{"id":98668,"date":"1962-12-12T00:00:00","date_gmt":"1962-12-11T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/s-c-prashar-income-tax-vs-vasantsen-dwarkadas-and-others-on-12-december-1962"},"modified":"2015-04-01T08:53:32","modified_gmt":"2015-04-01T03:23:32","slug":"s-c-prashar-income-tax-vs-vasantsen-dwarkadas-and-others-on-12-december-1962","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/s-c-prashar-income-tax-vs-vasantsen-dwarkadas-and-others-on-12-december-1962","title":{"rendered":"S. C. Prashar, Income-Tax … vs Vasantsen Dwarkadas And Others on 12 December, 1962"},"content":{"rendered":"
Supreme Court of India<\/div>\n
S. C. Prashar, Income-Tax … vs Vasantsen Dwarkadas And Others on 12 December, 1962<\/div>\n
Equivalent citations: 1963 AIR 1356, \t\t 1964 SCR (1)\t 29<\/div>\n
Author: S Das<\/div>\n
Bench: Das, S.K., Kapur, J.L., Sarkar, A.K., Hidayatullah, M., Dayal, Raghubar<\/div>\n
           PETITIONER:\nS. C. PRASHAR, INCOME-TAX OFFICER,MARKET WARD, BOMBAY AND AN\n\n\tVs.\n\nRESPONDENT:\nVASANTSEN DWARKADAS AND OTHERS\n\nDATE OF JUDGMENT:\n12\/12\/1962\n\nBENCH:\nDAS, S.K.\nBENCH:\nDAS, S.K.\nKAPUR, J.L.\nSARKAR, A.K.\nHIDAYATULLAH, M.\nDAYAL, RAGHUBAR\n\nCITATION:\n 1963 AIR 1356\t\t  1964 SCR  (1)\t 29\n CITATOR INFO :\n RF\t    1963 SC1394\t (2,9,10)\n F\t    1963 SC1399\t (13)\n F\t    1963 SC1401\t (3,7)\n R\t    1964 SC1742\t (9)\n R\t    1965 SC 342\t (20,25)\n D\t    1965 SC1267\t (9)\n OPN\t    1967 SC1552\t (5)\n E\t    1968 SC 139\t (4)\n RF\t    1969 SC 340\t (1)\n D\t    1971 SC 147\t (15)\n F\t    1971 SC1256\t (18)\n RF\t    1972 SC  83\t (11)\n R\t    1973 SC2585\t (13)\n\n\nACT:\nIncome\tTax-Escaped income-Reassesment-Validity\t of  notice-\nStatute\t  providing  for  saving  of   notices-Retrospective\noperation-Indian  Income-tax  (Amendment) Act, 1948  (48  of\n1948),\ts. 8-Indian Income-tax (Amendment) Act, 1953 (25  of\n1953  s.  31-Finance  Act 1956 (18 of  1956),  s.  18-Indian\nIncome-tax (Amendment) Act, 1959 (9 of 1959), s. 2, 4-Indian\nIncome-tax Act, 1922 (11 of 1922), s. 34, as amended.\n\n\n\nHEADNOTE:\nThe first respondent's father, D, and another were  partners\ndoing  business in the name of P.L. since 1935.\t D  died  in\n1946 but the firm was continued with the first respondent as\na  partner.  In 1941 another firm in the name of V.  D.\t was\nstarted by the first respondent and two others, and for\t the\nassessment year 1942-43 the firm made a return of its income\nand  also  claimed registration.   The\tIncome-tax  Officer,\nbeing of the view that the firm belonged really to D refused\nregistration  and  added  the  income of  the  firm  to\t the\nindividual  income of D. In 1943-44 the\t Income-tax  Officer\ncame  to a different conclusion and held that the firm\tV.D.\nwas  a branch of the firm P.L. For the subsequent  years  of\nassessment 1942-43 to 1948-49 also the firm V.D. applied for\nregistration  bat was refused, and for those  several  years\nappeals were filed before the Appellate Tribunal.  An appeal\nwas filed by the firm P.L. against its assessment in respect\nof excess profits tax.\tThere was also an appeal against the\nassessment  for the year 1942-43 by the first respondent  as\nthe heir and legal representative of his father against\t the\ndecision that the income of the firm V.D. should be included\nin  the income of his father.  All these appeals were  heard\ntogether and decided by the Appellate Tribunal by its  order\ndated  August 14, 1931.\t In that order the Tribunal  gave  a\nfinding\t that the business of the firm V.D. really  belonged\nto  the\t firm P.L. This decision was confirmed by  the\tHigh\nCourt  on  reference on October 8, 1953.  In order  to\tgive\neffect to the finding of the Tribunal the Income-tax Officer\nissued a notice on April 30, 1954, to the firm P.L. under s.\n34  of the Indian Income-tax Act, 1922, that the income\t for\nthe year ending\n30\nMarch  31,  1943,  had\tbeen  under-assessed,  and  that  he\nproposed to reassess the income.  The respondents challenged\nthe  validity  of  the notice on the grounds  (1)  that\t the\nIncome-tax  Officer  had no jurisdiction to issue  a  notice\nafter the expiry of the limit of time fixed by sub-s. (1) of\ns. 34, (2) that the second proviso to sub-s. 3) of s. 34  on\nwhich  the  Income-tax Officer relied did not apply  to\t the\ncase,  and  in any case, it was bad on the  ground  that  it\nviolated Art. 14 of the Constitution of India, and (3)\tthat\nthere  was  no provision in the Act under  which  the  Appe-\nllate Tribunal could give a finding in the appeals filed  by\nthe firm V.D. or in the appeal filed by the first respondent\nhimself\t that the income in question represented the  income\nof the firm P.L. The validity of the notice was sought to be\nsustained on the grounds that, in any case, it could not  be\nchallenged by reason of the amendments made in s. 34 of\t the\nIndian\tIncome. tax Act, by the provisions of s. 31  of\t the\nIndian\tIncome-tax  'Amendment)\t Act, 1953,  s.\t 18  of\t the\nFinance\t Act,  1956,  and  s. 4\t of  the  Indian  Income-tax\n(Amendment) Act, 1959.\nHeld, (per Sarkar, Hidayatullah and Raghubar Dayal, JJ., Das\nand Kapur, JJ., dissenting), that the notice dated April 30,\n1954,  was  valid and its validity could not  be  called  in\nquestion in any Court or Tribunal in view of the  provisions\nin s. 4 of the Indian Income-tax (Amendment) Act, 1959.\nPer  Das and Kapur, JJ.-(1) The second proviso to s. 34\t (3)\nof  the\t Indian\t Income-tax Act, 1922,\tas  amended  by\t the\nAmending Act of 1933, was hit by Art. 14 of the Constitution\nof India and was invalid.\n(2)  The Income-tax Officer had no jurisdiction to issue the\nnotice\ton April 30, 1954, and could not rely on the  second\nproviso to sub-s. (3) of s. 34 because the time limit  fixed\nby  sub-S.  (1) of s. 34 had expired long  before  the\tsaid\nproviso\t came into effect and the proviso did not  revive  a\nremedy which had been lost before April 1, 1952.\n(3)  Section  31 of the Indian Income-tax  (Amendment)\tAct,\n1953, did not validate the notice dated April 30, 1954.\n(4)  The  notices  to which s. 4 of  the  Indian  Income-tax\n(Amendment)  Act,  1959,  were\tapplicable  and\t which\twere\nvalidated  were those that were issued between the  date  of\nthe  amendment\tof the Finance Act, 1956, and  that  of\t the\nAmending  Act  of  1959.  It is not the effect of  s.  4  to\nabrogate and supersede the time limit provided by s. 34\t (1)\n(a) for all the past years.\n31\nPer Das, J.-The evidence did not show that the notice  dated\nApril 30, 1954, was issued under s. 34 (1) (Amendment)\tAct,\n1959, was not applicable.\nPer  Kapur,  J.-The principle of the law of  limitation\t was\napplicable to s. 34 of the Indian Income-tax Act, 1922, that\nif  the\t period\t prescribed for taking\taction\thad  already\nexpired,  subsequent  change in the law did not make  it  so\nretrospective  in  its effect as to revive the power  of  an\nIncome-tax Officer to take action under the new law.\nPer Sarkar,J.-The second proviso to s. 34 (3) as amended  in\n1953,  in  so  far as it affected  persons  other  than\t the\nassessee was void as violating Art. 14 of the  Constitution,\nand  could not be relied on in support of the notice in\t the\npresent case.\nPer  Hidayatullah and Raghubar Dayal, JJ.-(1) The  different\nperiods\t indicated under s. 34 cannot be treated as  periods\nof  limitation, in the sense that the expiry of the  periods\ngrants\tprescriptive  title to defaulting  tax-payers  or  a\nvested\tright arises in the assessee.  The liability to\t the\nState  is independent of any consideration of time  and,  in\nthe  absence of any provision restricting action by  a\ttime\nlimit, it can be enforced at any time.\n(2)  Under  the Indian Income-tax and Business\tProfits\t Tax\n(Amendment)  Act, 1948, which came into force on  March\t 30,\n1948,\t the   Income-tax   Officer   could   take    action\nretrospectively\t in all cases in which the assessment  years\nended  within eight years of the date of his action  and  in\nwhich  there  was  an escapement of an\tassessment  for\t the\nreasons indicated in cl. (a) o s.  34 (1), as amended.\n(3)  The Income-tax (Amendment) Act, 1953, enabled action at\nany  time  if  there  was a  finding  or  direction  of\t the\ncharacter  indicated in the second proviso to sub-s. (3)  of\ns.  34, and s. 31 of the Amendment Act applied the  'amended\ns. 34 to all assessments commenced after September 8,  1948,\nand saved all notices issued and assessments made in respect\nof any year prior to April 1, 1948, whether the notices were\nissued\tor  the assessments made before or  after  April  1,\n1952.\n(4)  The  second proviso to s. 34 (3), as amended  in  1953,\nwas  not  discriminatory and did not offend Art. 14  of\t the\nConstitution.\n(5)  The  notice issued against the firm P. L.\twas  validly\nissued under the amended second proviso to s. 34 (3).\n32\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL\tAPPELLATE  JURISDICTION : Civil Appeal\tNo.  705  of
\n1957.\n<\/p>\n
Appeal from the judgment and order dated October 5, 1955  of
\nthe Bombay High Court in Appeal No. 1 of 1955.
\nK.N. Rajagopal Sastri and P.D. Menon, for the appellants.
\nN.   A.\t Palkhivala,  J.B.  Dadachanji, O.  C.\tMathur,\t and
\nRavinder Narain, for respondents Nos. 1 and 2.
\nN.  A. Palkhivala, D. N. Mukherjee and B.N. Ghosh,  for\t the
\nintervener.\n<\/p>\n
1962.  December 12.  The following judgments were delivered.
\nS.  K.\tDas,  J.,  J. L. Kapur, J.,  and  A.K.\tSarkar,\t J.,
\ndelivered   separate   judgments.   The\t  judgment   of\t  M.
\nHidayatullah  and  Raghubar  Dayal, JJ.,  was  delivered  by
\nHidayatullah, J.\n<\/p>\n
S. K. DAS, J.  This appeal has been brought to this court on
\na  certificate\tof  fitness granted by\tthe  High  Court  of
\nBombay.\t  The  appellants  are the Union of  India  and\t the
\nIncome-tax Officer, Market Ward, Bombay.  By this appeal the
\nappellants  challenge  the correctness of the  judgment\t and
\norder of the High Court of Bombay dated October 5, 1955,  by
\nwhich  the High Court affirmed the judgment and order  of  a
\nlearned\t single\t judge of the same court dated\tDecember  7,
\n1954, on a petition filed by the respondents under Art.\t 226
\nof the Constitution.\n<\/p>\n
The  relevant  facts  are these.   The\tfirm  of  Purshottam
\nLaxmidas was started on October 28, 1935.  This firm had two
\npartners,   Dwarkadas\tVussonji  and\tParmanand   Odhavji.
\nDwarkadas  died on April 1, 1946, leaving a son,  Vasantsen.
\nAnother firm by the name of Vasantsen Dwarkadas was
\n33<\/span>
\nstarted\t on  January 28, 1941, and in that firm\t there\twere
\nthree  partners,  Vasantsen,  Narandas\tShivji\tand  Nanalal
\nOdhavji.  This firm was dissolved on October 24, 1946.\t The
\nfirm of Vasantsen Dwarkadas filed a return of its income for
\nthe assessment year 1942-1943 and also claimed\tregistration
\nas a firm.  The Income-tax authorities refused\tregistration
\nand  came  to  the conclusion that  the\t firm  of  Vasantsen
\nDwarkadas belonged really to Dwarkadas, father of Vasantsen;
\ntherefore they added the income of the firm to the income of
\nDwarkadas.   In\t subsequent  assessment years  the  firm  of
\nVasantsen  Dwarkadas  again applied  for  registration,\t but
\nregistration  was again refused.  For the  assessment  years
\n1942-1943 to 1948-1949 several appeals were filed before the
\nIncome-tax   Appellate\tTribunal  by  the   firm   Vasantsen
\nDwarkadas  both against the quantum of income  assessed\t and
\nagainst\t the refusal of the Income-tax Officer\tto  register
\nthe  firm of Vasantsen Dwarkadas.  An appeal was also  filed
\nby the firm of Purshottam Laxmidas against its assessment in
\nrespect of excess profits tax, and there was also an  appeal
\nfor  the assessment year 1942-1943 by Vasantsen as the\their
\nand legal representative of his father against the  decision
\nof  the Income-tax authorities that the income of  the\tfirm
\nVasantsen  Dwarkadas  should be included in  the  income  of
\nDwarkadas.    It   appears  that  after\t the   decision\t  in
\nVasantsen’s  case  in  the assessment  year  1942-1943,\t the
\nIncome-tax Officer gave a finding that the firm of Vasantsen
\nDwarkadas  was\tonly  a branch of  the\tfirm  of  Purshottam
\nLaxmidas  and  therefore the Income-tax\t Officer  added\t the
\nincome\tof  Vasantsen Dwarkadas to the income  of  the\tfirm
\nPurshottam Laxmidas.  This question also came up before\t the
\nIncome-tax  Appellate  Tribunal\t in  the  appeals  filed  by
\nPurshottam  Laxmidas  in  respect of  the  assessments\tmade
\nagainst it.  By a consolidated order dated August 14,  1951,
\nthe  Income-tax\t Appellate  Tribunal  disposed\tof  all\t the
\naforesaid  appeals, and it came to the conclusion  that\t the
\nbusiness done
\n34<\/span>
\nin  the name of Vasantsen Dwarkadas was really the  business
\nof the firm Purshottam Laxmidas.  With regard to the  appeal
\nfiled  by Vasantsen as heir and legal representative of\t his
\nfather\tfor  the  assessment year  1942-1944,  the  Tribunal
\nexpressed  the view that the income of\tVasantsen  Dwarkadas
\nshould be deleted from the assessment of Dwarkadas.  It said
\n:\n<\/p>\n
\t      “We are therefore of opinion that the addition
\n\t      of  Rs. 62,3721\/-to Dwarkadas’s income or\t the
\n\t      modification directed by the Appellate  Assis-
\n\t      tant  Commissioner  should  be  deleted\tfrom
\n\t      Dwarkadas’s income.  If the Income-tax Officer
\n\t      can   include  the  same\tin  the\t income\t  of
\n\t      Purshottam  Laxmidas,  he\t is  of\t course\t  at
\n\t      liberty  to do so.  He can then apportion\t the
\n\t      income  of  Purshottam  Laxmidas\tamongst\t the
\n\t      partners\tthereof as provided in s. 23 (5)  of
\n\t      the Act.”\n<\/p><\/blockquote>\n
The Commissioner of Income-tax questioned the correctness of
\nthe aforesaid finding of the Tribunal, but on a reference to
\nthe High Court the latter upheld the order of the  Tribunal.
\nThe reference was decided on October 8, 1953.
\nOn  April 30, 1954, the Income-tax Officer concerned who  is
\nthe  appellant\tbefore\tus served  on  the  firm  Purshottam
\nLaxmidas a notice under s. 34 of the Indian Income-tax\tAct,
\n1922.  This notice was in these terms :\n<\/p>\n
\t      “Whereas\tI have reason to believe  that\tyour
\n\t      income  assessable to income-tax for the\tyear
\n\t      ending 31st March 1943 has been under-assessed
\n\t      I\t therefore, propose to re-assess  to  income
\n\t      allowance that has been under assessed :
\n\t      I\t hereby require you to deliver to me  within
\n\t      35 days of the receipt of this notice a return
\n\t      in the attached form of your total income
\n35<\/span>
\n\t      and total world income assessable for the year
\n\t      ending 31st of March, 1943.\n<\/p><\/blockquote>\n
\t      This  notice is being issued  after  obtaining
\n\t      the necessary satisfaction of the Commissioner
\n\t      of Income-tax, Bombay City, Bombay.”\n<\/p><\/blockquote>\n
The  notice was followed by some correspondence between\t the
\nfirm  Purshottam Laxmidas and the Income-tax  Officer.\t The
\nresult of the correspondence was that the Income-tax Officer
\ninformed  the firm that its income was to be re-assessed  in
\norder  to  give\t effect\t to the\t finding  of  the  Appellate
\nTribunal  in  its  order  dated August\t14,  1951  that\t the
\nbusiness  of Vasantsen Dwarkadas was really the business  of
\nthe firm Purshottam Laxmidas.\n<\/p>\n
On  July 9, 1954, Vasantsen as the first petitioner and\t the
\nfirm  of  Purshottam Laxmidas as second petitioner  filed  a
\npetition   in  the  High  Court\t under\tArt.  226   of\t the
\nConstitution and asked for the issue of a writ quashing\t the
\nnotice\tdated  April  30,  1954,  and  a  writ\tof  mandamus
\nrestraining  the Union of India and the\t Income-tax  Officer
\nconcerned from taking any steps or proceedings in  pursuance
\nof  the said notice.  Their main contentions were  (1)\tthat
\nthe  Income-tax\t Officer had no jurisdiction  to  issue\t the
\nnotice after the expiry of the limit of time fixed by sub-s.
\n(1)  of s. 34, (2) that the second proviso to sub-s. (3)  of
\ns.  34 on which the Income-tax Officer relied did not  apply
\nto  the\t case, (3) that there was no provision\tin  the\t Act
\nunder  which the Appellate Tribunal could give a finding  in
\nthe  appeals filed by the firm of Vasantsen Dwarkadas or  in
\nthe appeal filed by Vasantsen  himself, that the  income  in
\nquestion  represented  the  income of  the  firm  Purshottam
\nLaxmidas  and  (4) lastly, that that the second\t proviso  to
\nsub-s.\t(3) of s. 34 was bad on the ground that it  violated
\nArt. 14 of the Constitution.\n<\/p>\n
Desai, J., who heard the petition in the first instance came
\nto the conclusion that the notice was
\n36<\/span>
\nbad and without jurisdiction because, to use his own  words,
\nthe  Income-tax Officer in issuing the notice on  April\t 30,
\n1954, which was clearly more than eight years from the close
\nof  the assessment year 1942-1943 was obviously in error  in
\nthinking  that\tthe second proviso to sub-s. (3)  of  s.  34
\napplied\t to  the  case.\t The learned  judge  held  that\t the
\nproviso\t did  not apply to orders of  assessment  which\t had
\nbecome\tfinal before the date when it came into\t force.\t  It
\nmay be here stated that the second proviso to sub-s. (3)  of
\ns. 34 was amended by Act XXV of 1953 and by s. 1 (2) of\t the
\nAmending Act of 1953 the amended proviso came into force  on
\nApril 1,  1952.\t Desai, J., further held that the proviso in
\nquestion  did not violate Art. 14 of the Constitution in  so
\nfar as assessees who were parties to the proceedings  before
\nthe Appellate Tribunal were concerned ; but the proviso\t was
\nbad  in so far as it affected persons other than  assessees.
\nHe held however that the petitioners before him were parties
\nto  the\t proceedings  before  the  appellate  Tribunal\t and
\ntherefore  fell within the category of assessees.   In\tview
\nhowever of his finding that second proviso to sub-s. (3)  of
\ns.  34 did not apply to the case, his final  conclusion\t was
\nthat the notice was without jurisdiction.
\nThe matter was then taken in appeal and the appeal was heard
\nby  Chagla,  C.\t J., and Tendolkar J.  The  appellate  court
\naffirmed the finding of Desai, J., that the notice under  s.
\n34  was\t issued out of time and was therefore  invalid.\t  It
\nfurther held that the second proviso to sub-s. (3) of s.  34
\ndid  not apply to the case.  On the question as\t to  whether
\nthe second proviso violated Arts. 14 of the Constitution  it
\ncame  to the conclusion that no valid distinction  could  be
\ndrawn  between\tpersons\t with regard to whom  a\t finding  or
\ndirection  is  given by the appellate Tribunal\tand  persons
\nwith  regard to whom no such direction or finding is  given.
