JUDGMENT
Ventataswami, J.
1. These are a batch of four petitions giving rise to common questions of law and can be conveniently disposed of by a common order.
2. The petitioner in all these cases in an ex-partner of a dissolved firm by name Srinivasa Weaving Factory. The firm was assessed to income-tax under the Indian Income-tax Act, 1922, to be hereinafter referred to as “the Act”. The four petitions relate to the assessment years 1952-53 to 1955-56. Subsequent to the assessment in respect of all those years, the Income-tax Officer was of the opinion that the firm was under-assessed inasmuch as certain income had escaped assessment. Consequently, the Income-tax Officer, after obtaining the sanction from the Commissioner of Income-tax, Bangalore, issued to the firm a notice under section 34 of the Act in respect of the above assessment years. Some time after the issue of the aforesaid notice, further notice under section 23(2) of the Act came to be issued. Since the assessee did not comply with the requirements of the notice issued under section 23(2), the Income-tax Officer completed the assessment as per the provisions of section 23(4) read with section 34 of the Act. Thereafter, the assessee filed an application under section 27 of the Act before the Income-tax Officer. That application being dismissed, an appeal was preferred before the Appellate Assistant Commissioner of Income-tax concerned. By an order dated September 19, 1967, the Appellate Assistant Commissioner allowed the appeal and cancelled the assessment with a direction that the Income-tax Officer should make a fresh assessment in accordance with law. Pursuant to the aforesaid order, the Income-tax Officer issued a notice under sections 22(4) and 23(2) of the Act to the assessee. Aggrieved by this procedure, the prescient petitioner, an ex-partner of the dissolved firm, has approached this court with these petitions.
3. The reliefs sought for by him are for the issue of a writ of certiorari quashing the notice issued under section 34(1)(a) of the Act and for a writ of prohibiting the Income-tax Officer from assessing the firm of Srinivasa Weaving Factory in pursuance of the proceedings initiated by him.
4. Although one of the grounds urged in the petitions relates to the constitutional validity of section 297(2)(d)(i) of the Income-tax Act, 1961, for the reason that it was violative of article 14 of the Constitution, Sri K. Srinivasan, the learned counsel appearing on behalf of the petitioner in all these petitions, confined his submission to the following two questions :
(1) That having regard to the provisions of clauses (ii) and (iii) of the first proviso to section 34(1)(a) of the Act, the sanction of the Central Board of Revenue was necessary for the issue of a notice for the purpose of taxing the income which had escaped assessment under that section. Since no such sanction has been obtained, the proceedings were vitiated for want of service of a valid notice on the assessee under section 34(1) of the Act. (2) That in view of the order of cancellation of assessment by the Appellate Assistant Commissioner of Income-tax, any fresh assessment made pursuant to section 27 of the Act should be instituted once again by the issue of a fresh notice under section 34(1) of the Act. He submits that the words “escaping assessment” apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and cases where due to any reason no notice was issued to the assessee and, therefore, there was no assessment of his income (see Commissioner of Income-tax v. Narsee Nagsee & Co.). It is, therefore, his submission that once the assessment made under section 23(4) read with section 34(1) of the Act was cancelled, the proceedings must be deemed to have resulted in no assessment at all, thus necessitating the institution of proceedings to tax income escaping assessment right from the inception, i.e., the issue of a notice under section 34(1) of the Act. He also submits tht the words “fresh assessment” occurring in section 27 of the Act should be understood to mean “reassessment”, thus requiring the proceedings to be instituted do novo under section 34(1) of the Act. In support of this argument, he invited attention to the provisions of the second proviso to section 34(3) of the Act, wherein there is a reference to reassessment made under section 27 of the Act. From this proviso he wants us to understand that the legislature itself had understood the words “fresh assessment” occurring in section 27 as equivalent to “reassessment”. Viewed from this angle also any “fresh assessment” to be made under section 27 of the Act can be validly commenced only by the issue of a notice under section 34(1) of that Act.
