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PETITIONER: COMMISSIONER OF INCOME TAX, WEST BENGAL,

       Vs.

RESPONDENT: BALKRISHAN MALHOTRA

DATE OF JUDGMENT28/07/1971

BENCH: HEGDE, K.S. BENCH: HEGDE, K.S. GROVER, A.N.

CITATION:  1971 AIR 2219            1971 SCR  951

ACT: Income-tax  Act,  1922, s. 34(3)-- Assessment’  meaning  of- Whether assessment completed on day of computation of income by Income-tax Officer or when the tax due is computed.

HEADNOTE: The  original assessment of the assessee for the  assessment year  1944-45  was  made sometime  before  March  13,  1953. Subsequently   after   obtaining   the   sanction   of   the Commissioner of Income-tax, the Income-tax Officer  reopened the  assessment  under s. 34(1)(a) of  the  Income-tax  Act, 1922.  On March 13, 1953 he issued a notice to the  assessee under  s.  34  read  with  s.  22(2)  of  the  Act.    After considering  the objection of the assessee,  the  Income-tax Officer made an assessment order under s. 34 read with s. 23 (4)  of  the Act on March 8, 1954 in which he  computed  the income  of  the  assessee.   But on  that  day  he  did  not determine the tax due from the assessee.  He determined  the tax  and issued a notice under s. 29(3) in Form 30  only  on March 31, 1954.  The assessee contended that the  assessment was  barred under s. 34(3).  The contention was rejected  by the  authorities  under  the  Act  including  the  appellate tribunal  but  the High Court gave its advisory  opinion  in favour  of  the assessee.  In appeal to this  Court  by  the Revenue the main question for consideration was whether  the assessment  was  complete on the date when  the  income  was assessed  by the Income-tax Officer or on the date when  the tax was computed. HELD:The appeal must fail. As long back as September 24, 1953 the High Court of  Madras in Vishwanathan Chettiar’s case came to the conclusion  that the  word ’assessments in the proviso to s. 34(3) means  not merely  the  computation of the income of the  assessee  but also the determination of the tax payable by him.  No  other High  Court  has taken a different view.  The  Revenue  must have in all these years acted on the basis of that  decision of the Madras High Court.  Interpretation of a provision  in a taxing statute rendered years back and accepted and  acted upon  by the department should not be easily departed  from. The corresponding provisions of the 1961 Act are  materially different from the provisions of the 1922 Act.  Under  these circumstances this Court would not be justified in departing from  the  interpretation  placed  by  the  High  Court   in

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Viswanathan  Chettia’s case though a different view  of  the law may be reasonably possible. [954F-H] RM.P.R. Viswanathan Chettiar v. Commissioner of  Income-tax, Madras, 25 I.T.R. 79, affirmed.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1391  of 1967. Appeal from the judgment and order dated May 31, 1963 of the Calcutta High Court in Income-tax Reference No. 4 of 1960. 952 Jagadish  Swarup  Solicitor-General, B. D. Ahuja and  B.  D. Sharma, for the appellant. Sukumar Mitra, and Rwneshwar Nath, for the respondent. The Judgment of the Court was delivered by Hegde,  J.-This  appeal  by certificate by  the  Revenue  is directed  against  the  order  made by  the  High  Court  of Calcutta in a reference under s. 66(1) of the Indian  Income Tax Act, 1922 (to be hereinafter referred to as the Act). At  the instance of the assessee, the  Income-tax  Appellate Tribunal ’A’ Bench, Calcutta referred to the High Court  for its opinion two questions of law viz. :               "(1) Whether the assessment is complete on the               date  when  the  income  is  assessed  by  the               Income-tax Officer or on the date when the tax               is  computed by him and the challan  demanding               the tax is issued ?               (2)Whether  on the facts admitted or  found               in  this case, the assessment was time  barred               under  the first proviso to section  34(3)  of               the Indian Income-tax Act The  original assessment of the assessee for the  assessment year 1944-45 was made sometime before March 13, 1953.   Sub- sequently  after obtaining the sanction of the  Commissioner of   Income-tax,   the  Income-tax  Officer   reopened   the assessment under s. 34(1) (a) of the Act.  On March 13, 1953 he issued a notice to the assessee under s. 34 read with  s. 22(2)  of the Act.  After considering the objection  of  the assessee, the Income-tax Officer computed the income of  the assessee under s. 34 read with s. 23(4) on March 8, 1954  at Rs. 60,000.  The note made by the Income-tax Officer on that day in the order sheet reads               "Assessed  as per assessment order on a  total               income  of Rs. 60,000 for the assessment  year               1944-45 under s. 34/23(4)". But  on that date the Income-tax Officer did  not  determine the  tax  due  from  the  assessee.   It  appears  that   he determined the tax due from the assessee and issued a notice under  s.  28(3)  in Form 30 only on March  31,  1954.   The assessee  contended that the assessment is barred  under  s. 34(3).   That  contention was rejected  by  the  authorities under  the  Act including the appellate tribunal  but  on  a reference  made by the tribunal to the High Court, the  High Court  following  the decision of the Madras High  Court  in R.M. P. R.  Viswanathan Chettiar v. Commissioner of 953 Income  Tax,  Madras(1)  accepted  the  contention  of   the assessee while giving its advisory opinion on the questions of  law  referred  to it by the  appellate  tribunal.   This appeal is directed against that decision. The  provisions of law which are material for  deciding  the point  in  issue  are ss. 23 and 34(3) of  the  Act.   Those provisions ;at the material time read as follows :