\nThe appellate court expressed the view that both fell in the
\nsame
\n37<\/span>
\ncategory  and  there was no difficulty in having  a  uniform
\nprovision  of law with regard to them.\tThe appellate  court
\nfurther\t expressed  the view that for  the  assessment\tyear
\n1942-1943  the\tassessee before the Tribunal  was  Vasantsen
\nDwarkadas  as representing his father ; in that\t appeal\t the
\nfirm of Purshottam Laxmidas was not before the Tribunal\t and
\ntherefore the firm was no better than a stranger who was  in
\nsome way associated with the assessee.\tThe appellate  court
\nheld in the result that the second proviso to sub-s. (3)  of
\ns. 34 offended against Art. 14.\n<\/p>\n
I  have stated earlier that the appeal has been\t brought  to
\nthis  Court  from the decision of the appellate court  on  a
\ncertificate  of fitness granted by the High Court.   In\t the
\noriginal  statement  of\t the case filed\t on  behalf  of\t the
\nappellants, the principal question raised was that  relating
\nto  the second proviso to sub-s. (3) of s. 34 which I  shall
\npresently  read.  The appellants were however allowed by  us
\nto  file a supplementary statement of the case in which\t two
\nother  points have been urged.\tOne of these points is\tthat
\nthe  validity of the notice dated April 30, 1954, cannot  be
\nchallenged  by\treason\tof the provisions of s.\t 31  of\t the
\nAmending Act, 1953 (XXV of 1953).  The second point is\tthat
\nthe validity of the notice cannot be challenged also because
\nof  the\t provisions  of\t s.  4\tof  the\t Indian\t  Income-tax
\n(Amendment) Act, 1959 (1 of 1959).\n<\/p>\n
Therefore, three substantial questions fall for decision  in
\nthis  appeal.\tThe  first question is\twhether\t the  second
\nproviso to sub-s. (3) of s. 34 is constitutionally valid and
\napplies to the case.  The second is, can the validity of the
\nnotice\tdated April 30, 1954, be challenged in view  of\t the
\nprovisions of s. 31 of the Amending Act of 1953.  The  third
\nquestion  is  the  effect of the provisions  of\t the  Indian
\nIncome-tax  (Amendment) Act, 1959 (1 of 1959). I  shall\t now
\ndeal with these questions one by one.\n<\/p>\n
38<\/span><\/p>\n
First as to the second proviso to sub-s. (3) of s. 34. S. 34
\nof  the\t Indian\t Income-tax Act, 1922,\thas  undergone\tmany
\namendments.  It is not necessary to refer to the section  as
\nit  stood  prior to 1939.  The section as it stood  in\t1939
\nempowered  the\tIncome-tax  Officer to\tassess\tor  reassess
\nincome\twhich  had  escaped assessment or  had\tbeen  under-
\nassessed or had been assessed at too low a rate or had\tbeen
\nthe subject of excessive relief under the Act.\tThe  section
\nmade  a\t distinction between two classes of  cases;  one  in
\nwhich the Income-tax Officer had reason to believe that\t the
\nassessee had concealed the particulars of his income or\t had
\ndeliberately furnished inaccurate particulars thereof and in
\nthis class of cases the Income-tax Officer could take action
\nas laid down in the section at any time within eight  years;
\nin all other cases the Income-tax Officer could take  action
\nwithin\tfour  years of the end of  the\trelevant  assessment
\nyear.\tThe  section  was almost completely  recast  by\t the
\nIncome-tax  and Business Profits Tax (Amendment)  Act,\t1948
\n(Act XLVIII of 1948).  For the purpose of this case all that
\nI need state is that the two time limits of eight years\t and
\nfour years were continued in respect of two classes of cases
\nmentioned  in  clauses (a) and (b) of sub-s. (1) of  s.\t 34;
\nclause\t(a) related to cases of omission or failure  on\t the
\npart  of  an assessee to make a return of his income  or  to
\ndisclose  fully and truly all material facts  necessary\t for
\nhis  assessment,  and  cl. (b) related to  cases  where\t the
\nIncome-tax Officer had in consequence of information in\t his
\npossession  reason to believe that income, profits or  gains
\nchargeable  to income-tax had escaped assessment  etc.\t The
\ntime limit of eight years applied to cases under cl. (a) and
\nthe time limit of four years applied to cases under cl. (b).
\nBy s. 18 of the Finance Act, 1956, more changes were  intro-
\nduced  with  effect from April 1, 1956.\t The time  limit  of
\neight  years  was omitted from sub-s. (1) as  regards  cases
\nfalling\t under cl. (a) but a proviso to sub-s. (1) of s.  34
\nwhich was substituted for the original proviso
\n39<\/span>
\nsaid inter alia that the Income-tax Officer shall not  issue
\na  notice under cl. (a) of sub-s. (1) for any year if  eight
\nyears have elapsed after the expiry of that year unless\t the
\nincome, profits or gain chargeable to income-tax which\thave
\nescaped\t assessment or have been under-assessed or  assessed
\nat too low a rate or have been made the subject of excessive
\nrelief under the Act etc. amount to or are likely to  amount
\nto  Rs.\t 1,00,000\/- or more in the aggregate for  that\tyear
\netc.   Certain other safeguards were also introduced in\t the
\nsub-section  with which we are not concerned.  Put  shortly,
\nthe  time limit of eight years continued in respect  of\t cl.\n<\/p>\n
(a) cases if the amount was less than Rs. 1,00,000\/-.
\nNow,  I come to sub-s. (3) and the second  proviso  thereto.
\nPrior  to 1956 sub-s. (3) provided that every assessment  or
\nre-assessment  should be completed within eight\t years\tfrom
\nthe end of the relevant assessment year in those cases where
\nthe  assessee  had  failed to make a  return  or  failed  to
\ndisclose  fully and truly all material facts  necessary\t for
\nhis assessment.\t In 1956 the time limit was removed and\t the
\nassessment or re-assessment in such cases might be completed
\nat  any time.  In all other cases the period  of  limitation
\nwas still four years, as it was before 1956, for  completion
\nof assessment under s. 23 or of assessment or re-assessment,
\nunder  s. 23 read with s.34. The second proviso,  after\t its
\namendment in 1953, constituted an exception to sub-s. (1) as
\nwell as sub-s. (3).  The periods of limitation laid down  in
\nsub-s. (1) for initiating proceedings and in sub-s. (3)\t for
\nmaking an order of assessment or re-assessment were  subject
\nto the exception mentioned in the second proviso.  I may now
\nread that proviso-\n<\/p>\n
\t      “Provided\t further that nothing  contained  in
\n\t      this  section limiting the time  within  which
\n\t      any action may be taken or any order,  assess-
\n\t      ment or re-assessment may be made, shall
\n40<\/span>
\n\t      apply to a re-assessment made under section 27
\n\t      or  to an assessment or re-assessment made  on
\n\t      the  assessee or any person in consequence  of
\n\t      or to give effect to any finding or  direction
\n\t      contained\t in  an\t order\tunder  section\t 31,
\n\t      section 33, section 33A, section 33-B, section
\n\t      66 or section 66A.”\n<\/p><\/blockquote>\n
I have stated earlier that the second proviso as amended was
\ninserted  by  the Income-tax (Amendment) Act, 1953  (XXV  of
\n1953), with effect from April 1, 1952.\n<\/p>\n
Now,  I proceed to discuss the first question as to  whether
\nthis proviso applies in the present case.  The question\t has
\ntwo  facets  : (1) whether the proviso\tis  constitutionally
\nvalid and (2) if it is constitutionally valid, does it apply
\nto a case where the time limit fixed by sub-s. (1) of s.  34
\nhad  expired  some time before April 1, 1952,  the  date  on
\nwhich  the  proviso came into effect ?\tWith regard  to\t the
\nfirst  facet, Chagla, C.J., has pointed out, rightly  in  my
\nopinion,  that the persons with regard to whom a finding  or
\ndirection  is  given  and persons with\tregard\tto  whom  no
\nfinding\t or  direction is given belong really  to  the\tsame
\ncategory, namely, the category of persons who are liable  to
\npay tax and have failed to pay it for one reason or another.
\nAdmittedly,  persons who are liable to pay tax and have\t not
\npaid  it could not be proceeded against after the period  of
\nlimitation,  unless  a finding or direction with  regard  to
\nthem  was given by some tribunal under the various  sections
\nmentioned  in  the  proviso;  therefore\t out  of  the  large
\ncategory of people who were liable to pay tax but failed  to
\npay  it,  a  certain number is selected for  action  by\t the
\nproviso\t and with regard to that small number the  right  of
\nlimitation  given to them is taken away.  The real  question
\nis,  is there any rational basis for distinguishing  between
\npersons who are liable to pay tax and have failed to pay  it
\nand with
\n41<\/span>
\nregard to whom a finding or direction is given, and  persons
\nwho are liable to pay tax and have failed to pay it and with
\nregard\tto whom no finding or direction is given.  I  am  in
\nagreement  with\t the  view expressed by\t the  learned  Chief
\njustice\t that  no rational basis has been made out  for\t the
\ndistinction  between the two classes of people\treferred  to
\nabove, who really fall in the same category and with  regard
\nto  whom  there\t was  no  difficulty  in  having  a  uniform
\nprovision  of law.  I am further in agreement with the\tview
\nof the learned Chief justice that the principle laid down by
\nthis  court  in Suraj Mall Mohta & Co.\tv.  A.V.  Visvanatha
\nSastri and<\/a> another (1) applies.\t In that case sub-s. (4)  of
\ns.  5 of the Taxation on Income\t (Investigation\t Commission)
\nAct,  was challenged and this Court pointed out\t that  there
\nwas   nothing\tuncommon   either  in\tproperties   or\t  in
\ncharacteristics\t between  persons  who\twere  discovered  as
\nevaders\t of  income-tax during\tan  investigation  conducted
\nunder s. 5 (1) and those who were discovered by the  Income-
\ntax Officer to have evaded payment of income-tax. Both these
\nkinds  of persons really belonged to the same  category\t and
\ntherefore required equal treatment.  This Court pointed\t out
\nthat s. 34 of the Indian Income-tax Act and sub-s. (4) of s.
\n5  of  the impugned Act dealt with persons who\thad  similar
\ncharacteristics\t and  properties and therefore\ta  different
\ntreatment  of some out of the same class offended the  equal
\nprotection  clause embodied in Art. 14 of the  Constitution.
\nIt seems to me that the position is the same here.   Whether
\npersons\t who evade tax are discovered by means of a  finding
\ngiven  by  a tribunal or they are discovered  by  any  other
\nmethod,\t they  really  belong  to  the\tsame  category\t and
\ntherefore  require equal treatment.  The second\t proviso  to
\nsub-s.\t(3)  of s. 34 which came into effect from  April  1,
\n1952, patently introduced an unequal treatment in respect of
\nsome  out  of  the  same  class\t of  persons.\tThose  whose
\nliability  to pay tax was discovered by one method could  be
\nproceeded against at any time and
\n(1)  [1955] 1 S.C.R. 448.\n<\/p>\n
42<\/span><\/p>\n
no limitation would apply in their case, and in the case  of
\nothers the limitation laid down by sub-s. (1) of s. 34 would
\napply.\tThis in my opinion is unequal treatment which is not
\nbased on any rational ground.  Desai, J., put the matter  on
\na  somewhat  narrower  ground.\t He  held  that\t so  far  as
\nassessees  were concerned, there might be a rational  ground
\nfor  distinction because the appeal proceedings\t etc.  might
\ntake  a\t long  time and the assessee being a  party  to\t the
\nappeal\t could\tnot  complain  of  such\t delay,\t  therefore,
\nassessees  did\tnot occupy the same position  as  strangers.
\nBut  the  learned  judge field that there  was\tno  rational
\ndistinction so far as strangers were concerned and there was
\nno reason why they should be deprived of the benefit of\t the
\ntime limit prescribed by sub.s. (1).  He therefore held that
\nthe  proviso,  so  far as it  affected\tpersons\t other\tthan
\nassessees  not parties to the proceedings enumerated in\t it,
\nmust  be  held to be ultra vires the legislature.   Even  on
\nthis  narrow ground it seems to me that the respondents\t are
\nentitled  to  succeed.\t The  finding  which  the  Appellate
\nTribunal  gave\tin its consolidated order dated\t August\t 14,
\n1951,  was a finding given in the appeal filed by  Vasantsen
\nas  heir  and  legal representative of his  father  for\t the
\nassessment year 1942-43.  In that appeal the firm Purshottam
\nLaxmidas  was not even a party, though\tPurshottam  Laxmidas
\nwas  a party to certain other appeals before  the  Appellate
\nTribunal.   I have some difficulty in appreciating  how\t the
\nfirm  Purshottam  Laxmidas  can be treated  as\tan  assessee
\nwithin the meaning of the second proviso to sub-s. (3) of s.
\n34 for the assessment year 1942-1943.  If the firm cannot be
\nso treated, then even on the narrow ground stated by  Desai,
\nJ.,  the  proviso  would  be  of  no  help  to\tthe  present
\nappellants.\n<\/p>\n
I  now\ttake up the second facet of the same  question.\t  On
\nthis  aspect  of  the case both\t the  learned  single  judge
\n(Desai,J.)  and\t the  appellate court (Chagla,\tc.  J.,\t and
\nTendolkar, J.) were agreed.  The
\n43<\/span>
\nrelevant assessment year was 1942-1943 and it ended on March
\n31,1943.   The period of four years therefrom would  end  on
\nMarch  31,1947, and the period of eight years would  end  on
\nMarch  31,1951.\t Now the second proviso to sub-s.  (3)\tcame
\ninto effect, as I have stated earlier, on April 1, 1952.  In
\nother words, the time limit fixed by sub-s. (i) had  expired
\nsome  time  before  the amended\t second\t proviso  came\tinto
\neffect.\t  Desai,  J., has rightly pointed out that it  is  a
\nfirmly\testablished principle of income-tax law that once  a
\nfinal  assessment  is  arrived\tat  and\t the  assessment  is
\ncomplete, it cannot be re-opened except in the circumstances
\ndetailed  in  ss.34 and 35 of the Act and  within  the\ttime
\nlimited by those sections.  Is there anything in the proviso
\nin  question  which  would give it  a  retrospective  effect
\nbeyond\tApril  1, 1952?\t In my opinion there is\t none.,\t The
\nsecond proviso came into force on April 1, 1952, and  before
\nthat date the period of eight years from March 31, 1943, had
\nalready\t expired.  The legislation which provided that\tfrom
\nApril  1, 1952, there would be no limitation in\t respect  of
\ncertain\t cases could not revive a remedy which\twas  already
\nlost  to  the Income-tax Officer.  It seems to me  that\t the
\nproposition of law is settled beyond any doubt that although
\nlimitation  is a procedural law and although it is  open  to
\nthe  legislature  to  extend the period\t of  limitation,  an
\nimportant  right accrues to a party when the remedy  against
\nhim  is\t barred\t by the existing law of\t limitation,  and  a
\nvested right cannot be affected except by express terms used
\nby  the\t statute  or  the  clearest  implication   following
\ntherefrom.  Some reliance was placed on the decision of\t the
\nCalcutta  High\tCourt  in  Income-tax  Officer\tv.  Calcutta
\nDiscount Co., Ltd.,<\/a> (1) which later came to this Court on  a
\ndifferent  point.  I am of the opinion that the decision  is
\nof  no help to the present appellants.\tIt was said in\tthat
\ndecision that the plain effect of the substitution of new s.
\n34 with effect from March 30, 1948, was that from that\tdate
\nthe Income-tax Act was to be read as including the
\n(1)  [1953] 23 I.T.R. 471.\n<\/p>\n
44<\/span><\/p>\n
new  section  as a part thereof, the further effect  of\t the
\nexpress\t language  of the section was that so far  as  cases
\ncoming\twithin\tcl. (a) of sub-s. (1)  were  concerned,\t all
\nassessment  years ending within eight years from  March\t 30,
\n1948,  and from subsequent dates, were within  its  purview.
\nthe  learned Chief justice of the Calcutta High\t Court\ttook
\nparticular care in that decision to point out that what\t was
\nnot  within  the purview of the section\t was  an  assessment
\nwhich  ended-before eight years from March 30,\t1948.\tThat
\ndecision  therefore does not in any way assist\tthe  present
\nappellants.\n<\/p>\n
On behalf of the appellants, some distinction was sought  to
\nbe  drawn between a right and the remedy thereof and it\t was
\ncontended  that the liability of an assessee to pay the\t tax
\nowing to the State was always there from the commencement of
\nthe  assessment year and s. 34 of the Act dealt merely\twith
\nthe  machinery\tof assessment.\tIt was argued  that  a\tcase
\nunder  s.  34 was not analogous to a time  barred  claim  to
\nrecover money from one individual by another.  In my opinion
\nsuch a distinction is entirely out of place so far as s.  34
\nis concerned.  The learned Chief justice has rightly pointed
\nout that under s. 34 the Income-tax Officer has the right to
\nissue a notice within the period of limitation fixed by sub-
\ns. (1); in another sense, it may be said that the remedy  of
\nthe  Income-tax\t Officer to bring to tax escaped  income  is
\navailable  to him under s. 34 provided he avails himself  of
\nthe remedy within the period of limitation.  No\t distinction
\ncan  be\t drawn, so far as s. 34 is  concerned,\tbetween\t the
\nright of the Income-tax Officer and the remedy available  to
\nhim.   If the remedy is lost, the right is also lost and  if
\nthe right is lost, much more so is the remedy.
\nTherefore, I am clearly of the view that on April 30,  1954,
\nthe  Income-tax\t Officer had no jurisdiction  to  issue\t the
\nnotice which he did on the
\n45<\/span>
\nfirm Purshottam Laxmidas under the second proviso to  sub-s.
\n(3) of s. 34, because the time limit fixed by sub-s. (1)  of
\ns.  34\thad expired long before the said proviso  came\tinto
\neffect\tand  the  proviso does not in express  terms  or  by
\nnecessary  implication revive a remedy which had  been\tlost
\nbefore April 1, 1952.\n<\/p>\n
This  disposes\tof the first question argued  before  us.  I
\nproceed now to the second question, namely, the effect of s.
\n31  of the Indian Income-tax (Amendment) Act, 1953  (XXV  of
\n1953). I may first set out the section :\n<\/p>\n
\t      “For  the\t removal  of  doubts  it  is  hereby
\n\t      declared\tthat the provisions of\tsub-sections
\n\t      (1),  (2)\t and  (3)  of  section\t34  of\t the
\n\t      principal Act shall apply and shall be  deemed
\n\t      always  to have applied to any  assessment  or
\n\t      reassessment  for any year ending\t before\t the
\n\t      first  day of April, 1948, in any\t case  where
\n\t      proceedings  in respect of such assessment  or
\n\t      re-assessment  were commenced under  the\tsaid
\n\t      sub-sections  after the 8th day of  September,
\n\t      1948 and any notice issued in accordance\twith
\n\t      sub-section (1) or any assessment completed in
\n\t      pursuance\t of  such  notice  within  the\ttime
\n\t      specified\t in sub-section (3), whether  before
\n\t      or  after\t the  commencement  of\tthe   Indian
\n\t      Income-tax   (Amendment)\tAct,  1953,   shall,
\n\t      notwithstanding  any judgment or order of\t any
\n\t      court,   Appellate  Tribunal   or\t  Income-tax
\n\t      authority\t to the contrary, be deemed to\thave
\n\t      been validly issued or completed, as the\tcase
\n\t      may be, and no such notice, assessment or\t re-
\n\t      assessment shall be called in question on\t the
\n\t      ground  merely that the provisions of  section
\n\t      34  did  not  apply or  purport  to  apply  in
\n\t      respect of an assessment or re-assessment\t for
\n\t      any year prior to the 1st day of April, 1948.”\n<\/p><\/blockquote>\n
46<\/span><\/p>\n
It  will be noticed that the section is in two parts  :\t the
\nfirst  part is declaratory of the law and says that  sub-ss.
\n(1),  (2) and (3) of s. 34 shall apply and shall  be  deemed
\nalways\tto have applied to any assessment  or  re-assessment
\nfor any year ending before April 1, 1948, in any case  where
\nproceedings   in  respect  of  such  assessment\t etc.\twere
\ncommenced  under  the said sub-sections after  September  8,
\n1948, and any notice issued in accordance with sub.s. (1) or
\nany assessment completed in pursuance of such notice  within
\nthe  time specified in sub-s. (3), whether before  or  after
\nthe  commencement  of  the Amending Act of  1953,  shall  be
\ndeemed\tto  have been validly issued etc.; the\tsecond\tpart
\nsays  inter  alia  that no such notice shall  be  called  in
\nquestion  on the ground merely that the provisions of s.  34
\ndid not apply or    purport  to\t apply\tin  respect  of\t  an
\nassessment prior to April  1,  1948.  It should\t be  noticed
\nhere that the  Amending\t Act  of 1948 (Act XLVIII  of  1948)
\ncompletely recast s. 34; and sub-s. (2) of s. 1 of that\t Act
\nwhich came into force on September 8, 1948 provided that ss.
\n3  to 12 of the Amending Act should be deemed to  have\tcome
\ninto  force on March 30, 1948.\tThe amendment of s.  34\t was
\nmade  by  s.  8 of the Amending Act ; therefore,  s.  34  as
\namended by the Amending Act of 1948 operated retrospectively
\nfrom  March 30, 1948.  In the Calcutta Discount Co. Ltd.  v.