5. On the first of the above questions Sri. S. R. Rajasekharamurthy, the learned counsel appearing on behalf of the revenue, submits thus : Clauses (ii) and (iii) of the first proviso to section 34(1) of the Act, in so far as it is relevant for the purpose of the present contention, postulate that no notice under section 34(1)(a) of the Act shall issue without the prior sanction of the Central Board of Revenue in cases in which income escaping assessment amounts to or is likely to amount to one lakh of rupees or more, and a period of 8 years have elapsed after the expiry of the relevant assessment year. Hence, it follows that if a notice under section 34(1) is issued within 8 years from the end of the assessment year, no sanction by the Central Board of Revenue would be necessary, not withstanding the income escaping assessment amounted to one lakh of rupees or more. On behalf of the revenue a counter-affidavit has been filed giving the dates on which notices under section 34(1)(a) were issued, all of them clearly falling within the time limit of 8 years referred to in the proviso.
6. On the next question propounded by Sri K. Srinivasan, Sri Rajasekharamurthy contends that once the assessment has been cancelled or set aside under section 27 of the Act, or under section 146 of the Income-tax Act, 1961, by an appellate authority, the Income-tax Officer is competent to make a fresh assessment without issuing a notice under section 34 of the Act or under section 147 of the Income-tax Act, 1961. According to him, the assessee had never questioned the issue of notice under section 31(1)(a) of the Act in any of the proceedings which resulted in a fresh assessment to be made under section 27 of the Act. What the assessee had to satisfy the Income-tax Officer was that he was prevented by sufficient cause from complying with the terms of the notice issued to him under section 23(2) of the Act. Hence, any direction to make a fresh assessment under section 27 of the Act would merely mean that the Income-tax Officer should proceed to reopen the proceedings from the stage at which a defect or an error, which was made a ground for an order under section 27, crept in.
7. We are not inclined to agree with the contention urged on behalf of the assessee. On the first question, Sri K. Srinivasan relied on a decision of this court in W. P. No. 468 of 1958 (G. J. Coelho v. Additional Income-tax Officer), wherein the provisos to section 34(1)(a) of the Act were interpreted to mean that when an “escaped income” was or was likely to be a lakh of rupees and more, the Income-tax Officer might issue a notice even after expiry of the period of 8 years referred to in the proviso provided the reassessment is made with the concurrence or approval of the Central Board of Revenue. In cases where the escaped income is less than a lakh of rupees, what is necessary is the approval or satisfaction of the Commissioner and not of the Central Board of Revenue. It also laid down that the period of 8 years within which the Income-tax Officer has got to issue the notice is the period of limitation prescribed by clause (ii) of the first proviso to section 34(1)(a). This decision has been subsequently reversed by the Supreme Court. But the submission of Sri Srinivasan is that the ratio of the case as enunciated in the decision has been subsequently reversed by the Supreme Court. But the submission of Sri Srinivasan is that the ratio of the case as enunciated in the decision of this court was not disturbed in any manner by the Supreme Court. Even if that be so, we are unable to see who this decision could be of any assistant to the petitioner. In the counter-affidavit filed on behalf of the revenue, the dates of expiry of the time limit of 8 years, the dates of issue of notices under section 34(1)(a) of the Act and the dates of service of such notices on the assessee have been clearly specified. These dates are not controverted by the petitioner in any manner. It is clear, therefore, that all the notices under section 34(1)(a) of the Act were issued and actually served on the assessee before the expiry of the period of limitation of 8 years referred to in the relevant provisos of that section. That being so, the question of securing the prior sanction of the Central Board of Revenue would not at all arise. The relevant provisos enjoin securing of prior sanction of the Central Board of Revenue only in case where “escaped income” is one lakh of rupees or more and the time limit of 8 years has elapsed, after the expiry of the relevant assessment year. Unless both the requirements are present the question of securing sanction of the Central Board of Revenue could not arise. In the instant case, all the notices to tax the income escaping assessment have been issued within the period of 8 years and as such no further sanction of the Central Board of Revenue is called for. We are, therefore unable to accept the contention that the notice under section 34(1)(a) of the Act was invalid.
8. We have already set out in some detail the next contention of Sri Srinivasan. The relevant statutory provisions which have a bearing on the submission of Sri Srinivasan are as follows :
(1) Section 27.
“Where an assessee within one month from the service of a notice of demand issued as hereinafter provided, satisfied the Income-tax Officer that he was prevented by sufficient cause from making the return required by section 22, or that he did not receive the notice issued under sub-section (4) of section 22, or sub-section (2) of section 23, or that he had not a reasonable opportunity to comply, or was prevented by sufficient cause from complying, with the terms of the last mentioned notices, the Income-tax Officer shall cancel the assessment and proceed to make a fresh assessment in accordance with the provisions of section 23.”
