http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8  

PETITIONER: BANARASI DEVI

       Vs.

RESPONDENT: INCOME-TAX OFFICER, CALCUTTA

DATE OF JUDGMENT: 31/03/1964

BENCH: SUBBARAO, K. BENCH: SUBBARAO, K. SHAH, J.C. SIKRI, S.M.

CITATION:  1964 AIR 1742            1964 SCR  (7) 539  CITATOR INFO :  R          1968 SC 623  (28)  D          1987 SC1378  (2)

ACT: Income-tax  Act,  (11  of 1922), as  amended  by  Income-tax (Amendment)  Act (1 of 1959) s. 4-Fiscal  enactments--Inter- pretation  of-"Issued" in s. 4 of the  Amending  Act-Meaning of.

HEADNOTE: For  the assessment year 1947-48 the appellant in the  first case  field  a return of her income and the  assessment  was completed sometime in 1948 as a result whereof it was  found that  no  tax  was payable by her.   On  April  2,1956,  the appellant  was ,served with a notice dated March  19,  1956, under  s. 34 (1) of the Income-tax Act, 1922, on the  ground of escaped assessment.  The date of the notice fell within 8 years  from  the end of the relevant  assessment  year  i.e. March  31, 1948, but it was served beyond 8 years  from  the date  and  therefore  was  clearly out  of  time  under  the provisions  of  the said section.  In the second  case,  the appellant  was assessed for the assessment year 1947-48  and the  tax thereon was deposited on his behalf.  On  April  2, 1956, the appellant was also served with a similar notice as aforesaid.   The appellants filed two petitions  under  Art. 226  for quashing the said notices and the learned Judge  of the High Court issued rules nisi to the Income-tax  Officer, the  Commissioner of Income-tax and the Union of India.   On September  11,  1958,  the rules were  made  absolute.   The respondents  then preferred appeals to a Division  Bench  of that  Court.  Pending the appeals, on March 12, 1959, s.  34 of  the  Act was amended by s.2 of the Amending  Act,  1959. After the said amendment the appeals were heard and  relying upon  the  said amendment the learned judges held  that  the said  notices,  though served on the  appellants  after  the prescribed time, were served under s. 4 of the Amending Act. On  appeal  by Special Leave it was urged on behalf  of  the appellants that s.4 of the Amending Act only saved a  notice issued  after  the prescribed time, but did not apply  to  a situation  where notice was issued within but served out  of time.    The  respondents  contended  that  the   expression

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8  

"issued"  means  "served"  and that, in  any  view,  it  was comprehensive enough to take in the entire process of giving and serving of notice. Held:  To the present case the general rule of  construction of fiscal Acts would apply, and not the exception  engrafted on  the  rules;  for, s. 4 of the Amending  Act,  cannot  be described  as a provision laying down the machinery for  the calculation of tax.  In substance it enables the  Income-tax Officer  to  reassess a person’s income  which  has  escaped assessment,  though the time within which he could  have  so assessed  had expired under the Act before the amendment  of 1959.   It resuscitates barred claims.  Therefore, the  same stringent  rules of construction appropriate to  a  charging section shall also apply to -such a provision. Case law discussed. On a true construction of s. 4 of the Amending Act, it  must be  held that the clear intention of the legislature was  to save  the validity of the notice as well as  the  assessment from an 540 attack  on the ground that the notice was given  beyond  the prescribed  period.  That intention would be effectuated  if the wider meaning is given to the expression "issued".   The dictionary  meaning of the expression "issued" takes in  the entire process of sending the notice as well as the  service thereof.   The said word used in s. 34(1) of the Act  itself was  interpreted  by courts to mean ’served".   The  limited meaning,  namely, "sent" will exclude from the operation  of the provision a class of cases and introduce anomalies.   In the  circumstances, by interpretation, the wider meaning  of the  word "issued" must be accepted.  In this  view,  though the  notices  were served beyond the prescribed  time,  they were saved under s.4 of the Amending Act. Case law referred to