\nIncome-tax  Officer<\/a> (1), Bose, J., held that s. 34  although
\ndescribed as a machinery section did not relate to procedure
\npure  and  simple but affected the protection  given  to  an
\nassessee   and,\t therefore,  the  amended  section  had\t  no
\napplication to the assessments for 1942-1943, 1943-1944\t and
\n1944-1945.   This view of Bose.J., was not accepted  by\t the
\nAppellate  Court in Income-tax Officer v. Calcutta  Discount
\nCo.  Ltd.<\/a>  (2),\t where\tthe learned  Chief  justice  of\t the
\nCalcutta  High\tCourt rightly pointed out that s. 34  as  it
\nspoke  from  March 30, 1948, took in  all  assessment  years
\nending within eight years from March 30, 1948, and subsquent
\ndates, but
\n(1) [1952] 21 I.T.R. 579.\n<\/p>\n
(2) [1953] 23 I.T.R. 471.\n<\/p>\n
47<\/span><\/p>\n
did not take in an assessment year which ended before  eight
\nyears  from March 30, 1948.  It is worthy of note  that\t the
\nBill  which became Act XXV of 1953 was introduced after\t the
\njudgment of Bose, J., and before the judgment of the learned
\nChief  Justice. There were really two separate and  distinct
\nquestions  one was whether s. 34 as amended in 1948  applied
\nto  assessment\tyears  prior to\t 1948-1919  and\t the  second
\nquestion was whether, on the footing that amended s. 34\t did
\napply  to  assessment years prior to 1948-1949,\t any  action
\ncould be taken under the amended section in respect of those
\nassessments which had become time-barred before the  amended
\nsection\t came  into effect.  Bose, J.,\tanswered  the  first
\nquestion in the negative and necessarily the second question
\nalso  in the negative.\tThe learned Chief  Justice  answered
\nthe  first  question in the affirmative, but took  pains  to
\npoint  out that an assessment made before eight\t years\tfrom
\nMarch 30, 1948, was not within the purview of s. 34.
\nI  am of the opinion that in its true scope and effect.,  s.
\n31  of the Amending Act of 1953 puts beyond any\t doubt\tthat
\nthe  view expressed by the learned Chief justice in  Income-
\ntax  Officer  v.  Calcutta Discount Co.\t Ltd.  (1),  is\t the
\ncorrect\t view and amended s. 34 applies to assessment  years
\nprior  to 1948-1949, but it does not say that an  assessment
\nwhich had become final and in respect of which\treassessment
\nproceedings  had  become  time-barred  before  the   amended
\nsection came into force could be re-opened.  This appears to
\nme to be clear from the first part of s. 31.  That part says
\nthat  sub-ss. (1), (2) and (3) of s. 34 shall apply  and  be
\ndeemed always to have applied to any assessment etc. for any
\nyear  ending  before  April  1,\t 1948  in  any\tcase   where
\nproceedings   in  respect  of  such  assessment\t etc.\twere
\ncommenced  under  the said sub-sections after  September  8,
\n1948,  and any notice issued in accordance with\t sub-s.\t (1)
\nshall be deemed to be valid
\n(1)  [1953] 23 I.T.R. 471.\n<\/p>\n
48<\/span><\/p>\n
etc.   The  section  does  not\tsay  that  the\tperiods\t  of
\nlimitation  laid down in sub-ss. (1) and (3) are being\tdone
\naway  with ; on the contrary, the first part of the  section
\nsays  that  the proceedings must have been  commenced  after
\nSeptember  8,  1948 (the date on which the Amending  Act  of
\n1948  came into force) under the said sub-sections  and\t the
\nnotice must have been issued in accordance with sub-s.\t(1).
\nThe  Income-tax Officer can commence proceedings  under\t the
\nsaid sub-sections or issue a notice in accordance with\tsub-
\ns.  (1)\t only when he obeys the injunction as to  time\tlaid
\ndown  therein;\tthen only he can be said to  have  commenced
\nproceedings  or issued a notice in accordance with the\tsub-
\nsections.   If\the has done that and  commenced\t proceedings
\nafter September 8, 1948, then the second part of the section
\nsays  that the notice or the assessment shall not be  called
\nin  question on the ground merely that the provisions of  s.
\n34 did not apply or purport to apply in respect of any\tyear
\nprior  to  April  1, 1948.  These lines\t underlined  in\t the
\nsecond part of the section also bring out its true scope and
\neffect.\t If there has been compliance with provisions of the
\nsub-sections  including the time limits fixed therein,\tthen
\nthe  notice  issued  or assessment made\t is  not  liable  to
\nchallenge  on  the mere ground that amended s. 34  does\t not
\napply  in  respect of a year prior to 1948-1949.   In  other
\nwords,\ts.  31\tof the Amending Act of\t1953  nullifies\t the
\neffect of the decision of Bose, J. in Calcutta Discount\t Co.
\nLtd.  v.  Income- tax Officer, (1) and gives effect  to\t the
\ndecision  of the learned Chief Justice of the Calcutta\tHigh
\nCourt.\t The  section  does  not  abrogate  the\t periods  of
\nlimitation laid down in the relevant sub-sections of s.\t 34;
\nif it did, it would be in conflict with s. 34 and the ground
\ntaken would be such conflict and not merely the ground\tthat
\nthe  provisions of s. 34 did not apply to any year prior  to
\n1948-1949.\n<\/p>\n
My conclusion, therefore, is that s. 31 of the Amending\t Act
\nof 1953 does not validate the notice
\n(1)  [1952] 21 I.T.R. 579.\n<\/p>\n
49<\/span><\/p>\n
issued\tin  the present case–a notice issued on  April\t 30,
\n1954 long before which date the assessment had become  final
\nand in respect of which reassessment proceedings had  become
\ntime-barred.   The short answer to the argument based on  s.
\n31 is that the notice in the present case was not issued  in
\naccordance  with sub-s. (1) of s. 34, and the first part  of
\ns. 31 requires that the notice must be so issued before\t the
\nsecond part thereof can give any protection to it.
\nI  now\tproceed to consider the Amending Act of\t 1959.\t The
\nIndian Income-tax (Amendment) Act, 1959 (1 of 1959) received
\nthe assent of the President on March 12, 1959.\tThe relevant
\nprovisions with which we arc concerned are contained in\t ss.
\n2 and 4 of the amending Act.  By s. 2 of the amending Act, a
\nnew sub-section, namely, sub-s. (4) was inserted in
\ns. 34. This sub-section said :\n<\/p>\n
\t      “S. 34 (4).  A notice under clause (a) of sub-
\n\t      section (1) may be issued at any time notwith-
\n\t      standing that at the time of the issue of\t the
\n\t      notice the period of eight years specified  in
\n\t      that  sub-section\t before\t its  amendment\t  by
\n\t      clause(a)\t of section 18 of the  Finance\tAct,
\n\t      1956  (18 of 1956), had expired in respect  of
\n\t      the year to which the notice relates.”\n<\/p><\/blockquote>\n
S. 4 of the amending Act contained provisions regarding\t the
\nsaving\tof notices, assessments etc., in certain cases\tonly
\nand read as follows :\n<\/p>\n
\t      “No notice issued under clause (a) of sub-sec-
\n\t      tion (1) of section 34 of the principal Act at
\n\t      any  time before the commencement of this\t Act
\n\t      and no assessment, re-assessment or settlement
\n\t      made or other proceedings taken in consequence
\n\t      of such notice shall be called in question  in
\n\t      any court, tribunal or other authority  merely
\n\t      on the
\n50<\/span>
\n\t      ground that at the time the notice was  issued
\n\t      or at the time the assessment or re-assessment
\n\t      was  made, the time within which\tsuch  notice
\n\t      should  have been issued or the assessment  or
\n\t      re-assessment should have been made under that
\n\t      section  as in force before its  amendment  by
\n\t      clause  (a) of section 18 of the Finance\tAct,
\n\t      1956 (18 of 1956), had expired.”\n<\/p><\/blockquote>\n
The main point argued before us on behalf of the  appellants
\nis  that s. 4 of the amending Act of 1959 saves\t the  notice
\nwhich  the Income-tax Officer issued in the present case  on
\nApril  30,  1954.  I may here state one\t initial  difficulty
\nwhich  faces  the appellants.  S. 4 of the amending  Act  of
\n1959  refers to a notice issued under cl. (a) of sub-s.\t (1)
\nof  s.\t34; therefore, in order to get the  benefit  of\t the
\nsection the appellants must establish that the notice  dated
\nApril  80, 1954 was a notice issued under cl. (a) of  sub-s.
\n(1) of s. 34.  In an earlier part of this judgment I had set
\nout  in\t full the notice which the  Income-tax\tOfficer\t had
\nissued\ton April 30, 1954, That notice said inter alia\tthat
\nthe Income-tax Officer had reason to believe that the income
\nof the firm Purshottam Laxmidas assessable to income-tax for
\nthe  year ending March 31, 1943 had been under-assessed\t and
\ntherefore  the Income-tax Officer proposed to re-assess\t the
\nincome.\t  It  is at least doubtful that the notice,  if\t one
\nwere  to  go by the words used in the  first  part  thereof,
\nwould make it a notice under cl. (a) of sub-s. (1) of s.  34
\nunless\tthe satisfaction of the Commissioner referred to  in
\nthe  last part makes it one.  I have said earlier  that\t cl.\n<\/p>\n
(a)  of sub-s. (1) of s. 34 related to those cases in  which
\nthere was an omission or failure on the part of the assessee
\nto  make a return of his income under s. 22 for any year  or
\nto disclose fully and truly all material facts necessary for
\nhis  assessment for that year.\tWhen the  Calcutta  Discount
\nCompany’s  case\t (1) came to us, we had explained  what\t was
\nmeant by non-disclosure of
\n(1)  [1961] 2 S.C.R, 241.\n<\/p>\n
51<\/span><\/p>\n
material  facts\t and  pointed out  the\tdistinction  between
\nprimary\t facts\tand  inferences\t therefrom.  (see   Calcutta
\nDiscount  Company Limited v. Income-tax\t Officer,  Companies
\nDistrict,<\/a> (1)).\t There is nothing in the record to show that
\nin the present case there was an omission or failure on\t the
\npart of the assessee to make a return of his income under s.
\n22  for\t the year 1942-1943; nor is there any  avertment  on
\nbehalf\tof  the\t appellants  that  the\tassessee  failed  to
\ndisclose  fully and truly all material facts  necessary\t for
\nhis  assessment for that year in the sense explained  above.
\nI  have\t said  earlier that there  was\tsome  correspondence
\nbetween\t the  Income-tax Officer concerned and the  firm  of
\nPurshottam  Laxmidas  with regard to the  notice  issued  on
\nApril 30, 1954.\t The firm wanted to know the reason why\t the
\nnotice\thad  been issued.  In reply to the letter  from\t the
\nfirm, the Income-tax Officer said (see Ex.  C) :\n<\/p>\n
\t      “The  income  of\tthe  concern  of   Vasantsen
\n\t      Dwarkadas was originally included in the hands
\n\t      of Dwarkadas Vassonji; Dwarkadas Vassonji\t was
\n\t      also  a  partner\tin the\tregistered  firm  of
\n\t      Messrs  Purshottam  Laxmidas.   The  Appellate
\n\t      Tribunal by its consolidated order dated 14-8-
\n\t      1951 (I.\tT. Nos. 7836 to 7851 of 1951\/52\t and
\n\t      E.P.T.A. Nos. 13 to 17 of 1950\/51) has come to
\n\t      the  finding  that the  concern  of  Vasantsen
\n\t      Dwarkadas\t is the branch of Messrs  Purshottam
\n\t      Laxmidas.\t   The\tincome\tof  the\t  firm\t has
\n\t      therefore to be reassessed.”\n<\/p><\/blockquote>\n
The  aforesaid\treply does not make out any  case  that\t the
\nnotice was issued under cl. (a) of sub-s. (1) of s. 34. When
\nwe allowed the appellants to file a supplementary  statement
\nof  the case urging new points, we also granted time to\t the
\nrespondents  to file a supplementary statement of  case,  if
\nany, on their behalf.  The respondents filed a supplementary
\nstatement of their case and said therein that the notice
\n(1)  [1961] 2 S.C.R. 241.\n<\/p>\n
52<\/span><\/p>\n
dated  April 30, 1954 was not and could not be issued  under
\ncl.  (a)  of sub-s. (1) of s. 31 but was and could  only  be
\nissued under cl. (b) or sub-s. (1) of s. 34.  Therefore,  it
\nseems to me that the appellants have not established without
\nany doubt that the notice in this case was issued under\t cl.\n<\/p>\n
(a)  of\t sub-s.\t (1)  of  s. 34, so  as\t to  give  them\t the
\nprotection  of s. 4 of the Amending Act of 1959.  The  point
\ntaken  is  indeed  a  point  of\t law,  namely,\twhether\t the
\nappellants  are\t entitled  to the benefit of  s.  4  of\t the
\nAmending Act of 1959.  But the applicability of s. 4 depends
\non certain facts and those facts must first be found.  It is
\ntrue  that  in\tthe judgment of the High Court\tthere  is  a
\nreference  to eight years’ period of limitation but none  of
\nthe  parties  raised any question as to whether\t the  notice
\ndated April 30, 1954 was issued under cl. (a) or cl. (b)  of
\nsub-s.\t(1) of s. 34.  The parties joined issue only on\t the
\nquestion  whether the second proviso to sub-s. (3) of s.  34
\napplied\t or not.  The necessary facts were not\tinvestigated
\nand  no\t finding  was given as to whether  the\tnotice\tcame
\nwithin cl. (a) or cl. (b) of sub-s. (1) of s. 34.
\nI  am of the opinion that this is enough to dispose  of\t the
\nclaim  put forward by the appellants that the  notice  dated
\nApril  30,  1954, is saved by s. 4 of the  Amending  Act  of
\n1959.\tNo  foundation\ton facts having been  laid  for\t the
\nclaim, it must be rejected.\n<\/p>\n
The  matter was however argued before us at great length  on
\nthe  supposition that the notice dated April 30, 1954 was  a
\nnotice issued under cl. (a) of sub-s. (1) of s. 34. 1 am  of
\nthe opinion that even on that supposition the appellants are
\nnot entitled to succeed.  It is manifest that sub-s. (4)  of
\ns.  34\tdoes not help the appellants.  That  sub-section  is
\nclearly\t prospective  and is intended  to  authorise  action
\nafter  the coming into force of the 1959  amendment;  there-
\nfore, sub-s. (4) of s. 34 cannot validate a notice issued in
\n1954.  Now the question is, what about
\n53<\/span>
\ns.  4  of  the\tAmending Act of\t 1959?\t It  has  been\tvery
\nstrenuously  argued before us that section by reason of\t the
\nunambiguous  language used therein saves the notice.  It  is
\npointed out that the section in its first part refers  inter
\nalia to a notice issued under cl. (a) of sub-s. (1) of s. 34
\nat  any time before the commencement of the 1959 Act and  in
\nits second part says that no such notice shall be called  in
\nquestion in any court etc. merely on the ground that at\t the
\ntime  the  notice  was issued, the time\t within\t which\tsuch
\nnotice\tshould\thave  been issued under s. 34  as  in  force
\nbefore\tits amendment by s. 18 of the Finance Act, 1956\t had
\nexpired.   The argument is that the language of the  section
\nis such that it clearly saves the notice issued on April 30,
\n1954  because  (1) it fulfils the requirement of  the  first
\npart  of  the section in as much as the\t notice\t was  issued
\nbefore\tthe commencement of the 1959 Act and (2) the  second
\npart of the section says that the notice cannot be called in
\nquestion  on the ground that it was issued after the  expiry
\nof  the\t time mentioned in sub-s. (1) of s. 34 as  it  stood
\nbefore the amendment made in 1956.\n<\/p>\n
At  first  sight the argument appears  almost  irresistible.
\nBut on a careful consideration I have come to the conclusion
\nthat  it is not correct.  It is necessary here to  refer  to
\nthe  circumstances under which the amending Act of 1959\t was
\nenacted.   Prior to the amendment of sub-s. (1) of s. 34  by
\nthe  Finance  Act, 1956, in cases falling under\t cl.  (a)  a
\nnotice\thad to be served within eight years from the end  of
\nthe relevant assessment year. This time limit was removed by
\ns. 18 of the Finance Act, 1956.\t In Debi Dutta v. T.  Bellan
\n(1),  the  Calcutta High Court held that  action  under\t the
\namended section could not be taken if prior to the amendment
\ncoming\tinto force (that is, April 1, 1956) the\t period\t for
\nserving\t the  notice  bad already  expired.   This  was\t the
\ndifficulty  which the Legislature had to meet and it  wanted
\nto
\n(1)  A.I.R. 1959 Cal. 567.\n<\/p>\n
54<\/span><\/p>\n
supersede  the view expressed by the Calcutta High  Court.It
\nis indeed true that the Statement of Objects and Reasons for
\nintroducing a particular piece of  legislation\t cannot\t  be
\nused  for  interpreting the legislation if  the\t words\tused
\ntherein are clear enough.  But the Statement of Objects\t and
\nReasons\t can be referred to for the purpose of\tascertaining
\nthe  circumstances which led to the legislation in order  to
\nfind  out what was the mischief which the legislation  aimed
\nat.  The decision of the Calcutta High Court to which I have
\nearlier made a reference was adverted to in the Statement of
\nObjects\t and Reasons.  It seems to me that sub-s. (4) of  s.
\n34  was\t enacted  to supersede the  view  expressed  in\t the
\nCalcutta  decision aforesaid, so that after the coming\tinto
\nforce of sub.s. (4) in 1959 a notice under cl. (a) of sub-s.
\n(1) could be issued at any time notwithstanding that at\t the
\ntime  of the issue of the notice the period of\teight  years
\nspecified  in the sub-section before its amendment by s.  18
\nof the Finance Act, 1956 had expired.  It further appears to
\nme  that both sub-s. (4) of s. 34 and s. 4 of  the  Amending
\nAct  of 1959 are meant to deal with only those\tcases  where
\naction\tis taken under s. 34 as amended in 1956,  but  where
\nthe  eight  years’ time limit had already  expired  and\t the
\noriginal  assessment (if any) had become final prior to\t the
\namendment of s. 34 in 1956.  Whereas sub-s. (4) of s. 34  is
\nintended to authorise action in such cases after the  coming
\ninto force of the Amending Act of 1959, s. 4 is intended  to
\nsave  and validate action taken in such cases  between\t1956
\nwhen  s.  34 was amended by the Finance Act, 1956  and\t1959
\nwhen  the Amending Act was passed.  In my view, s. 4 of\t the
\nAmending Act of 1959 has no bearing on a notice issued under
\ns. 34 prior to 1956. 1 do not accept as correct the decision
\nof the Bombay High Court in Onkarmal Meghraj v. Commissioner
\nof Income-tax, Bombay-1 (1).  That decision implies that  s.
\n4 of the Amending Act of 1959 in effect abrogates and super-
\nsedes the statutory time limits for action under
\n(1)  [1960] 38 I.T.R. 369.\n<\/p>\n
55<\/span><\/p>\n
s. 34 (1) (a) in all the past years ever since s. 34 (1) (a)
\nwas  put  on the Statute Book.\tIt seems to me that  on\t the
\ncontrary,  the\tprovisions  of s. 34 (4) and  s.  4  of\t the
\nAmending Act clearly indicate that the only effect of s.  34
\n(4)  is to authorise action, and the only effect of s. 4  of
\nthe  Amending  Act  is to validate action, under  s.  34  as
\namended\t in  1956  in cases where action  under\t s.  34\t has
\nalready\t become time barred prior to its amendment in  1956.
\nThey  have  no bearing on notices issued or  on\t assessments
\nmade  under  s. 34 prior to 1956.  If the intention  was  to
\nabrogate  altogether all provisions regarding limitation  in
\ns. 34 right from 1922, then s. 4 would have been differently
\nworded and would not have said that it saved notices etc. in
\ncertain\t cases\tonly;  on  the view  canvassed\tfor  by\t the
\ndepartment,  s.\t 4 would save notices issued  in  all  cases
\nbefore\t1959  irrespective of any  question  of\t limitation.
\nMoreover,  if the view taken of s. 4 of the Amending Act  of
\n1959 is that it abrogates and supersedes all past provisions
\nregarding limitation, then the section would be in  conflict
\nwith  the  provisions  of  s.  34.   On\t the  principle\t  of
\nharmonious construction the attempt should be to avoid\tsuch
\nconflict rather than create it.\t The last part of s. 4 shows
\nin my opinion its true intent, namely that what is  intended
\nis to validate post-1956 action, that is, action taken under
\ns.  34\tas  amended by s. 18 of the Finance  Act,  1956.   I
\ncannot read s. 4 as abrogating all periods of limitation and
\nas validating notices issued prior to 1956, even though such
\na notice was not property issued under cl. (a) of sub-s. (1)
\nof  s. 34.  If the intention was that any and  every  notice
\nissued\tunder  cl. (a) of sub-s. (1) of s. 34  at  any\ttime
\nbefore the commencement of the 1959 Act could be  validated,
\nthen the section should not have said-\n<\/p>\n
\t      “notice issued under clause (a) of sub-s.\t (1)
\n\t      of s. 34.”<\/p><\/blockquote>\n
\t      The very fact that the section talks of a
\n56<\/span>
\nnotice\tissued\tunder cl. (a) of sub-S. (1) of s.  34  means
\nthat it is a notice issued in compliance with the provisions
\nof  cl. (a) of sub-s. (1) of s. 34 as amended in  1956\twhen
\nthe  time limit was removed.  When a notice is issued  under
\ncl. (a) of sub-s. (1) of s. 34 as amended in 1956; it cannot
\nbe  called  in\tquestion merely on the ground  such  as\t was
\nupheld by the Calcutta High Court is Debi Dutta v. T. Bellan
\n(1) that the time limit had already expired before the issue
\nof the notice; this seems to me to be the true meaning of s.