(2) Section 34(3).
“No order of assessment or reassessment, other than an order….
Provided further the nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made, shall apply to a reassessment made under section 27 or to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 of section 66A.”
9. According to section 27 of the Act, an assessee on receipt of a notice of demand in prescribed form specifying the tax payable by him, could ask for a fresh assessment to be made provided he satisfies the Income-tax Officer as to the fulfilment of the one or other of the grounds specified therein. The grounds so specified related to the existence of sufficient cause for not making the return as required by section 22, or that he did not receive the notice issued under section 22(4) or section 23(2) of the Act, or that he had no reasonable opportunity to comply with those notices, or that he was prevented by sufficient cause from complying with them. Section 22 refers to the furnishing of the return of income by any taxpayer in response to the public notice or upon service of notice issued by the Income-tax Officer under section 22(2) of the Act. Section 22(4) relates to a notice to be issued by the Income-tax Officer requiring an assessee to produce accounts or documents or such other information as he may require for the purpose of assessment. Section 23(2) refers to a notice calling upon an assessee to attend the office or to produce or to cause to be there produced, any evidence on which such person may rely in support of the return. The other grounds referred to in section 27 relate to sufficient cause and want of reasonable opportunity to comply with the requirements of the notice. It is clear, therefore, that the notice issued under section 34(1) can at no time be put in issue in the proceedings under section 27 of the Act. All the circumstances specified in that section and which can be made the basis for claiming the relief of fresh assessment under that section, commence from the stage of issue of the notice under sections 22(4) and 23(2) of the Act. In a case of defect or error in regard to the notice under section 34(1), the assessee has got other remedies, either under the Act or under article 226 of the Constitution. It may, however, be noticed that the validity of the notice issued under section 34(1)(a) in the present case is not at all in dispute. In our opinion, the words “fresh assessment” occurring in section 27 must be understood in the light of the scope and purpose of the provisions of that section. The word “assessment” as occurring in the various provisions of the Income-tax Act should be understood with reference to the context in which it is used, in the specific statutory provisions. In some provisions, it may have a comprehensive meaning and may include reassessment and in some it includes the whole procedure relating to the computation of taxable income, determination of tax payable on the basis of such computation and, finally, the service of notice of demand in the prescribed form specifying the sum so payable. Sri Srinivasan placed considerable reliance on the word “reassessment” occurring in the second proviso to section 34(3) of the Act. In our opinion, the said words should be understood in the context of the provisions of section 27 of the Act. The question, therefore, would be whether the words “fresh assessment”, occurring in section 27 of the Act, would require institution of proceedings right from the inception, i.e., by the issue of a fresh notice under section 34(1)(a) of the Ac ?
10. As observed by us already these words must be interpreted in the light of the provisions of section 27 itself. In our opinion, the word “assessment” therein cannot be said to have been used in its most comprehensive sense. The grounds on which the cancellation of assessment or the making of a fresh assessment is permissible, clearly relate to the stage of issue of notices under the provisions specified under section 27 and the submission of the returns by the assessee in response thereto. The purpose of the provision is only to enable an assessee to ask for a fresh assessment on any of the grounds specified in section 27 in order to avoid a best of judgment assessment made on him. It is not demonstrated to us as to how this purpose could be better achieved by instituting proceedings afresh by reissue of a notice under section 34(1)(a) of the Act. We are, therefore, inclined to the view that the word “assessment” occurring in section 27 must be given a restricted meaning and thus confine it to a proceeding, subsequent to the issue of the notices by the Income-tax Officer under sections 22, 22(4) and 23(2) of the Act.
11. In the instance case, fresh assessment proceedings have been instituted by the issue of a fresh notice under section 22(4) and 23(2) of the Act. In the view we have taken, this procedure is sufficient compliance with the requirements of section 27 of the Act. The word “reassessment” occurring in the second proviso to section 34(3) of the Act, therefore, means nothing more than a reassessment to be made in accordance with the provisions of section 27 of the Act. In this view of the matter, the contention urged on behalf of the petitioner should also fail.
12. In the result, these petitions fail and are dismissed with one set of costs. Advocate’s fee Rs. 100.
13. Petitions dismissed.