JUDGMENT: CIVIL  APPELLATE JURISDICTION : Civil Appeals Nos.  142  and 143 of 1963.  Appeals by special leave from the judgment and order  dated  July 13, 1961, of the Calcutta High  Court  in Appeals from Original Orders No. 41 and 69 of 1959. S.   Chaudhury  and K. R. Chaudhuri, for the appellants  (in C.A. No. 142/63). M.   Rajagopalan, K. Rajendra Chowdhary and K. R. Chaudhuri, for the appellants (in C. A. No. 143/1963). K.   N.  Rajagopal Sastri and R. N. Sachthey, for  the  res- pondent (in both the appeals). March 31, 1964.  The Judgment of the Court was delivered by SUBBA RAO, J.-These two appeals filed by special leave raise the  question of the true construction of the provisions  of s. 4 of the Indian Income-tax (Amendment) Act, 1959 (Act No. 1  of  1959),  hereinafter called  the  Amending  Act.   The material  facts  lie  in a small compass  and  they  are  as follows.   For the assessment year 1947-48 the appellant  in Civil  Appeal No. 142 of 1963 filed a return of  her  income before  the Income-tax Officer, District IV,  Calcutta,  and the  assessment was completed sometime in 1948 as  a  result whereof  it  was found that no tax was payable  by  her.  on April 2, 1956, the Income-tax Officer served on her a notice dated  March 19, 1956, under s. 34(7) of the  Indian  Income tax Act, 1922, hereinafter called the Act, on the ground  of escaped  assessment.  The date of the notice fell  within  8 years  from  the end of the relevant assessment  year  i.e., March  31, 1948; but it was served beyond 8 years from  that

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8  

date  and,  therefore,  was clearly out of  time  under  the provisions of the said section. In  Civil  Appeal No. 143 of 1963, for the  assessment  year 1947-48 the appellant was assessed on a total income 541 of  Rs.  28,993/- on December 30, 1948,  by  the  Income-tax Officer and the tax thereon amounting to Rs. 4,747-13-0  was deposited  on  behalf of the appellant in the  Reserve  Bank of,,,  India.   On April 2, 1956, the appellant  was  served with  a  notice  dated March 19,  1956,  by  the  Income-tax Officer  purporting  to  be under s. 34 of the  Act  on  the ground  of escaped assessment.  The date of the notice  fell within 8 years from the end of the relevant assessment year, i.e., March 31, 1956; but it was served beyond 8 years  from that date and was, therefore, clearly out of time under  the provisions of the said section. The appellants in the two appeals filed two petitions in the High  Court of Calcutta under Art. 226 of  the  Constitution for  quashing  the said notices and  for  other  appropriate reliefs.  On March 20, 1957, Sinha, J., of that Court issued rules  nisi on the said two applications to  the  Income-tax Officer,  the  Commissioner of Income-tax and the  Union  of India.  On September 11, 1958, the said Judge made the rules absolute.   The  respondents to the  applications  preferred appeals from the judgment of Sinha, J., to a Division  Bench of  that Court.  Pending the appeals, on March 12, 1959,  s. 34 of the Act was amended by s. 2 of the AmendinAct.   After the  said  amendment the appeals were heard  by  a  Division Bench  of the High Court, consisting of Bose, C. J., and  G. K.  Mitter, J. Relying upon the said amendment  the  learned Judges  held  that the said notices, though  served  on  the appellants after the prescribed time, were saved under s.  4 of the Amending Act.  In that view they set aside the orders of  Sinha, J., and dismissed the writ petitions.  Hence  the appeals. Learned counsel for the appellants contends that the notices under  s.  34(1) of the Act were served  on  the  appellants beyond  8  years from the end of the  assessment  year  and. therefore,  were barred and that on a true  construction  of the provisions of s. 4 of the Amending Act, the said notices were not saved thereunder.  To appreciate the contention  it is  necessary  to read the relevant provisions of  the  Act. before and after the amendment. Section 34(1) of the Indian Income-tax Act, 1922. before  it was amended by the Finance Act No. XVIII of 1956: If-               (a)   the  Income-tax  Officer has  reason  to               believe  that  by reason of  the  omission  or               failure  on the part of an assessee to make  a               return  of hit-, income under Section  22  for               any year or to disclose fully               542               and truly all material facts necessary for his               assessment  for  the year, income,  profit  or               gain               chargeable to   income-tax    have     escaped               assess-               ment for that   year,  or  have  been   under-               assessed,               or assessed at  too  low a rate or  have  been               made               the subject of excessive relief under the  Act               or  excessive loss or  depreciation  allowance               has been computed, or               (b)