\n4  when\t the first of the section which talks  of  a  notice
\nissued\tunder cl. (a) of sub-s. (1) of s. 34  is  contrasted
\nwith the second part which says that such a notice shall not
\nbe called in question on the ground that the time limit\t had
\nalready\t expired  before the date on which  the\t notice\t was
\nissued.\t If the intention was to abrogate the time limit for
\nall notices issued before 1959, there was no sense in saying
\nthat the notice should issue under cl. (a) of sub-s. (1)  of
\ns.  34\tand  at\t the same time it would\t not  be  called  in
\nquestion  on  the  ground that the time\t limit\thad  expired
\nbefore\tthe date of its issue; the section then\t would\thave
\nsimply\tsaid that notwithstanding any time limit in cl.\t (a)
\nof sub-s. (1) of s. 34, all notices issued before 1959 would
\nbe valid.  I do not think s. 4 of the Amending Act 1959\t was
\nintended  to abrogate all periods of limitation\t for  action
\nunder cl. (a) of sub-s. (1) of s. 34 for all past years.
\nThe time limit of eight years was removed in 1956 in respect
\nof  those cases where the amount was not likely to  be\tless
\nthan  Rs.  1,00,000\/-.\tThe present case is  one  where\t the
\namount\tis  less than Rs. 1,00,000\/- and the  limitation  of
\neight  years applied in 1954.  All that s. 4 states is\tthat
\nif  a notice has been issued under cl. (a) of sub-s. (1)  of
\ns.  34 at any time before the commencement of the 1959\tAct,
\nthe  notice  shall not be called in question merely  on\t the
\nground that at the time it was issued
\n(1)  A.I.R. 1955 Cal. 567.\n<\/p>\n
57<\/span><\/p>\n
the time limit as in force before the amendment made in 1956
\nhad  expired,  in other words, s. 4 validates  action  taken
\nbetween\t 1956  when  s. 34 was amended\tand  1959  when\t the
\nAmending Act was passed.  It does not affect notices  issued
\nprior\tto  1956  nor  does  it\t abrogate  all\tperiods\t  of
\nlimitation.\n<\/p>\n
For all these reasons I have come to the same conclusion  as
\nmy  learned  brother  Kapur, J., that  the  appeal  must  be
\ndismissed with costs.\n<\/p>\n
KAPUR, J. -This is an appeal against the judgment and  order
\nof  the High Court of Bombay confirming the order passed  by
\nS.T.  Desai,.\tJ., in Writ Petition No. 266 of\t 1954  under
\nArt. 226 of the Constitution whereby Desai,J., issued a writ
\nof  prohibition restraining the appellants from\t taking\t any
\nfurther\t steps in pursuance of the notice dated\t April,\t 30,
\n1954, issued under s. 34 of the Income-tax Act,\t hereinafter
\ncalled\t“the Act” or from assessing or reassessing the\tfirm
\nknown  as Purshottam Laxmidas in respect of  the  assessment
\nyear  1942-43.\t The Appellant before us is  the  Income-tax
\nOfficer and the respondents are the firm and partners of the
\nfirm above noted.\n<\/p>\n
Dwarkadas Vussanji and Parmanand Odhavji carried on business
\nin partnership in the name and style of Purshottam  Laxmidas
\nfrom  October 28, 1935, till April 1, 1946,  when  Dwarkadas
\nVussenji  died.\t Thereafter Vasantsen Dwarkadas, the son  of
\nDwarkadas  Vussonji, and Parmanand Odhavji respondent No.  3
\ncontinued  the business under the same name i.e.  Purshottam
\nLaxmidas.  That firm was registered under the Indian Income-
\ntax Act.\n<\/p>\n
On  January  28,  1941,\t another  firm\tunder  the  name  of
\nVasantsen Dwarkadas was started, its partners were Vasantsen
\nDwarkadas  respondent  No. 1, Narandas\tShivji\tand  Nanalal
\nOdhavji.This
\n58<\/span>
\nfirm was dissolved on October 24, 1946.\t For the  assessment
\nyear  1942-43  firm Vasantsen Dwarkadas\t filed\ta  voluntary
\nreturn of income and also applied for registration under  s.
\n26  of the Act.\t The registration was refused on the  ground
\nthat the firm was not a genuine firm but really belonged  to
\nDwarkadas  Vussonji,  the  principal  partner  in  the\tfirm
\nPurshottam Laxmidas.The Income-tax Officer added the  income
\nof   the firm Vasantsen Dwarkadas for the assessment   year
\n1942-43\t to the individual income of Dwarkadas Vussonji,  in
\nthe  subsequent\t assessment  year  i.e.\t 1943-44.   In\t the
\nsubsequent  years also the firm Vasantsen Dwarkadas  applied
\nfor registration but registration was refused on the  ground
\nthat it was not a genuine firm.\t Appeals were taken in usual
\ncourse\t to  the  Income-tax  Appellate\t Tribunal  by\tfirm
\nVasantsen Dwarkadas both against the quantum of its assessed
\nincome\tand against the refusal of registration.   This\t was
\nfor  the  years\t of assessment 1942-43\tto  1948-49.   These
\nappeals\t filed\tby firm Vasantsen Dwarkadas and\t the  appeal
\nfiled  by Vasantsen Dwarkadas as representing the estate  of
\nhis  father Dwarkadas Vussonji and the appeals filed by\t the
\nfirm Purshottam Laxmidas in regard to the Excess Profits Tax
\nwere  all  heard  together and\tdecided\t by  the  Income-tax
\nAppellate Tribunal by its order made on August 14, 1951.  In
\nthat order the Income-tax Appellate Tribunal gave a  finding
\nthat  Dwarkadas Vussonji was not the sole proprietor of\t the
\nbusiness  of firm Vasantsen Dwarkadas but that the  business
\nof  that firm belonged to the firm Purshottam Laxmidas.\t  At
\nthe  instance  of the Commissioner of Income  the  Appellate
\nTribunal  stated a case to the High Court and  the  question
\nreferred was answered in favour of the assessee i.e.
\nOn April 30, 1954, the Income-tax Officer issued a notice to
\nthe  firm  Purshottam Laxmidas under s, 34 of  the  Act\t the
\nrelevant portion of which
\n59<\/span>
\nwas in the following terms:-\n<\/p>\n
\t      “Whereas\tI have reason to believe  that\tyour
\n\t      income  assessable to income tax for the\tyear
\n\t      ending 31st March 1943 has been under-assessed
\n\t      I therefore, propose to reassess to the income
\n\t      allowance that has been under-assessed.”\n<\/p><\/blockquote>\n
It  is\tthe validity of this notice which has to  be  deter-
\nmined.\n<\/p>\n
As the decision of the case depends upon the  interpretation
\nof  the various legislative changes made in s. 34 it may  be
\nconvenient  at\tthis  stage  to\t mention  those\t  amendments
\nrelating  to the periods during which action could be  taken
\nby  the\t Income-tax Officer in regard  to  escaped  incomes.
\nUnder  s.  34(1) of the Act as it stood in 1939,  after\t the
\nIncome-tax  Amendment Act, 1939, Act 7 of 1939,\t hereinafter
\nreferred  to as “the Amending Act of 1939”, the\t period\t for
\ntaking\taction\twas  eight years for cases  of\tomission  or
\nfailure\t on  the part of the assessee  to  furnish  accurate
\nparticulars  and four years in any other case of  escapement
\nof  income-tax.\t  This section was amended by s.  8  of\t the
\nIncome-tax and Business Profits Tax (Amendment) Act, Act  48
\nof  1948, hereinafter referred to as “‘the Amending  Act  of
\n1948″.\tThe period in the two cases still remained the\tsame
\nbut  certain  safeguards  in favour of\tthe  assessees\twere
\nprovided.  A further amendment was made in s. 34, this\ttime
\nin  the second proviso to sub-s. (3) of s. 34 by  Income-tax
\nAmendment  Act, 1953 (Act 25 of 1953), hereinafter  referred
\nto  as the Amending Act 1953.” That Act also made  provision
\nfor saving of notices and assessments in certain cases.\t  By
\ns.  18\tof  the\t Finance Act of 1956,  s.  34(1)  was  again
\namended.   By  Income tax (Amendment) Act, 1959\t (Act  9  of
\n1959)  hereinafter referred to as the Amending Act of  1959″
\ns.  34 was further amended, this time by addition of  sub-s.
\n(4) to that section and provision
\n60<\/span>
\nwas  also  made for the validation of  certain\tnotices\t and
\nassessment in certain cases.  These various changes will  be
\ndiscussed in detail at appropriate places.
\nThe  Amending  Act  of\t1953  received\tthe  assent  of\t the
\nPresident   on\t May   24,  1953,  but\t came\tinto   force
\nretrospectively\t as  from April 1, 1952.  By  that  Act\t the
\nsecond proviso to s. 34(3) of the Act was amended.
\nA  notice under s. 34(1)(a) was issued to respondent  No.  2
\nwhich has been set out above.  Thereupon Vasantsen Dwarkadas
\nfiled  a petition under Art. 226 of the Constitution in\t the
\nBombay High Court being Misc.  Application No. 266-X of 1954
\nchallenging  its legality.  S. T. Desai, J., who  heard\t the
\npetition in the first instance held that the Amending Act of
\n1953  which became operative as from April 1, 1952,  had  no
\nretrospective effect so as to enable the Income-tax  Officer
\nto reopen the assessment of the firm Purshottam Laxmidas for
\nthe  assessment\t year 1942-43 which had\t become\t time-barred
\nbefore April 1, 1952, and therefore the Income-tax Officer’s
\naction was barred and without jurisdiction; that the  second
\nproviso\t to  s. 34(3) of the Act ” or so far as\t it  affects
\npersons other than assessees not parties to the proceedings”
\nwas  ultra vires of the Constitution being in violation\t of’
\nArt.  14  of  the  Constitution;  that\ton  the\t facts\t and
\ncircumstances of the case the present respondents could\t not
\nbe  regarded  as strangers to the proceedings in  which\t the
\nfindings  were\tgiven  by the Tribunal.\t  The  Appeal  Court
\nconfirmed  the decision of Desai, J., and further held\tthat
\nthe  firm  Purshottam  Laxmidas against\t whom  the  impugned
\naction\twas  taken  was a stranger to the  appeal  filed  by
\nVasantsen  Dwarkadas.  Against this judgment and  order\t the
\nIncome-tax Officer has brought the present appeal.
\nThe  appellant in this court filed a supplemental  Statement
\nof Case in which he sought  to challenge
\n 61<\/span>
\nthe  correctness of the judgment of the High court on two
\nadditional grounds: (1) that s. 31 of the Amending     Act
\nof 1953 had been overlooked and (2) that s.2 of the Amending
\nAct  of\t 1959 had the effect of removing the  bar  of  eight
\nyears’ period in regard to notices under s. 34(1)(a) and  s.
\n4  of that Act (Amending Act of 1959) validated all  notices
\nincluding the impugned notice.\tThe respondents filed  their
\nsupplemental Statement of Case on October 5, 1960.
\nBefore\ttaking\tup the construction of ss. 2 and  4  of\t the
\nAmending  Act  of 1959, it will be helpful  to\texamine\t the
\ncircumstances in which the Amending Act was enacted.   After
\nthe  Amending Act of 1948 for the purposes of taking  action
\nin  respect of escaped incomes a period of eight  years\t was
\napplicable  to all escaped incomes under s. 34(1)(a) of\t the
\nAct, the two conditions requisite for taking action under s.
\n34(1)(a)  being (1) notice within eight years of  assessment
\nyear  and (2) Income-tax Commissioner’s\t previous  sanction.
\nBy s. 18 of the Finance Act of 1956 the words “eight  years”
\nwere  removed from sub-s. (1) of s. 34 and were inserted  in
\nthe  proviso  which  was substituted in\t place\tof  the\t old
\nproviso\t to s. 34(1) which took effect from April  1,  1956.
\nThen  came the Calcutta case Debi Dutta Moody v. T.  Bellan,
\n(1), which held that notices which were time barred when the
\nAmending Act of 1956 came into force remained time barred in
\nspite  of the new enactment.  In that case the\tnotice\twhen
\nissued\twas  within time but when served it  was  barred  by
\ntime.\n<\/p>\n
The two provisions of the Amending Act of 1959 which have to
\nbe  construed  are ss. 2 and 4. By s.  2  anew\tsub-section-
\nsub.s. (4) was added to s. 34 of the Act.  It provides :-\n<\/p>\n
\t      “(4) A notice under clause (a) of\t sub-section
\n\t      (1) may be issued at any time  notwithstanding
\n\t      that  at the time of the issue of\t the  notice
\n\t      the period of eight years specified in that
\n(1)  A.I.R. 1959 Cal, 567,
\n62<\/span>
\n\t      sub-section before its amendment by clause (a)
\n\t      of section 18 of the Finance Act, 1956 (18  of
\n\t      1956),  had expired in respect of the year  to
\n\t      which the notice relates.\n<\/p><\/blockquote>\n
Section 4 of that Act provides for saving and validation  of
\nnotices,  assessments etc., in certain cases.  The  relevant
\nportion\t of the section applicable to notices issued  tinder
\ns. 34 (1) (a) of the Act is as follows :-\n<\/p>\n
\t      “No  notice issued under clause (a) of  sub-s.
\n\t      (1) of s. 34 of the principal Act at any\ttime
\n\t      before the commencement of this Act  shall  be
\n\t      called in question in any court merely on\t the
\n\t      ground that at the time the notice was issued the
\n\t      time within which such notice should have been
\n\t      issued  …… under that section as in  force
\n\t      before  its amendment by cl. (a) of s.  18  of
\n\t      the  Finance  Act,  1956\t(18  of\t 1956)\t had
\n\t      expired.”\n<\/p><\/blockquote>\n
The  new proviso which was substituted in place of  the\t old
\nproviso to s. 34 (1) by s. 18 of the Finance Act, 1956,\t may
\nconveniently be given here.It reads as follows:–\n<\/p>\n
\t      “Provided\t that the Income-tax  Officer  shall
\n\t      not  issue a notice under clause (a)  of\tsub-
\n\t      section (1):\n<\/p><\/blockquote>\n
\t      (i)for  any year prior to the year  ending  on
\n\t      the 31st day of March 1941;\n<\/p><\/blockquote>\n
\t      (ii)  for\t any  year,  if\t eight\tyears\thave
\n\t      elapsed after the expiry of that year,  unless
\n\t      the  income,  profits or gains  chargeable  to
\n\t      income-tax which have
\n63<\/span>
\n\t      escaped assessment or have been under-assessed
\n\t      or  assessed  at too low a rate or  have\tbeen
\n\t      made  the\t subject of excessive  relief  under
\n\t      this Act or the loss or depreciation allowance
\n\t      which  has been computed in excess, amount  to
\n\t      or are likely to amount to, one lakh of rupees
\n\t      or more in the aggregate, either for that year
\n\t      or  for that year and any other year or  years
\n\t      after which or after each of which eight years
\n\t      have elapsed not being a year or years  ending
\n\t      before the 31st day of March 1941;\n<\/p><\/blockquote>\n
\t      (iii) for any year, unless he has recorded his
\n\t      reasons  for doing so and in any case  falling
\n\t      under clause (ii) unless the Central Board  of
\n\t      Revenue and in any other case the Commissioner
\n\t      is satisfied on such reasons recorded that  it
\n\t      is a fit case for the issue of such notice.”\n<\/p><\/blockquote>\n
The  appellant\tcontended that as a consequence of  the\t new
\nsub-section 4 of s. 34 of the Act (i.e. s. 2 of the Amending
\nAct  of\t 1959)\tthe impugned notice became  a  valid  notice
\nnotwithstanding the fact that at the time of the issuing  of
\nthe notice the period of eight years specified in s. 34\t (1)\n<\/p>\n
(a) before its amendment by s. 18 of the Finance Act of 1956
\nhad  expired.\tThis contention is not\twell-founded.\tSub-
\nsection\t (4) is prospective and therefore operates  as\tfrom
\nMarch  12,  1959,  and it does\tnot  affect  notices  issued
\nprevious to that date.\tThat is the effect of the words\t tea
\nnotice\tunder  cl. (a) of sub-s. (1) may be  issued  at\t any
\ntime.”\tIn the context these words refer to  notices  issued
\nafter the coming into force of the Amending Act of 1959\t and
\nnot to notices already issued.\n<\/p>\n
The appellant next contended that the effect of s. 4 of\t the
\nAmending Act of 1959 is that it abrogates
\n64<\/span>
\nand supersedes that statutory period prescribed for  notices
\nunder  a 34 (1) (a) for all past years whether\tthe  notices
\nwere issued before or after the amendment by the Finance Act
\nof  1956.  This contention is also not\twell-founded..\tThis
\nsection applies to notices under cl. (a) of sub-section\t (1)
\ns.  of 34.  The notice issued in the present case  does\t not
\nmention\t the  clause under which the notice was\t issued\t and
\nthere is nothing to indicate that it was under cl. (a).\t The
\nrespondents  in\t their supplemental  Statement\tspecifically
\nraised\tthe point that the notice was not under cl. (a)\t and
\ncould  only be under cl. (b).  The language of that  section
\nshows (1) that it applies to all notices under s. 34 (1) (a)
\nissued at any time before the Amending Act, 1959, i.e. March
\n12,  1959, and(2) its effect is that notices  issued  before
\nthe  Amending  Act 1959 cannot be challenged merely  on\t the
\nground\tthat at the time the notices were issued  they\twere
\nbarred\tunder s. 34 (1) (a) of the Act as it was before\t its
\namendment  by  s.  18 of the Finance  Act,  1956.   Now\t the
\nlegislature  has  not  said that the notices  shall  not  be
\nchallenged on the ground that a period of eight years  under
\ns.  34 (1) (a) as in force after the Amending Act  1948\t had
\nelapsed.   It has deliberately used the words “‘as in  force
\nbefore its amendment by the Finance Act 1956”.\tThese  words
\nindicate  that the legislature intended to give full  effect
\nto  the amendment made by the Finance Act of 1956 in  s.  34
\n(1) (a) removing the bar of the lapse of eight years’ period
\nin  cases  of certain incomes.\tThe notices to\twhich  s.  4
\napplies\t and which are validated are those that were  issued
\nbetween\t the periods mentioned in that Act i.e.\t before\t the
\nAmending  Act,\t1959, and after the Finance  Act,  1956,  in
\nspite  of the expiry of the eight years’ period\t before\t the
\namendment by the Finance Act, of 1956.\tThus whereas  sub-s.
\n(4) of s. 34 applies to and authorises the taking of  action
\nafter the coming into force of the Amending Act of 1959,  s.
\n4 of that Act validates action taken after the amendment  by
\nthe Finance
\n65<\/span>
\nAct of 1956.  It is not the effect, of s. 4 to abrogate\t and
\nsupersede  the time limit provided by s. 34 (1) (a)  of\t the
\nAct in all the past years.  All it does is that it validates
\nthose notices which were issued within the two limits  above
\nmentioned.\n<\/p>\n
In  this  connection  Mr. Palkhivala submitted\tthat  it  is
\nnecessary  to see why the Amending Act of 1959 was  enacted.
\nAccording to his submission the reason for and the intention
\nof  the enactment was to nullify the effect of the  judgment
\nof  the Calcutta High Court in Debi Dutta Moody’s (1)  case.
\nIn  that  case a notice issued under s. 34 (1)\t(a)  to\t the
\nassessee before April 1, 1956, when the Finance Act of\t1956
\nbecame\toperative was served a day later, i.e. April 2,\t and
\nit was contended in the High Court that the period of  eight
\nyears having by then elapsed the notice was invalid.  It was
\nheld that in construing the retrospective operation of the
\nstatute the nature of the right affected must beconsidered
\nand   where  there  is\ta  vested  right  an  amendment\t  is
\nperspective so as not to affect a vested right ; that at the
\ntime  when the amendment by the Finance Act of\t1956  became
\noperative  the\tright to proceed had already  become  barred
\nunder the Act of 1948 and that it could not be revived as  a
\nresult of the amendment of 1956 unless there was an  express
\nprovision  to  the  contrary.  It was  the  effect  of\tthat
\ndecision  which was sought to be nullified by  the  Amending
\nAct of 1959.  In construing an enactment and determining its
\ntrue  scope  it is permissible to have regard  to  all\tsuch
\nfactors\t as  can  legitimately\tbe  taken  into\t account  to
\nascertain  the\tintention  of the legislature  such  as\t the
\nhistory\t of  the  Act, the reason which\t led  to  its  being
\npassed,\t the mischief which had to be cured as well  as\t the
\ncure  as also the other provision; of the statute.  That  is
\nthe rule in Heydon’s (2) case which was accepted in R. M. D.