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             "23(1).    If   the  Income-tax   Officer   is               satisfied  without requiring the  presence  of               the  assessee or the production by him of  any               evidence  that a return made under section  22               is  correct and complete, he shall assess  the               total  income  of  the  assessee,  and   shall               determine the sum payable by him on the  basis               of such return.               (2)If   the  Income-tax  Officer   is   not               satisfied  without requiring the  presence  of               the   person  who  made  the  return  or   the               production of evidence that return made  under               section  22 is correct and complete, he  shall               serve  on such person a notice requiring  him,               on  a date to be therein specified, either  to               attend  at the Income-tax Officer’s Office  or               to produce, or to cause to be there  produced,               any evidence on which such person may rely  in               support of the return.               (3)On  the  day  specified  in  the  notice               issued  under  sub-section  (2)  or  as   soon               afterwards as may be, the Income-tax  Officer,               after hearing such evidence as such person may               produce and such other evidence as the Income-               tax Officer may require, on specified  points,               shall by an order in writing, assess the total               income of the assessee, and determine the  sum               payable   by   him  on  the  basis   of   such               assessment.               (4)If  any person falls to make the  return               required by any notice given under  subsection               (2) of section 22 and has not made a return or               a revised return under sub-section (3) of  the               same  section or fails to comply with all  the               terms of a notice issued under sub-section (4)               of the same section or, having made a  return,               fails  to  comply  with all the  terms  of  a,               notice  issued  under subsection  (2)  of  the               section, the Income-tax Officer shall make the               assessment  to  the best of his  judgment  and               determine  the sum payable by the assessee  on               the basis of such assessment.               Section  34(3)-No  order of  assessment  under               section 23 to which clause (c) of  sub-section               (1) of section 28               (1)   25, I.T.R. 79.               954               applies  or of assessment or  reassessment  in               cases falling within clause (a) of sub-section               (1)  of this section shall be made  after  the               expiry  of 8 years and no order of  assessment               or  re-assessment in any other case  shall  be               made after the expiry of 4 years from the  end               of  the year in which the income,  profits  or               claims were first assessable :               Provided that where a notice under sub-section               (1)  has been issued within the  time  therein               limited, the assessment or re-assessment to be               made  in pursuance of such notice may be  made               before the expiry of one year from the date of               the service of the notice even if such  period               exceeds  the period of 8 years or 4  years  as               the case may be". It has been stated over and over again by this Court as well as by the Judicial Committee that the words "assessment" and

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the "assessee" are used in different places in the Act  with different  meaning.   Therefore  in  finding  out  the  true meaning  of those words in any provision, we have to see  to the  context  in  which the word is  used  and  the  purpose intended to be achieved.  It is true that sub-ss. 1, 3 and 4 of s. 23 require the Income-tax Officer to "assess the total income  of  the assessee and determine the  sum  payable  by him".  In other words in those provisions the word  "assess" has been used with reference to computation of the income of the assessee and not the determination of his tax liability. But  in  s.  34(3)  the  word  used  is  not  "assess"   but "assessment".   The  question for decision is  what  is  the meaning  of that word ? As long back as September 24,  1953, the  High Court of Madras in Viswanathan Chettiar’s  case(1) came to the conclusion that the word "assessment" in proviso to  s. 34(3) means not merely the computation of the  income of  the  assessee  but also the  determination  of  the  tax payable  by him.  No other High Court has taken  a  contrary view.  The Revenue must have in all these years acted on the basis   of   that  decision  of  the  Madras   High   Court. Interpretation  of a provision in a taxing statute  rendered years  back  and accepted and acted upon by  the  department should not be easily departed from.  It may be that  another view  of  the law is possible but law is not a  mere  mental exercise.  The  courts  while  reconsidering  the  decisions rendered  long time back particularly under taxing  statutes cannot  ignore  the  harm  that  is  likely  to  happen   by unsettling law that had been once settled.  We may also note that the Act has been repeated by the Income-tax Act,  1961. The  corresponding provisions of the1961 Act are  materially different  from the provisions referred to  earlier.   Under these circumstances we do not think that we would (1)  25 I.T. R. 79. 955 be justified in departing from the interpretation placed  by the  Madras.  High Court in Viswanathan  Chettiar’s  case(1) though  a  different  view  of the  law  may  be  reasonably possible. In the result this appeal fails and the same is dismissed. But in the circumstances of the case we make no order as to costs. G. C (1) 25 I.T.R. 79 Appeal dismissed. 956