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8  

             he  may in cases falling under clause  (a)  at               any time within eight years serve on the               assessee   a notice containing all or any               of the requirements which may be included in a               notice  under sub-section 2 of Section 22  and               may proceed to assess or reassess such income,               profits  or  gains or re-compute the  loss  or               depreciation allowance; and the provisions  of               this  Act  shall,  so far as  may  be  applied               accordingly  as  if the notice were  a  notice               issued under that subSection.                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 eight years or four years, as the case  may               be.                  Section  4 of the Amending Act, (Act  1  of               1959)               No    notice  issued under clause (a) of  sub-               section (1) of section 34 of the principal Act               at  any time before the commencement  of  this               Act   and  no  assessment,  re-assessment   or               settlement made or               other  proceeding-,  taken in  consequence  of               such notice shall be called in question in any               Court,  tribunal or other authority merely  on               the  ground  that at the time the  notice  was               issued  or at the time the assessment  or  re-               assessment  was  made, the time  within  which               such  notice  should have been issued  or  the               assessment  or reassessment should  have  been               made under that section as in force before its               amendment  by clause (a) of section 18 of  the               Finance Act, 1956, and expired. Section  34(1)  (a)  of the  Act  empowered  the  Income-tax ,Officer to assess concealed income which escaped assessment by  serving  a notice on the assessee at any time  within  8 years 543 of  the  end of the assessment year in respect  whereof  the said  income  has  escaped assessment.   Section  4  of  the Amending Act debars the court from questioning the  validity of  notice  issued or the assessment or  re-assessment  made under sub-s. (1) (a) of s. 34 of the Act on the ground  that the time for the issue of such notice or the making of  such assessment or re-assessment had expired under the said  sub- section before it was amended by s. 18 of the Finance Act of 1956. Learned counsel for the appellants contends that s. 4 of the Amending  Act  only saver, a notice issued after  the  pres- cribed time. but does not apply to a situation where  notice is  issued within but served out of time.   Learned  counsel for  the  respondents argues that  the  expression  "issued" means  "served" and that, in any view, it  is  comprehensive enough  to take in the entire process of giving and  serving of notice. Before  construing the section it will be useful  to  notice the relevant rules of construction of a fiscal statute.   In Oriental Bank v. Wright(1) the Judicial Committee held  that if a statute professed to impose a charge, the intention  to impose  a charge upon a subject must be shown by  clear  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8  

unambiguous  language.  In Canadian Eagle Oil Co. v.  R.,(2) Viscount Simon L. C. observed:               "In   the        words       of        Rowlatt               J................................. in a taxing               Act  one has to look at what is clearly  said.               There is no room for any intendment.  There is               no  equity about a tax.  There is no  presump-               tion  as to a tax.  Nothing is to be read  in,               nothing  is to be implied.  One can only               look fairly at the language used." In other words, a taxing statute must be couched in  express and unambiguous language.  The same rule of construction has been  accepted  by  this Court in Gursahai  Saigal  v.  Com- missioner of Income-tax, Punjab (3), wherein it was stated:               "It  is  well  recognized  that  the  rule  of               construction  that  if a case is  not  covered               within the tour corners of the provisions of a               taxing  statute,  no  tax can  be  imposed  by               inference or by analogy or by trying to  probe               into the intentions of the legislature and  by               considering  what  was the substances  of  the               matter applies only to a taxing provision  has               no  application to all provisions in a  taxing               statute.  It does not apply to a provision not               creating a charge for the tax but laying  down               the   machinery   for   its   calculation   or               procedures               (1)(1880)      5      A.C.      842,      856.               (2)[1946] A.C. 119, 140.,               (3)   1868 Punj.  Rec.  Crl.  Case No. 6.               544               for  its  collection.   The  provisions  in  a               taxing  statute  dealing  with  machinery  for               assessment   have  to  be  construed  by   the               ordinary  rules  of construction, that  is  to               say, in accordance with the clear intention of               the  legislature,  which is to make  a  charge               levied effective. In  that  case, the court was called upon  to  construe  the provisions of s. 18A of the Income-tax Act, 1922, which laid down the machinery for assessing the amount of interest and, therefore,  this court did not apply the stringent  rule  of construction.  Apart from the emphasis on the letter of  the law,  the  fundamental  rule of  construction  of  a  taxing statute is not different from that of any other statute  and that  rule  is stated by Lord Russell of Killowen C.  J.  in Attorney-General v. Calton Ban(1), thus:               "The       duty       of       the       court               is...........................  to give  effect               to  the intention of the legislature, as  that               intention is to be gathered from the  language               employed,  having  regard to  the  context  in               connection with which it is employed." To  the  present case the general rule  of  construction  of fiscal Acts would apply, and not the exception engrafted  on that rule; for, s. 4 of the Amending Act cannot be described as a provision laying down the machinery for the calculation of  tax.  In substance it enables the Income-tax Officer  to reassess  a  person’s income which has  escaped  assessment, though  the time within which he could have so assessed  had expired  under  the Act before the amendment  of  1959.   It resuscitates  barred claims.  Therefore, the same  stringent rules  of  construction appropriate to  a  charging  section shall also apply to such a provision. Before  the  Amending  Act of 1959 was  passed,  Income  tax