\nChamarbaugwalla\t v.  The  Union of  India<\/a>(3).\tTaking\tthis
\nprinciple into account it appears that the object
\n(1) A.I.R. 1959 Cal. 567.  (2) (1584) 3 Co. Rep. 7a: 76 E.R.\n<\/p>\n
637.
\n\t\t(3) [1957] S.C.R. 930, 936.\n<\/p>\n
66<\/span><\/p>\n
of  the amendment was to validate certain notice  after\t the
\namendment and after the lapse of eight years from the end of
\nthe  assessment year and also to nullify the effect  of\t the
\nCalcutta judgment above mentioned.\n<\/p>\n
Mr.  Rajagopal Sastri relied next on the amendment to s.  34
\n(3)  of the Act by the amending Act of 1953 which came\tinto
\neffect\tas  from April 1, 1952.\t By s. 18 of  that  Act\t the
\nsecond\tproviso to sub-s. (3) of s. 34 was  amended  whereby
\ncertain\t changes were made in regard to the period  of\ttime
\nfor taking action in consequence of or to give effect to any
\nfinding or direction contained in an order under the various
\nsections therein mentioned one of them being an order of the
\nIncome-tax Appellate Tribunal.\tThe proviso as amended reads
\nas follows :-\n<\/p>\n
\t      “Provided\t further that nothing  contained  in
\n\t      this  section limiting the time  within  which
\n\t      any action may be taken or any order,  assess-
\n\t      ment  or reassessment may be made shall  apply
\n\t      to a reassessment made under section 27 or  to
\n\t      an  assessment  or reassessment  made  on\t the
\n\t      assessee or any person in consequence of or to
\n\t      give  effect to any finding or direction\tcon-
\n\t      tained  in an order under section 31,  section
\n\t      33,  section 33A, section 33B, section  66  or
\n\t      section 66 A”.\n<\/p><\/blockquote>\n
It  was contended that because action was taken against\t the
\nrespondent  in\tconsequence of an order\t of  the  Income-tax
\nAppellate Tribunal there was no time limit and therefore the
\nimpugned  notice was not hit by the period of  eight  years.
\nIt  was\t further argued that for the purpose  of  validating
\ncertain\t notices and assessments, s. 31 of the Amending\t Act
\nof 1953 was enacted the relevant portion of which
\nis as follows
\n\t      “Validity of certain notices and asessments.
\n\t      For  the\tremoval\t of  doubts  it\t is   hereby
\n\t      declared
\n67<\/span>
\n\t      that  the provisions of sub-sections (1),\t (2)
\n\t      and (3)of section 34 of the principal Act (the
\n\t      Indian Income-tax Act, (1922) shall apply\t and
\n\t      shall be deemed always to have applied to\t any
\n\t      assessment or reassessment for any year ending
\n\t      before the 1st day of April 1948, in any\tcase
\n\t      where   proceedings   in\t respect   of\tsuch
\n\t      assessment  or  reassessment  were   commenced
\n\t      under the said sub-sections after the 8th\t day
\n\t      of  September  1948 and any notice  issued  in
\n\t      accordance\t  with\t\t sub-section
\n\t      (1)   …………   ……    ……………
\n\t      whether  before or after the  commencement  of
\n\t      the  Indian Income-tax (Amendment) Act,  1953,
\n\t      shall,  notwithstanding any judgment or  order
\n\t      of any Court, Appellate Tribunal or Income-tax
\n\t\t\t    authority  to the contrary, be deemed
\nto  have
\n\t      been validity issued …………\t and no such
\n\t      notice   shall  be called in question  on\t the
\n\t      ground  merely that the provisions of  section
\n\t      34  did  not  apply or  purport  to  apply  in
\n\t      respect  of an assessment or reassessment\t for
\n\t      any year prior to the 1st day of April 1948.”
\nThis  section,\tso  it was argued,  validated  the  impugned
\nnotice even though the period of limitation expired on March
\n31, 1951.\n<\/p>\n
I  shall first deal with the argument based on s. 31 of\t the
\nAmending Act of 1953.  By s. 8 of the Amending Act of 1948 a
\nnew  s.\t 34 (1) was substituted for the old s. 34  (1)\twith
\neffect from March 30, 1948.  Bose, J.. of the Calcutta\tHigh
\nCourt  in  a  petition under Art. 226  of  the\tConstitution
\nreported as Calcutta Discount Co. v. Income-tax Officer<\/a> (1),
\nheld  that a notice served under the substituted s.  34\t (1)
\nfor  any assessment year prior to the coming into  force  of
\nthe  Amending  Act  of 1948 was invalid\t as  the  Income-tax
\nOfficer had
\n(1)  [1952] 21 I.T.R. 579.\n<\/p>\n
68<\/span><\/p>\n
no  jurisdiction  to proceed with the  reassessment  on\t the
\nground that s. 34 (1) as amended in 1948 had no\t application
\nto  assessments for the years prior to 1948 even though\t the
\nperiod\tof  eight years had not elapsed.  It was  also\theld
\nthat   the   Amending  Act  of\t1948  was   expressly\tmade
\nretrospective  as  from March 30, 1948, it  had\t no  further
\nretrospectivity and therefore the notice issued under s.  34
\n(1) were without jurisdiction.\tAgainst that judgment  which
\nwas  dated  March 26, 1952, an appeal was  taken  which\t was
\ndecided\t on  March 25, 1953, and is reported  as  Income-tax
\nOfficer, Companies District I, Calcutta v. Calcutta Discount
\nCo. Ltd.,<\/a> (1).\tBut in the meanwhile i.e. the period between
\nthe two judgments a bill was introduced in 1952 to amend  s.
\n34 so as to nullify the effect of the judgment of Bose,\t J.,
\nin the Calcutta case.  This resulted in the enactment of the
\nAmending  Act  of  1953 which received\tthe  assent  of\t the
\nPresident  on  May  24, 1953, but  was\tgiven  retrospective
\neffect as from April 1, 1952.\n<\/p>\n
Section\t 31 of the Amending Act of 1953 can be divided\tinto
\ntwo  parts.  The first part beginning with the words “it  is
\nhereby\tdeclared”  to the words ” were commenced  under\t the
\nsaid  sub-section  after the 8th day of September  1948″  is
\nmerely\t declaratory.\tIt  declares  the  section   to\t  be
\napplicable  to assessments for any year ending before  April
\n1,  1948  in any case where proceedings in respect  of\tsuch
\nassessment  or re-assessment “were commenced” under  sub-ss.
\n1,  2 and 3 of s. 34 after September 8, 1948.  According  to
\nthe  appellant the effect of the first part of\tthe  section
\nwas  to\t apply the provisions of s. 34(1), (2)\tand  (3)  to
\nevery  proceeding  for assessment or  reassessment  whenever
\ncommenced  after September 8, 1918 even though\treassessment
\nproceedings  in regard to them had become time barred.\t The
\ncontention on behalf of the respondents, on the other  hand,
\nwas that the use of the words “were commenced”
\n(1)  [1953] 23 I.T.R. 471.\n<\/p>\n
69<\/span><\/p>\n
under  sub-ss.\t(1),  (2) and (3) of s.\t 34  prescribes\t the
\nlimits\tfor  the  retrospective application  of\t those\tsub-
\nsections  and that period was between September 8, 1948\t and
\nApril  1952 when the Amending Act of 1953 became  operative.
\nThe contention of the respondents’ counsel is well  founded.
\nSection\t 31 does not make sub-ss. (1), (2) and (3) of s.  34
\napplicable  to\tany and every  assessment  or  re-assessment
\nwhenever commenced after September 8, 1948.  The use of\t the
\nwords  “”were commenced”, limits the retrospectivity to\t the
\nperiod\tbetween September 8, 1948, and April 1, 1952.\tThis
\npart  of s. 31 therefore is of no assistance to\t making\t the
\nAmending Act of 1953 applicable to the present case in which
\nthe notice was given on April 30, 1954.\n<\/p>\n
The second part of s. 31 deals with the validity of notices.
\nIt  firstly provides that any notice issued  “in  accordance
\nwith”  s.  34 (1) whether issued before or  after  April  1,
\n1952,  shall, notwithstanding, any judgment or order of\t any
\ncourt  to the contrary, be deemed to be validly\t issued\t and
\nsecondly that such notice shall not be challenged merely  on
\nthe ground that provisions of s. 34 do not apply or  purport
\nto  apply in respect of an assessment for any year prior  to
\nApril  1, 1948.\t In this second part of s. 31 the  important
\nwords are “in accordance with” which mean and imply that the
\nnotice\tissued\twas in conformity with sub-s. (1) of  s.  34
\nwhich would include all formalities and limitations  therein
\nmentioned.  Consequently it has to be a notice within  eight
\nyears’\tperiod\t. As the impugned notice was  issued  beyond
\nthat  period, it cannot be called a notice  “”in  accordance
\nwith” and therefore the deeming provision as to validity  is
\nnot  applicable\t to  the present case.\t Further  the  words
\nnotwithstanding\t any  judgment etc. are\t indicative  of\t the
\npurpose of this provision to be this that if the notice\t was
\nin  conformity\twith  s. 34 (1) it will\t be  valid  notwith-
\nstanding any judgment etc.  That this was the
\n70<\/span>
\npurpose\t and  meaning of this second part  is  further\tmade
\nclear by the provisions against such notice being challenged
\non  the ground of its being in respect of an  assessment  or
\nreassessment  for  any year prior to April  1,\t1948.\tThus
\nthese  words  only nullified the effect of the\tjudgment  of
\nBose,  J., in Calcutta Discount Co’s. (1) case, and did\t not
\nvalidate time barred notices.\n<\/p>\n
Moreover  in  the  present  case the  notice  is  not  being
\nimpugned  on  the  ground of s.\t 34  being  inapplicable  in
\nrespect of the assessment year 1942-43.\t On the contrary the
\nplea  raised against the validity of the notice is that\t the
\nprovisions as to eight years in s. 34(1) are applicable;  in
\nother words the attack on the legality of the notice is that
\nit  is barred by the provisions of s. 34 (1).  This part  of
\ns. 31 also does not validate the notice issued to respondent
\nNo. I after a lapse of eight years from the assessment year.
\nIn  my\topinion\t therefore neither the first  part  nor\t the
\nsecond\tpart  of  s. 31 is applicable to the  facts  of\t the
\npresent case.\n<\/p>\n
I shall next consider the appellant’s argument based on\t the
\nsecond\tproviso\t to  s. 34 (3) as amended by s.\t 18  of\t the
\nAmending  Act of 1953.\tThe assessment year in\tthe  present
\ncase is 1942-43 and therefore the eight years’ period  under
\nthe  Act  expired  on  March 31,  1951,\t and  order  of\t the
\nAppellate Tribunal was August 14, 1951 i. e. after the lapse
\nof  8  years.  It was contended by the appellant that  as  a
\nresult\tof  this proviso the limitation as  to\ttime  within
\nwhich any action could be taken in regard to any  assessment
\nor  reassessment was removed if assessment  or\treassessment
\nwas made in consequence of or to give effect to a finding or
\ndirection contained inter alia in the order of an Income-tax
\nAppellate  Tribunal under s. 33. In the present case, so  it
\nwas  contended by the appellant, there was a finding by\t the
\nAppellate  Tribunal in the order dated August 14,  1951,  to
\nthe
\n(1)  [1952] 21 I.T.R. 579.\n<\/p>\n
71<\/span><\/p>\n
effect\tthat  the  business in the name\t of  firm  Vasantsen
\nDwarkadas  belonged to firm Purshottam Laxmidas and that  if
\nthe  Income-tax\t Officer could include that  income  in\t the
\nincome\tof Purshottam Laxmidas he was at liberty to  do\t so.
\nThis  order,  it  was submitted, removed by  virtue  of\t the
\nsecond proviso to sub-s. (3) of s. 34 the bar of the  period
\nof  eight  years under sub-s. (1) (a) of s. 34 of  the\tAct.
\nThe  correctness of this contention will depend\t on  whether
\nthe  language  of the second proviso is retroactive  in\t its
\noperation  and\trevives barred rights or barred\t actions  or
\nremoves\t the bar of eight years under s. 34 (1) (a)  of\t the
\nAct.   There  is nothing in the words used  in\tthe  proviso
\nwhich  gives  it  retroactive  operation  expressly  or\t  by
\nnecessary intendment but it was argued that any\t enlargement
\nof time for taking action under s. 34 of the Act revives the
\nliability  of  an assessee to be taxed\tnotwithstanding\t the
\nexpiry\tof the period during which action could be taken  by
\nthe  Income-tax\t Officer.  It was also\tsubmitted  that\t the
\neight  years’  period in s. 34 (1) (a) was not a  period  of
\nlimitation but just created a fetter on the exercise of\t the
\npower  of  the Income-tax Officer and when that\t fetter\t was
\nremoved the ability to exercise the power was revived.
\nThe first argument above brings us to the general principles
\nof  the law of limitation whether a change in the period  of
\nlimitation takes away the existing finality of the  immunity
\nagainst\t actions which had already been barred by the  lapse
\nof the period of limitation.  The Statute of Limitation\t has
\nbeen termed a statute of ‘repose, peace and justice’ and its
\nintention  was\tstated\tby Sir Richard\tCouch  in  Hurrinath
\nChatterji v. Mohunt Mothoor Mohun Goswami (1) as follows :-\n<\/p>\n
\t      “The  intention of the law of  limitation\t is,
\n\t      not  to  give  a right whether  there  is\t not
\n\t      one,but  to  interpose a bar after  a  certain
\n\t      period  to  a  suit  to  enforce\tan  existing
\n\t      right.”\n<\/p><\/blockquote>\n
(1)  (1893) L.R. 20 I.A. 183, 192.\n<\/p>\n
72<\/span><\/p>\n
In  Kr.\t  Kr.\tKr.  Ramanathan Chettiar  v.  N.  M.Kandappa
\nGoundan\t (1), it was held that if a right to sue had  become
\nbarred\tby the provisions of the Limitation Act in force  on
\nthe  date  of  the  coming into force  of  a  new  Act\tthen
\nsuch  barred rights cannot be revived by the application  of
\nthe  new  enactment and it cannot be said that\tbecause\t the
\nremedies are barred but the rights are not extinguished such
\nrights\tcan  be\t revived by mere change\t in  the  period  of
\nlimitation  and become enforceable in a court of law.\tThis
\ndecision  has the support of the observations of  the  Privy
\nCouncil\t in cases which were decided on\t general  principles
\napplicable to limitation and were not based on any statutory
\nprovision  such\t as s. 28 of the Limitation Act of  1908  by
\nwhich  as a result of lapse of the period of limitation\t the
\nrights\tare extinguished.  In Appasami Odayar v.  Subramanya
\nOdayar (2), it was observed :-\n<\/p>\n
\t      “By sect. 1, clause 13, of Act XIV of 1859,  a
\n\t      suit  for a share of the family  property\t not
\n\t      brought  within twelve years from the date  of
\n\t      the  last participation in the profits  of  it
\n\t      would be barred.\tThis Act continued in  force
\n\t      until the 1st July, 1871, when Act IX of\t1871
\n\t      came  into force.\t Consequently, if there\t was
\n\t      no  participation of profits between 1837\t and
\n\t      1871  the suit would be barred, and the  later
\n\t      Acts  for\t limitation  of suits  need  not  be
\n\t      referred\tto.   If they altered the  law\tthey
\n\t      would not revive the right of suit.”\n<\/p><\/blockquote>\n
Later in Mohesh Narain Moonshi v. Taruck Nath
\nMoitra (3), the same principle was stated by Lord
\nShand in the following words :—\n<\/p>\n
\t      “It  is  clear that, on the 1st day  of  April
\n\t      1873,  the  plaintiff’s  suit  was  barred  by
\n\t      limitation under the Act of 1871, and the\t Act
\n\t      of 1877
\n(1) I.L.R. 1951 Mad. 581.\n<\/p><\/blockquote>\n
(2) (1888) L.R. 15 I.A. 167,169.\n<\/p>\n
(3)  (1892) L.R. 20 I.A. 30,38.\n<\/p>\n
73<\/span><\/p>\n
\t      could  not  revive the  Plaintiff’s  right  so
\n\t      barred-  a point which was  indeed  decided,in
\n\t      regard to the Limitation Acts of 1859 and 1871
\n\t      in  the case of Appasami Odayar v.  Subramanya
\n\t      Odyar(1)
\nIn Khunni Lal v. Govind Krishna Narain
\nMr. Ameer Ali said :-\n<\/p>\n
\t      “No suit could be brought, even if the  enact-
\n\t      ments  referred to above had permitted it,  to
\n\t      enforce  the right after the lapse  of  twelve
\n\t      years  “‘from  the time the  cause  of  action
\n\t      arose”  (s. 12, Act XIV of 1859).\t Nothing  in
\n\t      Art.  142 of Act IX of 1871 or of Art. 141  of
\n\t      Act  XV  1877 could lead to the revival  of  a
\n\t      right that had already become barred.”\n<\/p><\/blockquote>\n
The same principle has been applied by the Privy Council  in
\nthe  Case  of  decree ‘in Sachindra  Nath  ,Boy\t v.  Maharaj
\nBahadur Singh (3).  There the question was which of the\t two
\nLimitation Acts, Act 25 of 1877 or Act 9 of 1908 applied  to
\na decree obtained on August 26, 1905.  It was held that\t the
\nformer applied and therefore the decree became unenforceable
\naccording  to the law as it stood before the Limitation\t Act
\nof 1908.  Lord Atkinson observed at p. 345 :-\n<\/p>\n
\t      “There  is  no provision in this\tlatter\tAct”
\n\t      (Act  9  of  1908) “so  retrospective  in\t its
\n\t      effect  as  to  revive and  make\teffective  a
\n\t      judgment or decree which before that date\t had
\n\t      become unenforceable by lapse of time.”\n<\/p><\/blockquote>\n
In  Delhi  Cloth  & General Mills  Co.\tLtd.  v.  Income-tax
\nCommissioner,  Delhi<\/a>  (6), it was held that  no\t appeal\t lay
\nagainst the decision of, a High Court if it was given before
\nappeals\t to  the Privy Council were provided for.   In\tthat
\nconnection Lord Blanesburgh observed at p. 425 :
\n(1)  (1888)  L.R. 15 I.A. 167,169.\n<\/p>\n
(2)  (1911)  L.R. 38 I.A. 87, 102.\n<\/p>\n
(3)  (1921) L.R. 48 I.A. 335.\n<\/p>\n
(4) (1927) L.R. 54 I.A. 421, 425.\n<\/p>\n
74<\/span><\/p>\n
\t      “Their  Lordships\t can  have  no\tdoubt\tthat
\n\t      provisions       which,\t    if\t     applied
\n\t      retrospectively,would    deprive\t of    their
\n\t      existing\tfinality  orders  which,  when\t the
\n\t      statute  came  into  force,  were\t final,\t are
\n\t      provisions which touch existing rights.”\n<\/p><\/blockquote>\n
In  all\t these\tcases the Privy\t Council  proceeded  on\t the
\nprinciple  that\t if the right of action\t hid  become  barred
\naccording  to  the law of limitation  in  force,  subsequent
\nenlargement  of\t the  period of time ‘does  not\t revive\t the
\nremedy\tto  enforce  the rights already\t barred.   The\tsame
\nprinciple,  in\tmy  opinion,  would  apply  to\tthe  periods
\nspecified  in s. 34 of the Act and if the period  prescribed
\nfor taking action had already expired, subsequent change  in
\nthe law does not, make it so retrospective in its effect  as
\nto revive the power of an Income-tax Officer to take  action
\nunder  the new law- It is one of the canons of\tconstruction
\nof  statute  of limitation that in the\tabsence\t of  express
\nwords  or necessary intendment no change in, the  period  of
\nlimitation  can\t revive the right to sue  which\t has  become
\nbarred nor can it impair the immunity from any action  which
\nhad  become final after the lapse of a specified  period  of
\ntime.\n<\/p>\n
The  Calcutta  High  Court in Nepal Chandra  Roy  v.  Niroda
\nSundari\t Ghose\t(1),  held that the right  of  the  judgment
\ndebtor to make an application for setting aside an ex  parte
\ndecree\tcould not be revived by a change in the law  if\t the
\nright to apply had already become barred before the new\t law
\ncame  into  force.   Similarly\tin  Mohamed  Mehdi  Faya  v.
