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PETITIONER: THE COMMISSIONER OF INCOME-TAX, BIHAR & ORISSA.

       Vs.

RESPONDENT: MAHARAJA PRATAPSINGH BAHADUR OF GIDHAUR.

DATE OF JUDGMENT: 29/11/1960

BENCH: HIDAYATULLAH, M. BENCH: HIDAYATULLAH, M. KAPUR, J.L. SHAH, J.C.

CITATION:  1961 AIR 1026            1961 SCR  (2) 760  CITATOR INFO :  D          1965 SC1031  (4)  D          1965 SC1431  (11)  D          1978 SC 209  (12)

ACT: Income   Tax-Escaped  income--Notice  issued  by  Income-tax Officer   without   approval   of   Commissioner--Subsequent amendment   of   enactment  providing   for   Commissioner’s approval--Assessment        based        on         original notice--Validity--General Clauses Act, 1897 (10 of 1897), s. 6--Income-tax and Business Profits Tax (Amendment) Act, 1948 (48  of 1948), ss. r, 8--Indian Income-tax Act, 1922 (11  of 1922), s. 34, as amended by Act 48 of 1948.

HEADNOTE: The appellant who had agricultural income from his Zamindari was  assessed to income-tax for the four  assessment  years, 1944-45,  to  1947-48.  The income-tax authorities  did  not include  in his assessable income, interest received by  him on arrears of rent, in view of a decision of the Patna  High Court, but subsequently this view of law was reversed by the Privy  Council.  On August 8, 1948, the  Income-tax  Officer issued  notices  under s. 34of the  Indian  Income-tax  Act, 1922, for assessing the escaped income.  Before the  notices were  issued the Income-tax Officer had not put  the  matter before the Commissioner for his approval as the section then did  not  require it and the assessments were  completed  on those  notices.   In the meantime, certain  amendments  were made  to the Indian Income-tax Act by Act 48 of 1948,  which received the assent of the Governor-General on September  8, 1948.   The Amending Act substituted a new section in  place of S. 34, which among other changes, added a proviso to  the effect  that  "the  Income-tax Officer  shall  not  issue  a notice...... unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a  fit case for the issue of such notice", and also made  it retrospective  by providing that the new section  "shall  be deemed  to  have come into force on the 30th day  of  March, 1948".   The question was whether the notices issued by  the Income-tax  Officer on August 8, 1948, without the  approval of  the  Commissioner, were rendered void by reason  of  the

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operation  of the amended s. 34.  The  Commissioner  claimed that  s.  6  of the General Clauses  Act,  1897,  saved  the assessments as well as the notices. Held,  that s. 6 of the General Clauses Act, 1897,  was  in- applicable as the Amending Act of 1948 indicated a different intention  within the meaning of that section,  inasmuch  as the  amended  S.  34 of the  Indian  Income-tax  Act,  1922, provided that it shall be deemed to have come into force  on March 30, 1948. Lemm v.  Mitchell, [1912] A.C. 400, distinguished, 761 Held,  further,  that the notices issued by  the  Income-tax Officer on August 8, 1948, and the assessments based on them were invalid. Venkatachalam  v.  Bombay Dyeing & Mfg.  Co.,  Ltd.,  [1959] S.C.R. 703, applied.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 650 of 1957. Appeal  from the judgment dated July 13, 1956, of the  Patna High Court in Miscellaneous Judicial Case No. 665 of 1954. R. Ganapathy Iyer and R. H. Dhebar, for the appellant. A.   V.  Viswanatha  Sastri  and  R.  C.  Prasad,  for   the respondent. 1960.  November 29.  The Judgment of the Court was delivered by HIDAYATULLAH,  J.-This is an appeal by the  Commissioner  of Income-tax with a certificate against the judgment and order of  the High Court at Patna answering two questions  of  law referred  to it under s. 66(1) of the Income-tax Act by  the Tribunal, in the negative.  Those questions were: "(1)  Whether  in the circumstances of the  case  assessment proceedings were validly initiated under s. 34 of the Indian Income-tax Act? (2)  If  so, whether in the circumstances of  the  case  the amount  received  from interest on arrears  of  agricultural rent was rightly included in the income of the assessee ?" The  assessee, the Maharaja Pratapsingh Bahadur of  Gidhaur, had  agricultural  income from his zamindari  for  the  four assessment  years  1944-45  to 1947-48.   In  assessing  his income to income-tax, the authorities did not include in his assessable  income  interest received by him on  arrears  of rent.  This was presumably so in view of the decision of the Patna High Court.  When the Privy Council reversed the  view of  law  taken by the Patna High Court  in  Commissioner  of Income-tax  v.  Kamakhya Narayan Singh (1),  the  Income-tax Officer issued notices under S. 34 of the (1)  [1948] 16 I.T.R. 325. 762 Indian  Income-tax  Act for assessing  the  escaped  income. These   notices  were  issued  on  August  8,   1948.    The assessments after the returns were filed, were completed  on August  26,  1948.   Before the  notices  were  issued,  the Income-tax  Officer  had  not put  the   matter  before  the Commissioner for his approval, as  the section then did  not require  it,  and the assessments were  completed  on  those notices.   Section  34  was amended by  the  Income-tax  and Business Profits Tax (Amendment) Act, 1948 (No. 48 of 1948), which  received the assent of the Governor-General  on  Sep- tember  8,  1948.  The appeals filed by  the  assessee  were disposed  of on September 14 and 15, 1951, by the  Appellate Assistant  Commissioner, before whom no question as  regards the  validity  of the notices under s. 34 was  raised.   The