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8  

Officers issued notices before April 1, 1956, and also after that date for reopening assessments made beyond 8 years from the issue of such notices.  The validity of such notices was questioned.   To  save  the validity  of  such  notices  the Amending  Act  was passed.  This Court in S. C.  Prashar  v. Vayasantsen Dwarkadas(2) held, on a construction of s. 4  of the Amending Act, that it operated and validated the notices issued  under s. 34(1) (a) of the Act. as amended  in  1948, even  earlier than April 1, 1956.  In other  words,  notices issued  under s. 34(1) (a) of the Act before or after  April 1,  1956, ,could not be challenged on the ground  that  they were  issued  beyond  the time limit of  8  years  from  the respective assessment years prescribed by the 1948 amendment Act.  Section (1) [1899] 2. Q.B. 158, 164. (2)  [1964] 1 S.C.R. 29. 545 4  of the Amending Act of 1959, therefore, was  enacted  for the  sole purpose of saving the validity of such notices  in respect of all escaped incomes relating to any year commenc- ing  from the year ending on March 31, 1941, though they  In were issued beyond the prescribed time.  If the construction sought  to  be  placed  by  the  learned  counsel  for   the appellants  be accepted, it would defeat the purpose of  the amendment  in  some  cases.  If the  words  were  clear  and exclude  the  class  of cases where the  notices  were  sent before  8  years  from the date of  assessment,  but  served thereafter, this Court has to give them the said meaning. This  bring us to the question of construction of  the  pro- visions  of s. 4 of the Amending Act.  The crucial  word  in the said section is "issued".  The section says that  though a notice was issued beyond the time within which such notice should   have  been  issued,  its  validity  could  not   be questioned.  If the word ’issued" means "sent", we find that there  is no provision in the Act prescribing a  time  limit for  sending a notice, for, under s. 34(1)(a) of the  Act  a notice could be served only within 8 years from the relevant assessment year.  It does not provide any period for sending of   the  notice.   Obviously,  therefore,  the   expression "issued"  is  not  used  in  the  narrow  sense  of  "sent". Further,  the  said  expression  has  received,  before  the amendment,  a  clear  judicial  interpretation.   Under   s. 34(1)(a)  of  the Act the Income-tax Officer  may  in  cases falling  under cl. (a) at any time within 8 years  serve  on the  assessee  a notice.  The proviso to that  section  says that  where  the  notice under s. 34(1)(a)  is  within  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.  In Commissioner of Income-tax, Bombay South v. D.  V. Ghurve(1), it was argued that a notice sent before  8 years  though served beyond 8 years was in  compliance  with the section; and in support of that argument the  expression "issued" in the proviso was relied upon to limit the meaning of the word "served" in the substantive part of the section. Rejecting  that  argument, Chagla, C. J., speaking  for  the Court, observed:               "In other words, the attempt is to equate  the               expres-               sion  "served"  used  in section 34  with  the               expres-               sion  "issued"  used  in the proviso  to  sub-               section               (3).  Now we must frankly confess that we find