\nSakunabai  (2), it was held that a remedy which\t had  become
\nbarred under the old Limitation Act would not be revived  by
\nthe passing of a new Limitation Act.  This was a case  where
\nthe right to sue for restitution of conjugal rights was held
\nto be barred.\n<\/p>\n
The Bombay High Court in Dhondi Shitvaji Rajivade v. Lakhman
\nMhaskuji Khaire (3),
\n(1) I.L.R. 39 Cal. 506.\n<\/p>\n
(2) I.L.R. 37 Bom. 393.\n<\/p>\n
(3) A.I.R. 1930 Bom. 55.\n<\/p>\n
75<\/span><\/p>\n
held that where the mortgagor’s right to sue, for redemption
\nof the mortgage was barred subsequent acknowledgement  would
\nnot  extend the period of limitation as the  acknowledgement
\nought to have been made in writing within 60 years from\t the
\ndate; of the mortgage.\tThe court also held that the  remedy
\nand right of the mortgagor having been extinguished  nothing
\ncontained in the subsequent Limitation Act would affect\t the
\noperation of the previous enactment.  In this connection the
\ncourt referred to s. 6 of the General Clauses Act, 1897.
\nThe Madras High Court in two cases applied this principle in
\nK.  Simrathmul v. Additional Income-tax Officer,  Ootacamund
\n(1), to proviso (ii) of s. 34(3).  The Punjab High Court  in
\nPran  Nath v. Commissioner of Income-tax Punjab (2),  at  P.
\n600 also applied this principle to the same provision.\t But
\nit appears that in a later judgment, Commissioner of Income-
\ntax v. R. B. L. Ishar Das (3), a contrary view was taken but
\nit does not appear that the previous judgment was brought to
\nthe  notice  of\t the  court nor\t does  it  appear  that\t the
\nattention of the learned judges was drawn to the  principles
\nlaid  down  in\tthe decisions of  the  Privy  Council.\t The
\nOfficial  Liquidator  of  the  Benaras\tBank  Ltd.  v.\t Sri
\nPrakasha(4),  relied  on  by Mr. Rajagopal  Sastri  did\t not
\ndecide\tthe question that subsequent change in the  law\t can
\nrevive\tbarred rights.\tIt proceeded on the construction  of
\nthe  amended  s. 235 of the Indian Companies Act.   He\talso
\nrelied\ton two judgments of the Patna High Court :  Baleswar
\nPrasad\tv. Latafat (5), and Jagdish v. Saligram\t (6).In\t the
\nformer it was held that the law of limitation which  governs
\nan  action  is the law which prevails on the date  when\t the
\naction\tis brought and therefore acknowledgement made  on  a
\npronote\t executed  in 1934 would be governed by the  law  in
\nforce at the time the suit was brought.\t In the latter\talso
\nit  was held that the law relating to acknowledgement  under
\ns. 20 was the one which was
\n(1) [1959] 36 I.T.R. 41, 45.\n<\/p>\n
(2) [1960] 38 I.T.R. 595, 600.\n<\/p>\n
(3) [1962] 44. I.T.R. 629.\n<\/p>\n
(4) I.L.R. [1946] All. 461.\n<\/p>\n
(5) (1944) I.L.R. 24 Pat. 249.\n<\/p>\n
(6) (1945) I.L.R. 24 Pat. 391.\n<\/p>\n
76<\/span><\/p>\n
in  force at the time of the bringing of suit.\tBut it\t  is
\nsignificant to note that S. K. Das, J., (now a judge of this
\nCourt)\tdid  not agree with that view but did  not  disagree
\nwith  the  decision  as the matter  had\t been\t  previously
\ndecided in the judgment above referred to.
\nHe expressly said :\n<\/p>\n
\t      “I  would personally have come to a  different
\n\t      conclusion  if the matter were not covered  by
\n\t      the aforesaid decisions of this Court.”\n<\/p><\/blockquote>\n
Another argument raised on behalf of the appellant was\tthat
\nthe eight years’ period prescribed in s. 34 is not a rule of
\nlimitation  but merely a fetter on the power of the  Income-
\ntax  Officer  to take action and the removal of\t the  fetter
\nrevives\t the  power of the Officer.  This really  is  not  a
\ndifferent  argument  but the same argument of revival  of  a
\nright to sue which has been discussed above.  Change in\t the
\nlaw  as\t to  the period in which a suit can  be\t brought  to
\nrecover\t a  debt or action can be taken\t by  the  Income-tax
\nOfficer\t to commence an assessment or reassessment does\t not
\nimpair the rights already acquired by the bar of  limitation
\nor  revive  the power of the Income-tax\t Officer  which\t has
\nalready\t become\t incapable of being exercised  by  laspe  of
\ntime.\tThe two stand on the same footing and have the\tsame
\neffect i. e. provide immunity and place a bar on any  attack
\non  the rights of the defendant or the assessee as the\tcase
\nmay be.\n<\/p>\n
The  next  question raised is the constitutionality  of\t the
\nsecond proviso to s. 34 (3) of the Act.\t For that purpose it
\nis  necessary  to restate some of the salient facts  of\t the
\npresent\t case.\tThe firm, Vasantsen Dwarkadas of  which\t the
\npartners  were Vasantsen respondent No. 1,  Narandas  Shivji
\nand  Nanalal  Odhavji  filed  a\t voluntary  return  for\t the
\nassessment year 1942-43 and also applied for registration of
\nthe firm which was refused on the ground that the firm
\n\t\t\t     77<\/span>
\nwas not a genuine firm but belonged to Dwarkadas Vussonji  ,
\nthe  father  of\t respondent No. 1,  who\t was  the  principal
\npartner\t in the firm Purshottam Laxmidas and the  Income-tax
\nOfficer\t therefore  added  the\tincome\tof  firm   Vasantsen
\nDwarkadas  to the individual income of\tDwarkadas  Vussonji.
\nThis happened in regard to the assessment for the subsequent
\nyear also.  Appeals were filed for that year and  subsequent
\nyears  by  the\tfirm Vasantsen Dwarkadas  both\tagainst\t the
\nquantum of the assessed income and refusal of the Income-tax
\nOfficer to register the firm.  These appeals and the  Excess
\nProfits Tax appeal of firm Purshottam Laxmidas for the\tyear
\n1942-43\t were all consolidated and decided by the  order  of
\nthe Incometax Appellate Tribunal dated August 14, 1951.\t  At
\nthat   stage  Dwarkadas\t being\tdead,  Vasantsen   Dwarkadas
\nrespondent  No. 1 was substituted in place of his father  in
\nthe appeal of Purshottam Laxmidas.  The order in the  appeal
\nof  firm  Vasantsen Dwarkadas against  the  firm  Purshottam
\nLaxmidas was not an order to which firm Purshottam  Laxmidas
\nas  such was a party and consequently any finding  given  in
\nregard\tto the income of firm Vasantsen Dwarkadas being\t the
\nincome\tof the firm Purshottam Laxmidas was an order  passed
\nagainst\t  a  third  party  who\twas  not  heard\t  in   those
\nproceedings.  It was contended on behalf of respondents that
\nthe second proviso to s. 34 (3) is unconstitutional  because
\nit  infringes  Art. 14 of the Constitution in so far  as  it
\ndeprives  such\tthird party of the  immunity  given  against
\nassessment  or\treassessment by the period  of\teight  years
\nmentioned in s. 34 (1) (a) and it results in prejudging\t the
\nmerits of the third party’s case before he is even heard and
\nthat  there is no reasonable basis for\tdistinguishing\tsuch
\nthird party from any other person escaping income-tax.\t The
\nwords  used in the section are “assessment  or\treassessment
\nmade on the assessee in consequence of or to give effect  to
\nany  finding  contained\t in  an\t order.”  Any  person  there
\nmentioned must mean a person other
\n78<\/span>
\nthan the assessee.  The consequences of giving effect to the
\nsecond proviso to s. 34 (3) are that the protection, of\t the
\ntime limit given by the proviso to sub-s. (1) of s. 34\twill
\ndisappear qua those falling within the proviso and would  be
\navailable  to other assessees who fall within s. 34 (1)\t (a)
\nof the Act.  It was submitted that assessees who fall  under
\nthis  category cannot form a different class based  ‘on\t any
\nreal  and  substantial distinction ; and that  there  is  no
\nnexus between the classification and the object sought to be
\nachieved  and therefore Art. 14 is violated.   Reliance\t was
\nplaced on the judgment of this Court in Surajmal Mohta v. A.
\nV.  Viswanatha\tSastri<\/a>\t(1);  Shree  Meenakshi\tMills\tLtd.
\nMadurai\t v.  Shree A. V. Visvanatha Sastri<\/a> (2)\tand  M.\t Ct.
\nMuthiah v. The Commissioner of Income-tax, Madras<\/a> (3).
\nIt  was\t argued\t that  there was  no  reasonable  basis\t for
\nclassification\tin  this  case\tbecause\t there\twas  nothing
\npeculiar  in properties of characteristics of  persons\twith
\nregard\tto whom a finding or a direction is given under\t the
\nproviso\t and then action is taken against them under  s.  34
\n(3)  and those who have evaded tax and in regard to whom  no
\nsuch direction is given and fall under s. 34 (1) (a).\tBoth
\nof  them have common qualities, common\tcharacteristics\t and
\ncommon\t peculiarities\tand  traits.  There  is\t little\t  to
\ndistinguish one from the other and in support counsel relied
\non  the\t observations  of  Mehr Chand  Mahajan,\t C.  J.,  in
\nSurajmal Mlohta’s (1), case where it was observed that there
\nwas  no\t difference in characteristics between\tpersons\t who
\nwere  discovered  as substantial evaders  of  income  during
\ninvestigation conducted under s. 5 (1) of Taxation on Income
\n(Investigation\tCommission) Act (Act 30 of 1947)  and  those
\nwho are discovered by the Income-tax Officer to have  evaded
\npayment\t of income-tax.\t The question of classification\t was
\nagain  raised in Shree Meenakshi Mills’ (2) case.   In\tthat
\ncase the Court had to decide whether persons
\n(1) [1955] 1 S.C.R. 448, 461.\n<\/p>\n
(2) [1955] 1 S.C.R. 787.\n<\/p>\n
(3) [1955] 2 S.C.R. 1247
\n79<\/span>
\nwho came within the scope of s. 5 (1) of Act 30 of 1947\t and
\nthose who came within s. 34 of the Income tax Act as amended
\nby  the-Income-tax  (Amendment) Act 1954 (Act  33  of  1954)
\nformed distinct classes.  It was held that after the  coming
\ninto  force of the amended s. 34 which operates in the\tsame
\nfield as s. 5 (1) of Act 30 of 1947 both classes were inclu-
\nded  within the ambit of amended s. 34 and the two  sections
\noverlapped.,  Therefore\t according to the two  cases  above-
\nmentioned if there are no particular qualities and  elements
\nwhich  distinguish  one set of evaders of  income-tax,\tfrom
\nanother\t and  both have evaded income-tax their\t cases\tfall
\nunder  s. 34 (1) before and after 1948 or before  and  after
\n1953.  From the mere fact that in regard to one a  direction
\nis given or an order is made within the second provise to s.
\n34 (3) and in regard to another it is not given, no reasona-
\nble  basis  for\t classification arises\tas  their  essential
\ncharacteristics are the same.  But it was argued that in  A.
\nPhangal\t Kunju Musaliar v. M. Venkatachalam Potti<\/a> (1),\tsuch
\nclassification\twas made.  In that case a native  of  Quilon
\nwithin\tthe Travancore State was given a notice under  s.  5
\n(1)  of\t the  Travancore  Act  XIV  of\t1124,  a   provision
\ncorresponding  to s. 5 (1) of the Indian Act 30 of 1947\t for
\ninvestigation  but  before  the report\tcould  be  made\t the
\nConstitution  of  India\t became\t applicable  to\t Travancore,
\nState.\tThe assesee filed a petition in the Travancore\tHigh
\nCourt  for a writ of prohibition prohibiting the  Commission
\nfrom  holding an inquiry in regard to evasion and  then\t the
\nmatter\twas  brought in appeal to this Court.  It  was\theld
\nthat  s. 5 (1) of Travancore Act is not\t discriminatory\t and
\nviolative of rights under Art. 14 when read in juxtaposition
\nwith s. 47 of the Travancore Income-tax Act corresponding to
\ns.  34\tof  the Indian Income-tax Act.\tSection\t 47  of\t the
\nTravancore Income-tax Act was directed only against  persons
\nconcerning   whom   definite  information  came\t  into\t the
\npossession of the Income-tax Officer in consequence of which
\nthat
\n(1)  [1955] 2 S.C.R. 1196.\n<\/p>\n
80<\/span><\/p>\n
officer\t discovered the escaped income and such clan  was  a
\ndefinite  class\t and it was not confined to  those  who\t had
\nescaped\t from assessment of income-tax made during  the\t war
\nperiod i.e. 1939 to 1946.  On the other hand s. 5 (1) of the
\nTravancore  Act sought to reach that class of persons  which
\nwas comprised only of those about whom there was no definite
\ninformation and no discovery of any item or items of  income
\nwhich  escaped taxation but against whom the Government\t had
\nonly  a prima facie reason to believe that they\t had  evaded
\npayment of tax of substantial amounts.\tFurther action under
\nthe latter Act was limited to evasion of payment of tax made
\nduring\twar  period.  Section 5 (1) of\tthe  Travancore\t Act
\ntherefore  was not discriminatory in comparison with  s,  47
\n(1)  of\t the  Travancore Income-tax  Act.   The\t reason\t for
\nholding\t that  there  was a  definite  characteristic  which
\ndistinguished  that class i.e. those who had escaped  income
\nto  a  substantial degree during the war  period  and  those
\nfailing\t under s. 34 of the Income-tax Act was that  in\t the
\ncase of the former the Government had reason to believe that
\nthey  had evaded payment of tax to a substantial degree\t and
\nthat  it  was limited to evasion of payment of\ttaxation  on
\nincome\tmade during the war period.  In the case  of  ‘those
\nfalling\t under\ts. 47 (1) of the Travancore  Income-tax\t Act
\nthere  had to be definite information in the  possession  of
\nthe  Income-tax Officer in consequence of which the  Income-
\ntax   Officer  discovered  that\t the  income   had   escaped
\nassessment.   The  two classes were distinct  and  therefore
\nMusaliar’s  (1),  case\tcannot apply to\t the  facts  of\t the
\npresent case.  Later in N. Ct.\tMuthiah v. The\tCommissioner
\nof  Income-tax Madras<\/a> (3), ‘this court pointed out  that  if
\nthe provision of s. 34 (1) of the Act as it stood before its
\namendment  by  the Amending Act of 1948 had  been  the\tonly
\nprovision  to be considered the rule in Musaliar’s (1)\tcase
\nwould have applied but the position was materially  affected
\nby reason of the two amendments made in s. 34 (1), by
\n(1) [1955] 2 S.C.R. 1196.\n<\/p>\n
(2) [1955] 2 S.C.R. 1247.\n<\/p>\n
81<\/span><\/p>\n
Amending   Act\t1948  and  the\tother  by   the\t  Income-tax
\n(Amendment)  Act,  Act\t33 of 1954.  In\t that  case  it\t was
\ncontended and it was so held that s. 5 (1) of Act 30 of 1947
\nwas ultra vires of the Constitution as it was discriminatory
\nand  violative\tof Art. 14 by reason of the  two  amendments
\nabove  referred to.  The submission of the respondents\tthat
\nthere  is  no reasonable basis\tfor  classification  between
\nthose  who have escaped assessment under s. 34 (1)  (a)\t and
\nthose  third  parties who have escaped income-tax  but\twith
\nregard to whom a direction or an order is made under proviso\n<\/p>\n
(ii)  to  s.  34  (3) is  well\tfounded\t and  therefore\t the
\nprovision is unconstitutional and hit by Art. 14.
\nLastly it was argued that the second proviso contemplates  a
\nvalid  finding\tor  direction and that it  cannot  be  given
\nagainst\t a non-assessee at all.\t It was also submitted\tthat
\nsuch  a\t finding  must\tbe necessary  but  there  is  little
\nsubstance   in\tthis  submission.   Whether  a\tfinding\t  is
\nnecessary  or not must depend on the circumstances  of\teach
\ncase  and it cannot be said as a matter of law that  finding
\nis or is not necessary.\n<\/p>\n
For  the reasons given above, the appeal must  be  dismissed
\nwith costs.  In any case the appellant had undertaken to pay
\nthe  costs of the respondents irrespective of the result  of
\nthe appeal and he must pay the costs of the respondents.
\nSARKAR,\t J.-This appeal arises out of a petition under\tArt.
\n226  of the Constitution for the issue of writs\t restraining
\nthe  revenue authorities from making an assessment  under  a
\nnotice\tdated April 30, 1954, served under s. 34 (1) (a)  of
\nthe  Income-tax\t Act,  1922,  on  Purshottam  Laxmidas,\t the
\nrespondent firm, in respect of the assessment year  1942-43.
\nIt  is contended that the notice had been issued  after\t the
\nperiod prescribed for it by the section
\n82<\/span>
\nhad  expired and was, therefore, invalid.  This, it  may  be
\nconceded, is so but it seems to me that the notice was\tnone
\nthe less made valid by a subsequent enactment, namely, s.  4
\nof Act 1 of 1959 to which I will later refer.\n<\/p>\n
Purshottam  Laxmidas is the assessee.  It had two  partners,
\nDwarkadas and Parmanand.  Vasantsen is the son of Dwarkadas.
\nIt appears that in 1941 another business was started in\t the
\nname  of Vasantsen Dwarkadas.  Vasantsen claimed it to\thave
\nbeen  an independent partnership business carried on by\t him
\nwith two other persons.\t For the year 1942-43, this business
\nhad filed a return of income of its own and had applied\t for
\nregistration  as  a  firm under\t the  Income-tax  Act.\t The
\nIncome-tax Officer rejected these claims by the business  of
\nVasantsen Dwarkadas and added its income for the year to the
\nincome\tof Dwarkadas taking the view that it was a  business
\nsolely\tbelonging to him.  Vasantsen Dwarkadas (the  alleged
\nfirm) appealed from this decision.  There was also an appeal
\nagainst\t the  assessment on Dwarkadas individually  for\t the
\nyear 1942-43.  In 1943-44, the Income-tax Officer came to  a
\ndifferent conclusion and held that Vasantsen Dwarkadas was a
\nbranch\tof Purshottam Laxmidas.\t The alleged firm of  Vasan-
\ntsen Dwarkadas repeated its aforesaid contention in  several
\nyears  from 1943-44 onwards and went up in  appeals  against
\nits rejection.\n<\/p>\n
In 1951, various appeals concerning the parties named  above
\ncame  up  before the Income-tax Appellate  Tribunal.   These
\nappeals consisted of the said appeals by the alleged firm of
\nVasantsen  Dwarkadas,  Appeals by Vasantsen as the  son\t and
\nheir  of  Dwarkadas  who  had died in  1946  in\t respect  of
\nassessments  on him for 1942-43 and 1943-44, and appeals  by
\nthe firm of Purshottam Laxmidas in respect of assessments on
\nit  for\t various  years under the Excess  Profits  Tax\tAct.
\nThese appeals were disposed’ of by a
\n83<\/span>
\ncommon\tjudgment passed by the Tribunal on August 14,  1951.
\nThe  appeals  by the firm of Vasantsen\tDwarkadas  were\t all
\ndismissed  as  it  was held that it was\t not  a\t partnership
\nbetween\t the persons alleged.  In the appeals by  Purshottam
\nLaxmidas,  it  was  held  that\tthe  business  of  Vasantsen
\nDwarkadas  was one of its branches.  In the appeals  against
\nthe assessment on Dwarakadas, it was held that the income of
\nthe  business of Vasantsen Dwarkadas had wrongly been  added
\nto  his\t income\t for the assessment  year  1942-43  and\t the
\naddition  should be deleted.  It was also said referring  to
\nthe  income  of\t Vasantsen  Dwarkadas  in  respect  of\t the
\nassessment year 1942-43, that ,If the Income-tax Officer can
\ninclude this sum in the income of Purshottam Laxmidas he  is
\nof  course  at\tliberty to do so ” It  is  because  of\tthis
\nobservation  that  the\timpugned notice was  served  on\t the
\nrespondent  firm of Purshottam Laxmidas.  It was,  thereupon
\nthat  the  firm of Purshottam Laxmidas\tand  Vasantsen,\t the
\nlatter\trepresenting  his father’s estate,  moved  the\tHigh
\nCourt  at  Bombay  under Art. 226 for  the  reliefs  earlier
\nmentioned.   The  respondents  to  the\tpetition  were\t the
\nappellants, the Income-tax Officer, Bombay and the Union  of
\nIndia.\tParmanand, the other partner in Purshottam Laxmidas,
\nwas  also made a respondent to the petition but he does\t not
\nseem to have taken any interest in the proceedings at all.
\nWhen the matter was heard in the High Court, the Act of 1959
\nhad not been passed.  The revenue authorities relied on\t the
\nsecond proviso to s. 34 (3) of the Income-tax Act as amended
\nby Act 25 of 1953 for the validity of the notice.  The\tHigh
\nCourt did not accept this contention and issued the writs as
\nprayed.\t The revenue authorities have now come up in  appeal
\nwhich  is  being  opposed  by  the  respondents,  Purshottam
\nLaxmidas  and Vasantsen.  As I think that the appeal  should
\nbe  allowed  because  of  s. 4- of Act\t1  of\t1959,  which
\nprovision  the\tHigh Court had no occasion to  consider,  it
\nwould be to no purpose
\n84<\/span>
\nto discuss the reasons on which the High Court based  itself
\nor the second proviso to sub-s. (3) of s. 34.