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question of the validity of the notices without the approval of  the Commissioner appears to have been raised before  the Tribunal for the first time.  In that appeal, the Accountant Member  and the Judicial Member differed, one  holding  that the  notices  were invalid and the other, to  the  contrary. The  President agreed with the Accountant ’Member  that  the notices were invalid, and the assessments were ordered to be set aside. The Tribunal then stated a case and raised and referred  the two questions, which have been quoted above.  The High Court agreed with the conclusions of the majority, and the present appeal  has been filed on a certificate granted by the  High Court. Section 34, as it stood prior to the amendment Act No. 48 of 1948,  did not lay any duty upon the Income-tax  Officer  to seek  the  approval  of the Commissioner  before  issuing  a notice  under s. 34.  The amending Act by its first  section made  ss.  3  to 12 of the  amending  Act  retrospective  by providing  "sections  3 to 12 shall be deemed to  have  come into force on the 30th day of March, 1948........ Section  8 of the amending Act substituted a new section in place of s. 34, and in addition to textual changes with which we are not concerned, also added a proviso to the following effect : "Provided that- 763 (1)  the  Income-tax Officer shall not issue a notice  under this  sub-section  unless he has recorded  his  reasons  for doing  so and the Commissioner is satisfied on such  reasons that it is a fit case for the issue of such notice." The  question is whether the notices which were issued  were rendered  void  by  the operation  of  this  proviso.-’  The Commissioner contends that s. 6 of the General Clauses  Act, particularly cls. (b) and (c) saved the assessments as  well as  the  notices.  He relies upon a decision  of  the  Privy Council in Lemm v. Mitchell (1), Eyre v. Wynn-Mackenzie  (2) and Butcher v. Henderson (3) in support of his  proposition. The  last  two cases have no bearing upon this  matter;  but strong  reliance is placed upon the Privy Council case.   In that case, the earlier, action which had been commenced when the Ordinance had abrogated the right of action for criminal conversation,  had already ended in favour of the  defendant and  no appeal therefrom was pending, and it was  held  that the revival of the right of action for criminal conversation did not invest the plaintiff with a right to begin an action again and thus expose the defendant to a double jeopardy for the  same act, unless the statute expressly and by  definite words  gave him that right.  The Privy Council case is  thus entirely different. No  doubt,  under  s. 6 of the General  Clauses  Act  it  is provided  that  where any Act repeals  any  enactment,  then unless  a different intention appears, the repeal shall  not affect  the previous operation of any enactment so  repealed or  anything  duly  done thereunder  or  affect  any  right, obligation or liability acquired, accrued or incurred  under any  enactment  so repealed.  It further provides  that  any legal  proceedings  may be continued or enforced as  if  the repealing Act had not been passed.  Now, if the amending Act had  repealed the original s. 34, and merely enacted  a  new section in its place, the repeal might not have affected the operation of the original section by virtue of s. 6. But the amending Act goes further than this.  It (1) [1912] A.C. 400.            (2) (1896) 1 Ch. 135. (3) (1868) L.R. 3 Q. B. 335. 764

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repeals  the original s. 34, not from the day on  which  the Act  received the assent of the Governor-General but from  a stated  day,  viz., March 30, 1948, and substitutes  in  its place   another   section  containing  the   proviso   above mentioned.   The  amending Act provides  that  the  amending section shall be deemed to have come into force on March 30, 1948,   and  thus  by  this  retrospectivity,  indicates   a different intention which excludes the application of s.  6. It  is  to be noticed that the notices were  all  issued  on August  8, 1948, when on the statute book must be deemed  to be  existing an enactment enjoining a duty upon the  Income- tax  Officer to obtain prior approval of  the  Commissioner, and  unless that approval was obstained, the  notices  could not be issued The notice were thus invalid. , The  principle which  was applied by this Court in Venkatachalam v.  Bombay Dyeing & Mfg.  Co. Ltd. (1) is equally applicable here. No question of law was raised before us, as it could not  be in view of the decision of this Court in Narayana Chetty  v. Income-tax  Officer (2), that the proviso was not  mandatory in  character.   Indeed,  there was time  enough  for  fresh notices to have been issued, and we fail to see why the  old notices were not recalled and fresh ones issued. For these reasons, we are in agreement with the High,  Court in the answers given, and dismiss this appeal with costs. A appeal dismissed. (1) [1959] S.C.R. 703.         (2) [1959] 35 I.T.R. 388. 765