LexS. C. PRASHAR, INCOME-TAX OFFICER, MARKET WARD, BOMBAY AND ANOTHER versus VASANTSEN DWARKADAS AND OTHERS
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--- , • 1 I S.C.R. SUPREME COURT REPORTS 29 S. C. PRASHAR, INCOME-TAX OFFICER, MARKET WARD, BOMBAY AND ANOTHER "· VASANTSEN DWARKADAS AND OTHERS (S. K. DAS, J. L. KAPUR, A. K. SARKAR, M. HIDAYATULLAH and RAGHUBAR DAYAL, JJ.) Income Tax-Escaped income-Reassessment-Validity of notic•-Btal'Ult providing for saving of notices-Retrospective operation-Indian Income-to"' (Amendment) Act, 1948 (48 of 1948), •· 8-Indian Income-ta"' (Amendment) Act, 1953 (25 of 1953), 1. 31-Finance Act, 1956 (18 of 1956), •· 18-Indian Income-ta"' (Amendment) Act, 1959 (9 of 1959), s. 2, 4-Indian Income-ta.: Act, 1922 (11 of 1922), s. 34, as amended. The first respondent's father, D, and another were partners doing busines in the name of P.L. since 1935. D died in 1946 but the firm was continued with the first re<pondent as a partner . In 1941 another firm in the name of V. D. was started by the first respondent and two others, and for the assessment year 1942-43 the firm made a return of its income and alro claimed registration. The Income-taJ< Officer, being of the view that the firm belonged really to D refused registration and added the income of the firm to the individual income of D. In 1943-44 the Income-true Officer came to a different con- clusion and held that the firm V.D. was a branch of the firm P.L. For the subsequent years of a5'essment 1942-43 to 1948- 49 also the firm V.D. applied for registration but was refused, and for those several years appeals were filed before the Appe- llate Tribunal. An appeal was filed by the firm P.L. against its assessment in respect of excess profits tax. There was also an appeal against the a5'essment for the year 1942-43 by the first respondent as the heir and legal representative of his father against the decision that the income of the firm V.D. should be included in the income of his. father. All these appeals were heard together and decided by the Appellate Tribunal by its order dated August 14, 1951. In th~t order the Tribunal gave a finding that the busine5'.of the firm V.D. really belonged to the firm P.L. This derision was confirmed by the High Court on reference on October 8, 1953. In order to give effect to the find- ing of the Tribunal the Income-taJ< Officer issued a notice on April 30, 1954, to the firm P.L. under s. 34 of the Indian In- come-taJ< Act, 1922, that the income for the year endin11 1962 D1umtrr, 12. 1~2 s.c. p,,,,,,., Tnumt· Ta Offic11!1, Mahl H-'.,d, BomhaJ •• V 1ta11tu11 Dwarkathu 30 SUPREME COURT REPORTS [1964) VOL. March 31, 1943, had !>ten under-assessed, and that he propoocd to reassess the income. The respondents challenged the validity of the notice on the grounds (I) that the Income-tax Officer had n<' jurisdiction to issue a notice after the expiry of the limit of time fixed by sub-s. (I) of s. 34, (2) that the second proviso to sub-s. (3) of s. 34 on which the Income-tax Officer relied did not apply to the c:ise, and in any case, it was bad on the ground that it violated Art. 14 of the Constitution of India, and (3) that there was no provision in the Act under which the Appe- llate Tribunal could give a finding in the appeals filed by the firm V.D. or in the appeal filed by the first respondent himself that the income in question represented the income of the firm P.L. The validity of the notice was sought to be sustained on the grounds that, in any case, it could not be challenged by reason of the amendments made in s. 34 of the Indian Income- tax Act, hy the provisions of s. 31 of the Indian Income-tax (Amendment) Act, 1953, s. 18 of the Finance Act, 1956, and s. 4 of the Indian Income-tax (Amendment) Act, 1959. Held, (per Sarkar, Hidayatullah and Raghubar Dayal,lJ., Da.• and Kapur,JJ., dissenting), that the notice dated April 30, 1954, was valid and its validity could not be Clllcd in question y • in any Court or Tribunal in view of the provisions ins. 4 of the • Indian Income-tax (Amendment) A•.·t, 1959. Per Das and Kapur,,U.-(1) The second proviso to s. 34 (3) of the Indian Income-tax Act, 1922, as amended by the Amending Act of 1953, was hit by Art. 14 of the Constitution of India and was invalid. (2) The Income-tax Officer had no jurisdiction to issue the notice on April 30, 1954, and could not rely on the second provi>0 to sub-s. (3) of s. 34 because the time limit fixed by sub-s. (I) of s. 34 had expired long bcfvre the ;aid proviso came into effect and the proviso did
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