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8  

             it               difficult  to understand why  the  Legislature               has used in the proviso the expression  "where               a notice under sub-section (1) has been issued               within the               (1)(1937) 31 I.T.R. 683, 686.               546               time therein limited".  In sub-section (1)  no               time  is limited for the issue of the  notice:               time  is only limited for the service  of  the               notice-, and therefore it is more  appropriate               that  the  expression  "issued"  used  in  the               proviso  to sub-section (3) should be  equated               with the expression "served" rather than  that               the  expression "served" used  in  sub-section               (1)  should  be equated  with  the  expression               "issued" used in the proviso to sub-section               (3)." This  decision equated the expression "issued" with  expres- sion  "served".   The Allahabad High Court in Sri  Niwas  v. Income-tax Officer(1) has also interpreted the word "issued" to  mean  "served".  The relevant rule  of  construction  is clearly stated by Viscount Buckmaster in Barras v.  Aberdeen Steam Trawling and Fishing Co. Ltd.(2) thus:               "It has long been a well established principle               to  be applied in the consideration of Act  of               Parliament  that  where  a  word  of  doubtful               meaning   has   received  a   clear   judicial               interpretation  the subsequent  statute  which               incorporates the same word or the same  phrase               in  a similar context, must be con,-,trued  so               that   the  word  or  phrase  is   interpreted               according  to the meaning that has  previously               assigned to it." Section  4  of the Amending Act was enacted for  saving  the validity of notices issued under s. 34 (1) of the Act.  When that  section  used  a word interpreted  by  courts  in  the context  of such notices, it would be reasonable  to  assume that  the expression was designedly used in the same  sense. That  apart, the expressions "issued" and "served" are  used as  interchangeable terms both in dictionaries and in  other statutes.   The  dictionary meaning of the word  "issue"  is "the act of sending out, put into circulation, delivery with authority  or delivery".  Section 27 of the General  Clauses Act (Act X of 1897) reads thus:               "Where  any  Central Act  or  Regulation  made               after the commencement of this Act  authorizes               or requires any document to be served by post,               whether  the expression "serve" or  either  of               the expression, "give" or "send" or any  other               expression  is used, then, unless a  different               intention appears, the service shall be deemed               to   be  effected  by   properly   addressing,               prepaying and posting               (2)   [1933] A.C. 402, 411.               (1) (1956) 30 I.T.R. 381.               547               by,  registered post, a letter containing  the               document,  and unless the contrary is  proved,               to have been effected at the time at which the               letter  would  be delivered  in  the  ordinary               course of post." It  would be seen from this provision that  Parliament  used the  words  "serve", "give" and  "send"  as  interchangeable words.   So  too, in ss. 553, 554 and 555  of  the  Calcutta

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8  

Municipal  Act,  1951, the two expressions  "issued  to"  or "served  upon" are used as equivalent expressions.   In  the legislative practice of our country the said two expressions are sometimes used to convey the same idea.  In other words, the expression "issued" is used in a limited as well as in a wider  sense.   We  must,  therefore,  give  the  expression "issued"  in  s. 4 of the Amending Act  that  meaning  which carries  out the intention of the Legislature in  preference to  that  which  defeats it.  By doing so  we  will  not  be departing  from the accepted meaning of the expression,  but only giving it one of its meanings accepted, which fits into the context or setting in which it appears. With  this  background  let us give a  closer  look  to  the provisions  of s. 4 of the Amending Act.  The object of  the section  is to save the validity of a notice  issued  beyond the  prescribed  time.  Though the time  within  which  such notice should have been issued under s. 34(1) of the Act, as it stood before its amendment by s. 18 of the Finance Act of 1956, had expired, the said notice would be valid.  Under s. 34(1)  of the Act, as we have already pointed out, the  time prescribed  was  only  for service of the  notice.   As  the notice mentioned in s. 4 of the Amending Act is linked  with the  time  prescribed  under the Act,  the  section  becomes unworkable if the narrow meaning is given to the  expression "issued".   On the other hand, if we give wider  meaning  to the   word,  the  section  would  be  consistent  with   the provisions  of  s. 34(1) of the Act.  Moreover,  the  narrow meaning would introduce anomalies in the section: while  the notice,   assessment  or  re-assessment  were   saved,   the intermediate  state of service would be avoided.  To put  it in other words, if the proceedings were only at the stage of issue of notice, the notice could not be questioned, but  if it was served, it could be questioned; though it was  served beyond  time, if the assessment was completed, its  validity could  not  be  questioned.  The result would  be  that  the validity  of an assessment proceeding would depend upon  the stage at which the assessee seeks to question it. That could not  have been the intention of the Legislature.  All  these anomalies  would disappear if the expression was  given  the wider meaning. LP(D)ISCI-18(a)..... 548 To ’summarize: the clear intention of the Legislature is  to save  the validity of the notice as well as  the  assessment from  an attack on the ground that the notice was  given  be yond the prescribed period.  That intention would be  effec- tuated  if  the  wider meaning is given  to  the  expression "issued"  takes in the entire process of sending the  notice as  well as the service thereof.  The said word used  in  s. 34(1)  of the Act itself was interpreted by courts  to  mean "served".  The limited meaning, namely, "sent" will  exclude from  the  operation of the provision a class of  cases  and introduce    anomalies.     In   the    circumstances,    by interpretation,  we  accept  the  wider  meaning  the   word "issued"  bears.   In  this view, though  the  notices  were served beyond the prescribed time, they were served under s. 4 of the Amending Act.  No other point was raised before us. In  the  result, the appeals fail and are  di;-,missed  with costs.  There will be one hearing fee. Appeals dismissed. 549