M.M.PARIKH INCOME TAX OFFICER, SPECIAL INVESTIGATION CIRCLE-B, AHMEDABAD versus NAVANAGAR TRANSPORT & INDUSTRIES LTD. & ANR

Citation: [1967] 2 S.C.R. 38 · Decided: 01-11-1966 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed
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Judgment (excerpt)

M. M. PARIKH, I~COME-TAX OFFICER, SPECIAL 
INVESTIGATION CIRCLF.-B, AHMF.DABAD 
\', 
NAVA:\'AGAR TRANSPORT & INDl'STRIES 
LTD. & ANR. 
November I, 1966 
[J. C. SHAH, V. RA~tASWA~fl ASD V. BHARGAVA, JJ.j 
Indian lncon1e-ta:c Act (11 of 1922), s. 23A-Order t1nder-W/Je1/rer 
au "order of assessn1en('-Section 23A, whether a 
charging 
section-
Limitation under s. 34(3) ff applies. 
The appellant-Income-tax Officer 
issued a notice 
to 
the 
asscsscc-
company to show cause why an order under s. 23A of the Inoidn Income-
tax Act, 1922 should not be made for the assessment year 1957-58. The 
assessee applied to the High Court for a writ to restrain the appellant 
from giving effect to the notice. 
'The High Court held that an order un-
der s. 23A of the Act after its amendment by the Finance Act, 1955. 
'"'as an "order of assessment" to which the period of limitation prescribed 
bys. 34(3) applied and since such an order could not cc made after the 
expiration of four years from the end of the assessment ye.1r 195i-58 
the proceedings initiared against the asse<:;see in respect of Lhc assessnil!nt 
year 1957-58 after March 31, 1962 was without jurisdiction. 
HELD : Section 23A is not a charging section and Jn oi'dcr n1ade 
thereunder is not an "order of assesc;rncnt" to \Vhich 1hi:: period of lin1i-
ta•ion prescribed hy s. 34(3) applied. 
Secrion 23 . .<\ 
hefor.~ it \l/:lS amended by rinan..:e Act. 1955 \Vas pro-
cedural. 
Section 23A( I), after it was amended by the F.nance Act. 
1955 provides within itself niachinery for imposition of liabil,ry to pay 
additional super tax, but it has not on that account hecn mildt: a charging 
section. 
A charge to tax arisei under ss. 3, 4 and 5 of the Act for pay-
ment of income-tax and super tax and not under s. 23A. f47 EJ 
Section 23A does not use the expression "assessment" in the body 0r 
cl. (!) : 
and to the 
title of the 
section 
after it was 
amended, vii. 
"Power to assess companies to su~r-tax on undistributed inc.:01ne in cer-
tain cases", it is impossible to give any exalted meaning so J.s to 
convert 
what is an order directing payment of tax into an order of dSsessment 
within the meaning of s. 34(3) of the Indian Income-tax Act, 
1922. 
Every order which contemplates computation of income for determina-
tion of the amount of tax payable is not an order of assessment within 
the meaning of the Act : nor does prescribing of procedure for deter-
mining and imposing tax liability make it an order of assessment. 
The 
Income-tax Act contemplates making of diverse 
orders 
by Income-tax 
Oll!cers directing paymeni. of sums of money by tax payers which are 
of the nature of orders for payment of tax, but still are not orders of 
assessment. [45 A-DJ 
Qv1L APPELLATE JURISDICT!OS : Civil Appeal No. 1082 of 
1965. 
A 
B 
c 
D 
E 
F 
'
G 
H 
A 
I. T. 0. v. NAVANAGAR TRANSP. LTD. (Shah, J:) 
3!l 
Appeal from the judgment and order dated February 21, 1964 
of the Gujarat High Court in Special Civil Application No. 802 of 
1962. 
S. V. Gupte, Solicitor-General, R. D. Karklwnis and R. N. 
Sachthey, for appellant. 
B 
S. T. Desai and K. R. Clwudlwri, for the respondents. 
R. Va11katrama11 and R. Gopalakrishnan, for intervener No. I. 
S. P. Mehta, D. Pal and D. N. Gupta, for intervener No. 2 .. 
D. Pal and D. N. Gupta, for int-ervener No. 3. 
C 
R. Gopalakrishnan and S. Swaminathan, for intervener No. 4. 
The Judgment of the Court was delivered by 
Shah, J. 
M/s Navanagar Transport & Industries Ltd.-
hereinafter called 'the assessee'-is a company in which "the public 
are not substantially interested" within the meaning of s. 23A 
D 
of the Indian Income-tax Act, 1922. At the annual general meet-
ing held on December 4, 1957, the Company declared Rs. 8,767/-
as dividend payable to the shareholders for the year ending March 31, 
1957. The Income-tax Officer, Special Investigation Circle, Ahmc-
dabad, determined the taxable income of the assessee for the assess-
ment year 1957-58 at Rs. 1,10,769/-. 
Since the dividend declared 
by the Company was less than the statutory percentage of the total 
E income of the Company, as reduced by the taxes specified in els. 
(a) & (b) of sub-s. (I) of s. 23A, the Income-tax Officer issued a 
notice on November 15, 1961 calling upon the assessee to show c"use 
why an order under s. 23A should not be made for the assessment 
year 1957-58 and submitted the record to the Inspecting Assi5tant 
Conunissioner seeking permission under sub-s. (8). The asscsse
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