notice is issued under cl. (ii) and when on a construction of 
cl. (ii). no notice can be issued with respect to a class of escaped asse:ss-
ments, there can possibly be no requirement of the sanction of the Cent-
ral Board of Revenue. If a notice is issued by virtue of some other pr~ 
vision euch as the second proviso to sub-s. (3) of s. 34, it would be a 
notice "!n any other cas~" referred to in cl. (iii) of the proviso to 
sub·s. (J) o( '· 34 and in such a case the sanction which is required 
is only that of the Commissioner. Such a sanction was obtained in 
this case and therefore, the notice cannot be said to be bad because 
the sanction of the Central Board of Revenue had not been obtained. 
In the present case the income which has escaped assessment is below 
one lakh of rupees and more than eight years have elapsed since tho 
assessment year in respect of which the income is alleged to have escaped 
assessment. Clearly, therefore, no notice could issue under cl. (ii). 
(ii) The High Court erred in holding that the provisions of the 8Ccond 
proviso to s. 34(3) would not apply to a case where the escaped assess-
ment is of an amount less than a lakh of rupees and more than eight 
years have elapsed. Apparently, the High Court has overlooked the fact 
that the second proviso to sub-s. (3) of s. 34 was amended first by Act 
25 of .1953 and then by Act. 18 of 1956. The amendment of 1956 would 
govern the whole of s. 34( l) and would consequently include even an 
escaped assessment with respect to which limitation is provided in cl. 
(ii) of the first proviso to s. 34(1). The result would be the same even 
if the case fell to be governed by the Amending Act of 1953, though 
not by that of the Amending Act of 1956. 
CML APPELLATE JURISDICTION: Civil Appeal No. 688 of 
1962. 
Appeal by special leave from the judgment and order 
dated April l, 1958 of the Bombay High Court in Misc. 
Application No. 202 of 1957. 
N. D. Karkhanis and R. N. Sachthey, for the appellant. 
l. N. Shroff, for the respondents. 
Januar

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