R. S. A. C. KASI IYER versus THE COMMISSIONER OF INCOME TAX, MYSORE, TRAVANCORE-COCHIN AND COORG, BANGALORE

Citation: [1961] 1 S.C.R. 466 · Decided: 01-09-1960 · Supreme Court of India · Bench: S.K. DAS · Disposal: Dismissed
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Judgment (excerpt)

September r. 
466 
St.:PRElllE corRT REPORTS 
[196i J 
R. S. A. C. KASI I YER 
v. 
THE COMMISSIONER OF l:\"CO:\IE-TAX, 
MYSORE, TRAVANCORE-COCHI~ 
AND COORG, BANGALORE. 
(S. K. DAS, M. HIDAYATULLAH, K. c. DAS GUPTA, 
J. c. SHAH AND K. l{AJAGOPALA AYYANGAR, JJ.) 
Income-tax-Merger of Travancore-Cochin State with Indian 
Union-Government of I11dia's pw:er to direct assessment or re-
assessme11t proceedi!lgs-Trava11core Income-lax I<egulatio11 VII I of 
1096 M. E.-Travancorc Taxation on ltzcome (Investigation Com-
mission) Act, II24 M. E. s. 8, sub-ss. (2), (4), (5), (6i-Opium and 
RevenuelLa!l's (Extension of Application) Act (33 of r950), ss. 2, 3, 
3(c). 
The State of Travancore-Cochin merged with Indian Cuion 
on March 7, r949, but the Travancore Income-tax Regulation, 
VIII of rog6 (Malayalam Era) and the Travancore Taxathn on 
Income (Investigation Commission) Act, 1124 (Malayalam Era), 
continued to apply to that area not withstanding the merger. 
On August 6, r949, the Travancore-Cochin Government 
passed an order referring the case of the appellants to the com-
mission conf:itituted under the 'fravancore ·raxation on Income 
(Investigation Commission) Act, u24 
~I. E. 
The investigation 
commission held by its report that the appellants had made a 
secret profit in the accounting year 1u8 M. E., which was not 
included in the income-tax return submitted by the appellants 
earlier. The Travancore-Cochifl Government accepted the re-
port and directed recovery of the tax due by its order dated 
February 14, r950. 
The Income-tax Officer without holding any 
fresh assessment pro<:cedings, issued a demand notice. 
The Cnion Legislature enacted the Opium and Revenue 
Laws (Extension of Application) Act (33 of r950) providing for 
extension of certain opium and revenue laws to certain parts of 
India. 
In exercise of the authority under s. 8(2) of the said 
Travancore Investigation Act, read withs. 3, cl. (c), of the Opium 
and Revenue Laws (Extensi6n of Application) Act, the Go\•ern-
ment of India, on Octoucr 25, 1951, directed that appropriate 
assessn1ent proce:edings under the ·rravancore Income-tax Act 
be taken agamst the appellants with a view to as.0ess or re-
assess the concealed income which ha<l escaped assessment. ·rhe 
Commissioner of Income-tax withdrew the earlier notice of 
demand and thereafter the Income-tax Officer after reassess-
ment proceedings directed the appellants to pay income-tax and 
super-tax on the concea1ed income. 
The said orders of the Government of India and of the 
1 S.C.R .. SUPREME COURT REPORTS 
467 
Income-tax Officer were questioned by the appellants and the 
zgoo 
matter was referred by the Commissioner of Income-tax to .the 
High Court. The High Court held that the orders in question 
R. s. A. c. 
were valid orders. The appellant appealed with Special leave. 
Kasi Iyer 
Held, that the Government of India had the powers under · 
v. . . 
s .. 3(c) of the Opium and Revenue Laws (Extension of Applica-The Commissioner 
tion) Act, 1950, to direct proceedings for assessment or reassess-
01 lHconie-tax, 
ment ·nuder the Travancore Income-tax Regulation after Myso'" T~avan
consideration of the report made by the Travancore Investiga-
core-Cochin &-
tion Commission. 
Coorg, Bangalore 
The order passed by the Government of India on February 
14, 1950, was not inconsistent with the order passed by the 
Travancore-Cocbin Government. Liability to pay income-tax 
would arise only on an effective order of assessment. No such 
order having been passed by the Income-tax Officer in the 
instant case, there could be no doubt as to the competency of 
the· Government of India to direct proceedings for assessment. 
There is nothing in s. 8(2) of the Travancore Taxation on Income 
(Investigation Commission) Act which states that action may be 
taken thereunder only once, and if an unauthorised direction is 
given thereunder there is nothing which prevents rectification 
of that order. 
By sub-s. (4) of s. 8 of the Travancore Taxation on Income 
(Investigation Commission) Act the findings by the Investigation 
Commission are final in all assessment or reassessment proceed-
ings. Section 8(2) of the Act removed the bar of limitation 
which arose bys. 25 of the Income-tax Act. Consequently, it 
was competent to the Income-tax Officer to reopen the assessment 
proceedings notwithstanding any lapse of time and the previous 
order of assessinent did not operate as a bar to such re-
assessment. 
C1v1L AP
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