\nI  think  I  ought to refer at this stage to s.\t 34  of\t the
\nIncome-tax Act.\t That section authorises assessment and\t re-
\nassessment  in respect of past years where for one or  other
\nof the reasons mentioned in it, income has not been assessed
\nto the full amount of tax payable on it.  A general idea  of
\nsome  of  the provisions of s. 34 may now  be  given.\tSub-
\nsection (1) of this section provides that before making\t the
\nassessment  a  notice  has to be  served  on  the  assessees
\nconcerned  asking for a return of the income of the year  in
\nwhich it escaped assessment and this within a certain number
\nof years from the end of that year.  Then sub-s. (3) of this
\nsection\t provides that the order of assessment\tpursuant  to
\nthe  notice has to be made within a certain number of  years
\nfrom  the  end\tof the year in which the  income  was  first
\nassessable.   These  are  two conditions which\thave  to  be
\nsatisfied before assessment under s. 34 can be made.  In the
\npresent\t case,\twe  are concerned with the  first  of  these
\nconditions only, that is, whether the notice had been issued
\nwithin\tthe time provided for it for no order of  assessment
\nwas ever made.\tI ought to have said that the second proviso
\nto  sub-s.  (3)\t of s. 34 as amended  in  1953\tenlarged  in
\ncertain\t cases the time for issuing the notice and also\t for
\nmaking the order of assessment.\t That is why the High  Court
\nhad to deal with this proviso in this case.\n<\/p>\n
Now, s. 34(1) has been amended on a number of occasions.   A
\nreference  to some of the amendments would be  useful.\t The
\nfirst amendment to which I desire to draw attention is\tthat
\nmade  by the Income-tax (Amendment) Act, 1939.\t Under\tthat
\namendment  where  the revenue authorities thought  that\t the
\nassessee had concealed his income or deliberately  furnished
\ninadequate  particulars, they could issue the notice  within
\neight  years of the year in which the income is supposed  to
\nhave escaped assessment
\n 86<\/span>
\nand in other cases, within four years of that year.
\nSub-section (1) of s. 34 was next amended by the  Income-tax
\nand  Business Profits Tax (Amendment) Act, 1948.   This\t Act
\nwas passed on September 8, 1948, but s. 8 which\t substituted
\na  new\tsection\t for the existing s. 34,  was  brought\tinto
\noperation retrospectively from March 30, 1948.\tThe new sub-
\nsection (1) was divided into two clauses.  Clause (a)  dealt
\nwith cases of omission on the part of an assessee to make  a
\nreturn\tor his failure to disclose fully his income for\t any
\nyear as a result of which income escaped assessment.  Clause\n<\/p>\n
(b)  dealt with cases where there was no such  omission\t but
\nthe Income-tax Officer in consequence of information in\t his
\npossession  believed  that income of any  year\thad  escaped
\nassessment.  It was provided that in a case coming under cl.\n<\/p>\n
(a)  the notice might be issued within eight years and in  a
\ncase  coming under cl. (b) within four years of the  end  of
\nthe year in which the income escaped assessment.  There\t was
\na proviso to this sub-section which said that the Income-tax
\nOfficer\t could not issue the notice unless he  recorded\t his
\nreasons\t for doing so and the Commissioner of Income-tax,  a
\nsuperior  revenue officer, was satisfied on the\t reasons  so
\nrecorded that it was a fit case for the issue of the notice.
\nThen  came the amendment by s. 18 of the Finance Act,  1956,
\npassed\t on   April  27,  1956,\t but  brought\tinto   force
\nretrospectively\t from  April 1, 1956.  As a result  of\tthis
\namendment it was provided in a case coming under cl. (a)  of
\ns. 34(1) the clause with which this case is  concerned–That
\n(1)  no\t notice should issue for a year prior  to  the\tyear
\nending\ton  March 31, 1941, (2) nor for any  year  if  eight
\nyears  had elapsed after the expiry of that year unless\t the
\nincome which had escaped assessment was likely to amount  to
\nRs. 1,00,000\/- or more and (3) nor unless
\n86<\/span>
\nthe Income-tax Officer had recorded the reasons for  issuing
\nthe  notice and where the amount of the escaped\t income\t was
\nRs.  1,00,000\/- or more, the Board of Revenue, and in  other
\ncases  the Commissioner, was satisfied on such reasons\tthat
\nthe case was a fit one for the issue of the notice.
\nIt  seems  to  me  that the 1956  amendment  made  two\treal
\nchanges.   First, it removed altogether the prescription  of
\ntime  for the issue of a notice in a case where the  escaped
\nincome\twas likely to be Rs. 1,00,000\/- or more.  Under\t the
\n1948  amendment no notice for a year from the end  of  which
\neight  years  had expired could be issued at  all.   As\t the
\namending  Act of 1948 came into force on March 30, 1948,  no
\nnotice\tcould be issued under it for any year prior  to\t the
\nyear  ending on March 31, 1941.\t Therefore the provision  in
\nthe  1956 amendment that no notice could issue for any\tyear
\nprior  to  the year ending on March 31, 1941, made  no\treal
\nalteration  in the law.\t The other change was that in  cases
\ninvolving  escaped  income of Rs. 1,00,000\/-  or  more,\t the
\napproval of the Board of Revenue to the issue of the  notice
\nwas  made  necessary.\tThis alteration in the\tlaw  has  no
\nbearing on the quest ion that I propose to discuss.
\nNow the present is not a case where the revenue\t authorities
\ncontend that the income which escaped assessment was  likely
\nto  be\tRs.  1,00,000\/-\t or more.  The\tnotice,\t it  may  be
\nremembered, was issued on April 30, 1954, in respect of\t the
\nyear  1942-43.\tIt was a notice therefore which was  invalid
\nboth under the 1948 and 1956 amendments of s. 34 (1).
\nI  will\t now refer to the Act of 1959 which I  have  earlier
\nmentioned.   That is the Income-tax (Amendment)\t Act,  1959.
\nIt  was\t passed on March 12, 1959.  Section 2  of  this\t Act
\nintroduced a new
\n 87<\/span>
\nsub-section in s. 34, namely, sub-s. (4).  That\t sub-section
\nwas in these terms :\n<\/p>\n
\t      Sub-s. 4 “A notice under Cl. (a) of sub-s. (1)
\n\t      may be issued at any time notwithstanding that
\n\t      at  the  time of the issue of the\t notice\t the
\n\t      period  of eight years specified in that\tsub-
\n\t      section before its amendment by clause (a)  of
\n\t      section  18  of  the Finance  Act,  1956,\t had
\n\t      expired  in respect of the year to  which\t the
\n\t      notice relates.”\n<\/p><\/blockquote>\n
Section 4 of this amending Act on which I propose to rest my
\njudgment in this case runs as follows :-\n<\/p>\n
\t      S. 4. “‘No notice issued under cl. (a) of sub-
\n\t      s.  (1) of s. 34 of the principal Act  at\t any
\n\t      time  before the commencement of this Act\t and
\n\t      no  assessment,  re-assessment  or  settlement
\n\t      made or other proceeding taken in\t consequence
\n\t      of such notice shall be called in question  in
\n\t      any court, tribunal or other authority  merely
\n\t      on the ground that at the time the notice\t was
\n\t      issued  or ‘at the time the assessment or\t re-
\n\t      assessment  was  made, the time  within  which
\n\t      such  notice  should have been issued  or\t the
\n\t      assessment  or re-assessment should have\tbeen
\n\t      made under that section as in force before its
\n\t      amendment\t by cl. (a) of s. 18 of the  Finance
\n\t      Act, 1956, had expired.”\n<\/p><\/blockquote>\n
Quite  clearly the new sub-s. (4) of s. 34 cannot  apply  to
\nthe  notice with which we are concerned for the\t sub-section
\nby  its own terms deals only with notices issued  after\t the
\n1959  Act  came into force and the notice in this  case\t was
\nissued before that date.\n<\/p>\n
Now, s. 4 of the 1959 Act prevents a notice issued under  s.
\n34 (1) (a) of the principal Act being held to be invalid  on
\nthe ground that it was issued
\n88<\/span>
\nafter the time within which it should have been issued under
\nthat  section  as  it stood before it  was  amended  by\t the
\nFinance\t Act  of  1956.\t In other words, s.  4\tvalidates  a
\nnotice issued under s. 34 (1) (a) even though it was invalid
\nfor  the reason that it was issued after the expiry  of\t the
\neight years prescribed for it under the 1948 amendment, that
\nbeing the section as it stood before the 1956 amendment.
\nThe  first requirement then of the applicability of s. 4  is
\nthat  there must be a notice issued under s. 34 (i)  (a)  of
\nthe  principal\tAct.  I do not think that it  was  seriously
\ncontended at the bar that the notice in the present case has
\nnot been issued under cl. (a) of s. 34 (1).  I feel no doubt
\nthat  it  was  so issued.  The provision  that\twe  have  to
\nconsider for this purpose is s. 31 (1) (a) as it stood as  a
\nresult\tof  the 1948 amendment for that was the\t section  in
\nforce  on the date the notice was issued.  The notice  would
\nhave  been  one issued under cl. (a) of that section  as  so
\namended if it was a case where income had escaped assessment
\nbecause\t of the failure of Purshottam Laxmidas\tto  disclose
\nfully  its  income for the year 1942-43.  There\t can  be  no
\ndoubt on the facts of this case that Purshottam Laxmidas had
\nfailed\tto disclose fully its income for the  year  1942-43.
\nOn the facts found, the income of the business of  Vasantsen
\nDwarkadas was the income of Purshottam Laxmidas.   Therefore
\nPurshottam Laxmidas should have disclosed in its return\t for
\n1942-43\t the income made by it on the business done  in\t the
\nname  of  Vasantsen Dwarkadas.\tWhat happened was  that\t the
\nincome\tof Vasantsen Dwarkadas for 1942-43 was shown as\t the
\nincome\tof its own as an independent firm and this was\tdone
\nby  Vasantsen.\tObviously, Vasantsen, his  father  Dwarkadas
\nand Parmanand, the latter’s partner in Purshottam  Laxmidas,
\nwere all acting together.  It would perhaps be more  correct
\nto say that things had been left to Dwarkadas
\n89<\/span>
\nand Vasantsen to manage.  They had three-fourth interest  in
\nthe   business,\t  while\t Parmanand   had   only\t  one-fourth
\nFurthermore, Parmanand has taken no interest in\t  the
\npresent proceedings.  It would follow from all this that  if
\nVasantsen  Dwarkadas’s income had been shown separately,  it
\ncould  not  have  been\tincluded  in  the  return  filed  by
\nPurshottam  Laxmidas.\tTherefore,  it is a  case  in  which
\nPurshottam Laxmidas’s income for 1942-43 escaped  assessment
\nbecause\t of its failure to disclose its income fully.\tThat
\nis  why\t I  think it beyond doubt that\tthe  notice  in\t the
\npresent case had been issued under cl. (a) of s. 34 (1).  It
\nis none the less so because it was issued in consequence  of
\nthe  direction of the Tribunal that the\t Income-tax  Officer
\nwas  at\t liberty if he could in law do so,  to\tinclude\t the
\nincome\tof Vacantsen Dwarkadas for 1942-43 in the income  of
\nPurshottam  Laxmidas.\tThe order could not have  enabled  a
\nnotice\tto  issue.   The notice had to\tbe  issued  under  a
\nstatutory provision.  That provision was s. 34 (1) (a).
\nThe next requirement of s. 4 of the Act of 1959 is that\t the
\nnotice\tmust  have  been  issued  at  any  time\t before\t the
\ncommencement of that Act.  The present notice which had been
\nissued in 1954 had clearly been so issued.  When the section
\nuses the word “at any time”, I suppose it means at any time;
\nit  does not thereby say that the notice must be  issued  at
\nany time before the 1959 Act but after a certain other point
\nof time.  The other limit is not to be found in the  section
\nat  all;  all that it requires is that the  notice  must  be
\nissued before the 1959 Act.\n<\/p>\n
It is however contended that the proper construction of s. 4
\nis  that the notice must have been issued after the  Finance
\nAct  of\t 1956  came into force and amended s.  34.   I\tfind
\nnothing\t in  s. 4 on which to rest this\t construction.\t Mr.
\nPalkhivala appearing for the respondent, said that the words
\n“under that section as in force before its amendment by\t cl.\n<\/p>\n
(a) of
\n90<\/span>
\ns.   18 of the Finance Act, 1956″ led to this  construction.
\nI  do  not  see\t why and I am not able\tto  deal  with\tthis
\ncontention  more fully for I do not see the reason on  which
\nit is based.  To my mind, all that these words mean is\tthat
\nthe  section  to be considered is the section  as  it  stood
\nbefore it was amended by the ]Finance Act, 1956, that is  to
\nsay, the section as it stood as a result of the amending Act
\nof 1948, for that was the section which was in force immedi-
\nately  before  the amendment affected by  the  Finance\tAct,
\n1956.\n<\/p>\n
Then it was said that if the notice contemplated was not one
\nissued after the Finance Act, 1956, then under s. 34 (1) (a)
\nall  years  without  any  limitation  could  be\t brought  to
\nassessment.   If that is the result of the words used in  s.
\n4, the words must have that effect.  That would be no reason
\nto  say that s. 4 applies only to notices issued  after\t the
\n1956 Act came into force.  No doubt the words ” at any time”
\nwould  comprehend  a  notice  whenever\tissued\tbefore\t the
\ncommencement of the 1959 Act.  But the section protects such
\nnotice only against the invalidity caused by s. 34 (1) as it
\nstood  after  the  1948\t amendment,  that  is,\tagainst\t the
\ninvalidity caused by reason of the notice having been issued
\nafter  the  expiry  of the time prescribed  for\t it  in\t the
\nsection\t as it then stood.  Section 4 does riot protect\t the
\nnotice\tfrom invalidity otherwise attaching to it.   Now  it
\nwill  be  remembered that the 1939 amendment of s.  34\talso
\nprescribed  a  period of time for the issue of\tthe  notice.
\nThat  prescription  had to be  obeyed  whenever\t applicable.
\nSection 4 provided for no immunity against a breach of\tthat
\nprescription.\tSo,  though  s. 4 of the 1959  Act  freed  a
\nnotice\tfrom the bar of limitation in respect of it  imposed
\nby  the 1948 amendment, it did not altogether do  away\twith
\nall  prescriptions  of\ttime.  Inspite of  s.  4,  a  notice
\ncontemplated  by it would be subject to the prescription  of
\ntime as to its issue under the 1939 Act and may be, under s.
\n34 as it stood
\n91<\/span>
\nbefore\tthe 1939 amendment.  If the notice was issued  after
\nthe  1956,  amendment  it  would  also\tbe  subject  to\t the
\nprescription as to time provided by that amendment.
\nThen  it  was said that if s. 4 applied to a  notice  issued
\nmore  than  eight years after the year in which\t the  income
\nescaped\t assessment but before the 1956 amendment came\tinto
\nforce  in  a case where the escaped income of the  year\t was
\nless than Rs. 1,00,000\/-, the position. would be curious.  A
\nnotice\tissued\tin a similar case after the  1956  amendment
\nwould be bad under s. 34 as it then stood and s. 4 could not
\nsave  it  for it saved notices only from the effect  of\t the
\n1948  amendment.  The position then would be that in a\tcase
\ninvolving  the\tsame amount of escaped income for  the\tsame
\nyear,  a  notice issued before 1956  amendment\tand  invalid
\nunder  the  1948  amendment would be validated\tand  a\tmore
\nrecent\tnotice\tequally invalid under both the\tearlier\t and
\npresent laws would remain invalid.  Assume that the position
\nis somewhat curious or incongruous.  But that seems to me to
\nbe the result of the words used.  For all we know that might
\nhave been intended.  However strange, if at all, the  result
\nmay  be,  I  do not think the Courts  can  alter  the  plain
\nmeaning of the language of the statute only on the ground of
\nincongruity  if\t there is nothing in the words\twhich  would
\njustify\t the  alteration.  As I have said earlier,  in\tthis
\ncase there is nothing to justify the alteration of the plain
\nmeaning.  Consider this.  In a case where the escaped income
\nis Rs. 1,00,000\/- or over, no incongruity as in the case  of
\nescaped income below Rs. 1,00,600\/- arises.  In such a\tcase
\nthe 1956 amendment removes the bar of limitation  altogether
\nand what had not been previously barred cannot become at all
\nbarred.\t  So  no question of more  recent  notices  becoming
\nbarred\tand  earlier notices made valid arises:\t If  on\t the
\nground of the alleged incongruity notices issued before 1956
\nin cases of escaped income of less than
\n92<\/span>
\nRs.  1,00,000\/- have to be left out of the scope of s. 4  of
\nthe Act of 1959, I suppose we must hold that such notices in
\ncases of escaped income of Rs. 1,00,000\/or over must also be
\nleft  out  of  the scope of s. 4, for  clearly\tthe  section
\ncannot\tbe read as treating the notices in these  two  cases
\ndifferently.   But in the latter kind of cases, there is  no
\nincongruity.  It would indeed be absurd to hold that notices
\nissued before 1956 in cases where the escaped income was Rs.
\n1,00,000\/-  or\tover were excluded from s. 4,  for  in\tsuch
\ncases notices may be clearly issued after the 1959 Act under
\nsub-s. (4) of s. 34 introduced by that Act.  Sub-section (4)
\nof  s. 34 was enacted by the Act of 1959 which also  enacted
\ns. 4. If a year’s escaped income could be brought to tax  by
\na  notice  issued after the 1959 Act under  sub-s.  (4),  it
\ncould not be that it was intended that the same income could
\nnot  be brought to tax by a notice earlier issued and  prima
\nfacie made valid by s. 4. There would be no reason to make a
\ndistinction  between the two cases.  If a distinction  could
\nnot  be made between the two cases, and in one case  notices
\nissued before 1956 were covered by s. 4, s. 4 must apply  to
\nall  notices  issued  before the 1956  amendment  came\tinto
\nforce.\n<\/p>\n
I  may, before I conclude, as well say that for the  reasons
\nmentioned  in  the judgment in the case of  Commissioner  of
\nIncome-tax v. Sardar Lakhmir Singh (C.\tAs.  Nos.<\/a> 214-215 of
\n1958),\tthat I shall presently read today, I think that\t the
\nsecond proviso to s. 34 (3) of the Income-tax Act is invalid
\nand cannot therefore support the notice.\n<\/p>\n
The  result  is\t that I think that the\tpresent\t notice\t was
\nvalidated by s. 4 of the Income-tax (Amendment) Act of 1959.
\nThe appeal will, therefore, be allowed.\t As the\t certificate
\nunder  which the appeal was admitted so provides by  consent
\nof parties, the appellant will pay the costs of\t Respondents
\nNos.   1  and 2, of this appeal.  The orders of\t the  Courts
\nbelow are set aside.\n<\/p>\n
93<\/span><\/p>\n
HIDAYATULLAH, J.-In this judgment we shall deal also with C.
\nAs. 214, 215 and 509 all of 1958 and C. A. 585 of 1960.\t The
\nappellant  is  the Commissioner of Income-tax,\tBombay.\t  In
\nCivil  Appeal Nos. 214 and 215 of 1958 the  Commissioner  of
\nIncome-tax.,  Bihar,  and  in  C. A. No.  509  of  1958\t the
\nCommissioner of Income-tax, Madras, are the appellants.\t  In
\nCivil  Appeal  No.  585\t of  1960  the\tIncome-tax  Officer,
\nAhmednagar,  and  the  Union of India  are  the\t appellants.
\nThese  appeals\tare directed against divers  respondents  to
\nwhom  reference will be made later.  This appeal and  C.  A.
\nNo. 585 of 1960 are appeals against the orders of the Bombay
\nHigh  Court  in\t the  exercise of  the\tpower  conferred  by
\nArticles  226  and 227 of the  Constitution,  the  remaining
\narise  out of regular proceedings for assessment  under\t the
\nIncome-tax Act, culminating in references to the High  Court
\nunder s. 66, Income-tax Act, and orders passed therein.\t  In
\nall these appeals assessments made or notices issued,  under
\ns.  34\tof the Income-tax Act were  successfully  called  in
\nquestion  by the respondents and orders appropriate  to\t the
\nnature\tof  the proceedings were passed by  the\t High  Court
\nconcerned,  either  declaring  the  assessments\t illegal  or
\nquashing  the  notice by a writ.  In  these  cases,  however
\ncommenced,  the validity of the assessments or\tthe  notices
\nunder  s. 34 was questioned on the ground  of  ‘limitation’.
\nThe  High Courts held that the notices or  assessments\twith
\nwhich  they were dealing were out of time.  The Bombay\tHigh
\nCourt further held that the 2nd proviso to s. 34 (3) of\t the
\nIncome-tax   Act   was\tultra  vires  Article  14   of\t the
\nConstitution  and thus void.  The High Courts certified\t the
\nrespective  cases as fit for appeal to this Court and  these
\nappeals have been filed.\n<\/p>\n
We  have  had  the benefit of  reading\tthe  judgments\tjust
\ndelivered  by our learned brethren Das and Kapur,  JJ.,\t who
\nhave ordered the dismissal of all the appeals.\tWe have\t the
\nmisfortune to differ
\n94<\/span>
\nfrom  them  as\twe are of opinion that\tthese  appeals\tmust
\nsucceed.  The point of law which arises in these appeals  is
\ncommon\tthough\tit  arises in different\t settings.   We\t are
\nconcerned  with\t s. 34 of the Indian Income-tax\t Act  as  it
\nstood  between\t1939 and 1959.\tThis section  has  been\t the
\nsubject of repeated amendments in 1939, 1948, 1953, 1956 and
\n1959.\tIt has, while enabling the bringing to tax,  income,
\nprofits and gains which escape assessment, always provided a
\nperiod or periods of time for such action though after\t1956
\nit  has\t done away with the restriction of time\t in  certain
\nclasses\t of cases.  We are not concerned with the  state  of
\nlaw prior to the Amending Act of 1939 or the amendments made
\nlater  than the Act of 1959.  During the intervening  twenty
\nyears,\tthe Indian Legislature and Parliament have not\tonly
\namended\t s. 34 but have passed at intervals validating\tlaws
\nand  these cases involve the interpretation and\t application
\nof  the\t section  as  amended from  time  to  time  and\t the
\ndetermination  of the effect of the  validating,  provisions
\nwith  a\t view  to  seeing whether  any\timpugned  notice  or
\nassessment  is\tsaved by any validating provision.   In\t our
\nopinion,  the provisions taken all-in-all are sufficient  to
\nuphold\tthe validity of the divers notices issued  in  these
\ncases  and the assessments, if any, made as  a\tconsequence.
\nIf  the notices and the assessments are held to be  in\ttime
\nand  thus valid, there is nothing in these  appeals  besides
\nthe  constitutionality\tof the second proviso to s.  34\t (3)
\nwhich  was raised successfully in the appeals  from  Bombay.
\nIf  the constitutionality is also upheld then these  several
\njudgments and orders must be reversed and that indeed is our
\nopinion.  We shall now\t give the facts of this appeal.
\nIn this case there was a firm of two partners (i) Dwarkadas
\nVussonji  and  (ii)  Parmanand\tOdhavji,  bearing  the\tname
\n“Purshottam  Laxmidas.” This firm did business from  October
\n28,  1935, to April 1, 1946.  On the latter date Dwarka\t das
\ndied. A new
\n95<\/span>
\npartnership firm bearing the same name came into being\twith
\nVasantsen  Dwarkadas the son of the deceased partner.\tThis
\nfirm  was  registered.\t Another  firm\tby  name  “Vasantsen
\nDwarkadas”  was\t started  on January 28, 1941,\tand  it\t was
\ndissolved  on  October 24, 1946.  Its partners\twere  :\t (i)
\nVasantsen Dwarkadas (ii) Naraindas Shivji and (iii)  Nanalal
\nOdhavji.\n<\/p>\n
For  the  assessment  year  1942-1943  the  firm  “Vasantsen
\nDwarkadas”   filed  a  voluntary  return  and  applied\t for
\nregistration.\tThis registration was refused on the  ground
\nthat  the  firm\t was not genuine.  The income  of  the\tfirm
\nrelative  to that assessment year was added to the  personal
\nincome of Dwarkadas Vussonji in the assessment year 1943-44.
\nThis also happened in subsequent years.\t A number of appeals
\nwere  heard  together  and disposed  of\t by  the  Income-tax
\nAppellate  Tribunal by its order on August 14, 1951.   These
\nappeals were filed by the firm “Vasantsen Dwarkadas” for the
\nassessment years 1942-43 to 1948-49, by Vasantsen  Dwarkadas
\nrepresenting  the  estate  of his father  and  by  the\tfirm
\nPurshottam   Laxmidas”\tconcerning  excess   profits.\t The
\nTribunal held that not Dwarkadas Vussonji alone but the firm
\n“Purshottam Laxmidas” owned the firm “Vasantsen\t Dwarkadas.”
\nA case was stated but the High Court upheld this  conclusion
\non October 8, 1953.  A notice was then issued under s. 34 of
\nthe  Income-tax\t Act to the firm  “Purshottam  Laxmidas”  on
\nApril  30,  1954,  that it had been  under-assessed  in\t the
\nrelevant year.\tThis notice was challenged before the Bombay
\nHigh   Court  by  a  petition  under  Article  226  of\t the
\nConstitution.  The first contention was that the notice\t was
\nout of time and the second was that the 2nd proviso to s. 34
\n(3) was ultra vires Article 14 of the Constitution in so far
\nas it applied to persons other than the assessees.  Both the
\npoints\twere accepted by the learned single judge who  heard
\nthe petition.  He, however, held that the firm
\n96<\/span>
\n“Purshottam  Laxmidas” could not be called “‘a stranger”  to
\nthe assessment proceedings.  A Divisional Bench of the\tHigh
\nCourt upheld the conclusions of the learned single judge but
\nheld  further  that the said firm was “a  stranger”  to\t the
\nproceedings before the Tribunal.  The validity of the notice
\nwas sought to be established under s. 34 as amended in\t1948
\nand  also  by  invoking\t s.  31\t of  the  Indian  Income-tax
\n(Amendment)  Act 1953, Act XXV of 1933.\t In this Court by  a
\nsupplemental   statement the amendments made by the  Finance
\nAct  of\t 1956  (18 of 1956) and\t by  the  Indian  Income-tax
\n(Amendment)  Act, 1959 (1 of 1959) were also brought to\t our
\nnotice.\t The amount involved in this case was Rs. 62,732.
\nIn  the\t companion appeals the full facts of which  will  be
\ngiven  in-this\tjudgment later the position  was  this.\t  In
\nCivil  Appeal  No. 585 of 1960, notices were issued  to\t the
\nrespondent   on\t February  18,\t1957,  in  respect  of\t the
\nassessment years 1944-45,1945-46 and 194647, as a result  of
\na  direction by the Appellate Assistant\t Commissioner.\t The
\nnotices were quashed by the Bombay High Court following\t the
\ndecision  just\tmentioned.  The amounts\t involved  were\t Rs.
\n14,000;\t 14000 and 38,000.  In Civil Appeal No. 509 of\t1958
\nthe  notice was issued in 1949 to a lady whose\thusband\t had
\nremitted Rs. 9,180 to her from Bangkok in the year  relative
\nto  the assessment year 1942-43.  She had omitted to file  a
\nreturn.\t  In  Civil  Appeal Nos. 214 and  215  of  1958\t the
\nassessment  years were 1946-47 and 1947-48.  The  assessment
\nof  the\t respondent as individual was made on  November\t 17,
\n1953, as a result of a direction by the Appellate  Assistant
\nCommissioner on March 20, 1953.\t These assessments were held
\nbarred\tunder s. 34 (3) as it stood before the Amending\t Act
\nof 1953.  The amounts involved were Rs. 28,284 (1946-47) and
\nRs. 21,141 (1947-48).\n<\/p>\n
The  above are the relevant facts of the five  appeals\twith
\nwhich we are dealing.  We shall deal
\n97<\/span>
\nwith  each appeal separately later.  For the present  it  is
\nsufficient  to\tnote  the  dates  of  the  assessment  years
\ninvolved,,  the date of the direction (if any) issued  by  a
\nsuperior  officer or Tribunal and the date of the  issue  or
\nservice\t of the notices and date of the assessment, if\tany,
\nin  each  case.\t  This will serve to  determine\t under\twhat
\namendment  or amendments the matter falls to be\t considered.
\nWe  shall revert to these dates after analysing s.  34\twith
\nreference to the amendments made from time to time.
\nIn determining the effect of the provisions of the  amending
\nActs  and  the validating enactments contained\tin  some  of
\nthem,  it is altogether more satisfactory to start with\t the
\nIncome-tax  Act (hereafter the Principal Act) as amended  in
\n1939,  and then to proceed chronologically.  Each case\tthen
\nfalls for consideration in its appropriate period.   Section
\n34 before its amendment in 1939 provided for a period of one
\nyear  for bringing to tax income, profits or gains  escaping
\nassessment  in\tany year.  In 1939, the\t whole\tsection\t was
\nsubstituted by another.\t The material portion of it read  as
\nfollows:–\n<\/p>\n
\t      “34 (1) If in consequence of definite informa-
\n\t      tion  which has come into his  possession\t the
\n\t      Income-tax  Officer  discovers  that   income,
\n\t      profits or gains chargeable to income-tax have
\n\t      escaped  assessment in any year, or have\tbeen
\n\t      underassessed,  or have been assessed  at\t too
\n\t      low  a  rate,  or have  been  the\t subject  of
\n\t      excessive relief under this Act the Income-tax
\n\t      Officer  may,  in\t any case in  which  he\t has
\n\t      reason  to  believe  that\t the  assessee\t has
\n\t      concealed\t the  particulars of his  income  or
\n\t      deliberately furnished inaccurate\t particulars
\n\t      thereof, at any time within eight years and in
\n\t      any  other case at any time within four  years
\n\t      of  the end of that year, serve on the  person
\n\t      liable  to pay tax on such income, profits  or
\n\t      gains………… a notice……… and may
\n98<\/span>
\n\t      proceed  to assess or re-assess  such  income,
\n\t      profits  or gains, and the provisions of\tthis
\n\t      Act shall, so far as may be, apply accordingly
\n\t      as  if the notice were a notice  issued  under
\n\t      that sub-section.”\n<\/p><\/blockquote>\n
\t   x   x    x\t x\tx     x
\nIt  will  be  noticed that the\tIncome-tax  Officer  was  to
\nproceed on definite information that there was an escapement
\nof  assessment before he took action.  The section  provided
\ntwo periods in which action could be taken-(1) an eight year
\nperiod and (ii) a four year period.  The first was to  apply
\nto  cases  in  which the Income-tax Officer  had  reason  to
\nbelieve (a) that the assessee had concealed the\t particulars
\nof  his\t income\t or  (b)  furnished  inaccurate\t particulars
\nthereof.   The second was to apply in all other cases.\t The
\nterminus a quo in either case was the end of the  assessment
\nyear  and  the terminus ad quem the service of\tthe  notice.\n<\/p><\/blockquote>\n
The section remained in force till March 30, 1948, when\t the
\nIncome-tax  and\t Business Profits Tax (Amendment)  Act\t1948
\n(passed\t on September 8, 1948) substituted a new section  in
\nplace of the old.  That section in so far as it is  material
\nto our purpose read:–\n<\/p>\n
“34. (1) If-\n<\/p>\n
\t      (a)  the\tIncome-tax  Officer  has  reason  to
\n\t      believe  that  by reason of  the\tomission  or
\n\t      failure  on the part of an assessee to make
\n\t      a\t return of his income under section  22\t for
\n\t      any  year or to disclose fully and  truly\t all
\n\t      material\tfacts necessary for his.  assessment
\n\t      for  that\t year,\tincome,\t profits-  or  gains
\n\t      chargeable   to\tincome-tax   have    escaped
\n\t      assessment for that year, or have been  under-<\/p><\/blockquote>\n
\t      assessed.,  or assessed at too low a rate,  or
\n\t      have been made the subject of excessive relief
\n\t      under   the   Act,  or   excessive   loss\t  or
\n\t      depreciation allowance has been computed, or
\n99<\/span>\n<\/p>\n
\t      (b)   notwithstanding  that there has been  no
\n\t      omission or failure as mentioned in clause (a)
\n\t      on  the part of the assessee,  the  Income-tax
\n\t      Officer  has in consequence of information  in
\n\t      his possession reason to believe that  income,
\n\t      profits or gains chargeable to income-tax have
\n\t      escaped assessment for any year, or have\tbeen
\n\t      under-assessed, or assessed at too low a rate,
\n\t      or  have\tbeen made the subject  of  excessive
\n\t      relief under this Act, or that excessive\tloss
\n\t      or depreciation allowance has been computed,
\nhe may in cases falling under clause (a) at any time  within
\neight  years  and in cases falling under clause (b)  at\t any
\ntime within four years of the end of that year, serve on the
\nassessee or, if the assessee is a company, on the  principal
\nofficer\t thereof,  a  notice containing all or\tany  of\t the
\nrequirements  which may be included in a notice\t under\tsub-
\nsection\t (2) of section 22 and may proceed to assess or\t re-
\nassess\tsuch income, profits or gains or recompute the\tloss
\nor  depreciation allowance; and the provisions of  this\t Act
\nshall, so far as may be, apply accordingly as if the  notice
\nwere a notice issued under that sub-section:\n<\/p>\n
\t      Provided that :-\n<\/p><\/blockquote>\n
\t      (i)   the Income-tax Officer shall not issue a
\n\t      notice  under this sub-section, unless he\t has
\n\t      recorded\this  reasons for doing\tso  and\t the
\n\t      Commissioner  is\tsatisfied  on  such  reasons
\n\t      recorded\tthat it is a fit case for the  issue
\n\t      of such notice;\n<\/p><\/blockquote>\n
\t      x\t    x\t  x\t x
\n\t      Explanation.-Production before the  Income-tax
\n\t      Officer  of  account-books or  other  evidence
\n\t      from  which  material  facts  could  with\t due
\n\t      diligence have been discovered by the  Income-
\n\t      tax Officer will not necessarily amount
\n100<\/span>
\n\t      to  disclosure  within  the  meaning  of\tthis
\n\t      section.\n<\/p><\/blockquote>\n
\t      (2)   x\t  x\tx     x
\n\t      (3)   No order of assessment under section  23
\n\t      to  which\t clause (c) of\tsub-section  (1)  of
\n\t      section  28  a Plies or of assessment  or\t re-
\n\t      assessment in cases falling within clause\t (a)
\n\t      of  sub-section (1) of this section  shall  be
\n\t      made  after the expiry of eight years, and  no
\n\t      order  of\t assessment or reassessment  in\t any
\n\t      other  case shall be made after the expiry  of
\n\t      four years, from the end of the year in  which
\n\t      the  income,  profits  or\t gains\twere   first
\n\t      assessable :\n<\/p><\/blockquote>\n
\t      Provided that where a notice under sub-section
\n\t      (1)  has been issued within the  time  therein
\n\t      limited, the assessment or re-assessment to be
\n\t      made  in pursuance of such notice may be\tmade
\n\t      before the expiry of one year from the date of
\n\t      the service of the notice even if such  period
\n\t      exceeds  the  period of eight  years  or\tfour
\n\t      years, as the case may be :\n<\/p><\/blockquote>\n
\t      Provided\tfurther\t that nothing  contained  in
\n\t      this sub-section shall apply to a reassessment
\n\t      made  under section 27 or in pursuance  of  an
\n\t      order  under section 31, section\t33,  section
\n\t      33A, section 33B, section 66 or section 66A.”\n<\/p><\/blockquote>\n
This  new section created different conditions precedent  to
\naction\tin the two kinds of cases to which the periods of  8
\nand 4 years were applicable.\n<\/p>\n
\t      8\t  years:  Income-tax  Officer  should\thave
\n\t      reasons to believe  that escapement was due to
\n\t      omission\tor  failure  on\t the  part  of\t the
\n\t      assessee-\n<\/p>\n
 101<\/span><\/p>\n
\t      (i)   to\tmake a return of his income for\t the
\n\t      year;\n<\/p>\n
\t\t\t\t  or\n<\/p>\n
\t      (ii)  to disclose fully and truly all material
\n\t      facts  necessary\tfor  his  assessment.\t The
\n\t      explanation made it clear that the  disclosure
\n\t      must be positive.\n<\/p>\n
\t      4\t years:This  comprised all  other  cases  in
\n\t      which there was no omission or failure on\t the
\n\t      part  of\tthe  assessee  but  the\t  Income-tax
\n\t      Officer was in possession of information which
\n\t      led   him\t to  believe  that  there   was\t  an
\n\t      escapement of assessment.\n<\/p>\n
In  both  cases\t the Income-tax Officer had  to\t record\t his
\nreasons\t in  writing  and the Commissioner  had\t to  satisfy
\nhimself that the reasons were good.\n<\/p>\n
The  section  as  enacted by the Amending Act  of  1948\t was
\namended\t again in 1953 by the Indian Income-tax\t (Amendment)
\nAct,  1953 which in the absence of special provision in\t any
\nsection\t came  into force from the 1st day of  April,  1952.
\nSection\t 18  of Amending Act amended the second\t proviso  to
\nsub-section (3) which has been quoted above and it read :-\n<\/p>\n
\t      “Provided further that nothing in this section
\n\t      limiting the time within which any action\t may
\n\t      be   taken,  or  any  order,   assessment\t  or
\n\t      reassessment may be made, shall apply to a re-
\n\t      assessment  made\tunder section 27  or  to  an
\n\t      assessment   or  reassessment  made   on\t the
\n\t      assessee or any person in consequence of or to
\n\t      give  effect  to\tany  finding  or   direction
\n\t      contained\t in  an\t order\tunder  section\t 31,
\n\t      section 33, section 33A, section 33B,  section
\n\t      66 or section 66A.”\n<\/p><\/blockquote>\n
102<\/span><\/p>\n
The Act also enacted a provision for the validity of certain
\nnotices and assessments.  This was section 31 which read :-\n<\/p>\n
\t      “31.   For the removal of doubts it is  hereby
\n\t      declared\tthat the provisions  of\t sub-section
\n\t      (1),  (2)\t and  (3)  of  section\t34  of\t the
\n\t      principal Act shall apply and shall be  deemed
\n\t      always  have applied to any assessment or\t re-
\n\t      assessment for any year ending before the\t 1st
\n\t      day   of\tApril,\t1948,  in  any\tcase   where
\n\t      proceedings  in respect of such assessment  or
\n\t      re-assessment  were commenced under  the\tsaid
\n\t      sub-sections  after the 8th day of  September,
\n\t      1948, and any notice issued in accordance with
\n\t      subsection (1) or any assessment completed  in
\n\t      pursuance\t of  such  notice  within  the\ttime
\n\t      specified in subsection (3), whether before or
\n\t      after  the commencement of the Indian  Income-\n<\/p><\/blockquote>\n
\t      tax     (Amendment)    Act,    1953     shall,
\n\t      notwithstanding  any judgment or order of\t any
\n\t      court,   Appellate  Tribunal   or\t  Income-tax
\n\t      authority\t to the contrary, be deemed to\thave
\n\t      been  validly issued or completed as the\tcase
\n\t      may be, and no such notice, assessment or\t re-
\n\t      assessment shall be called in question on\t the
\n\t      ground  merely that the provisions of  section
\n\t      34  did  not  apply or  purport  to  apply  in
\n\t      respect of an assessment or re-assessment\t for
\n\t      any year prior to the 1st day of April, 1948.”\n<\/p><\/blockquote>\n
The effect of these provisions will have to be seen in cases
\nin  which notices and assessments took place after  the\t 1st
\nday of April, 1952, particularly as a result of a  direction
\nsuch  as is mentioned in the second proviso  to\t sub-section
\n(3) of s. 34 as amended by this Act.\n<\/p>\n
By the Finance Act 1956, the section was again amended\tfrom
\nthe  1st day of April, 1956.  The most\tsignificant  changes
\nwere the omission of
\n 103<\/span>
\nthe time-limit of eight years in sub-section (1) in  respect
\nof  cases falling under clause (a) and the  substitution  of
\ncertain provisos to sub-section (1).  The section as amended
\nin so far as material to our purpose is reproduced:\n<\/p>\n
\t      “34. (1) If-\n<\/p><\/blockquote>\n
\t      (a)   The\t Income-tax  Officer has  reason  to
\n\t      believe  that  by reason of  the\tomission  or
\n\t      failure  on the part of an assessee to make  a
\n\t      return of his income under section 22 for\t any
\n\t      year  or\tto  disclose  fully  and  truly\t all
\n\t      material\tfacts necessary for  his  assessment
\n\t      for  that\t year,\tincome,\t profits  or   gains
\n\t      chargeable   to\tincome-tax   have    escaped
\n\t      assessment for that year, or have been  under-
\n\t      assessed,\t or assessed at too low a  rate,  or
\n\t      have been made the subject of excessive relief
\n\t      under the Act,or excessive depreciation  allo-<\/p><\/blockquote>\n
\t      wance has been computed, or\n<\/p>\n
\t      (b)   notwithstanding  that there has been  no
\n\t      omission or failure as mentioned in clause (a)
\n\t      on  the part of the assessee,  the  Income-tax
\n\t      Officer  has in consequence of information  in
\n\t      his possession reason to believe that  income,
\n\t      profits or gains chargeable to income-tax have
\n\t      escaped assessment for any year, or have\tbeen
\n\t      under-assessed, or assessed at too low a rate,
\n\t      or  have\tbeen made the subject  of  excessive
\n\t      relief under this Act, or that excessive\tloss
\n\t      or depreciation allowance has been computed,
\nhe  may in cases falling under clause (a) at any time x x  x
\nand in cases falling under (b) at any time within four years
\nof  the end of that year, serve on the assessee, or, if\t the
\nassessee  is a company, on the principal officer thereof,  a
\nnotice\tcontaining all or any of the requirements which\t may
\nbe included in a notice under sub-section (2) of section  22
\nand may proceed to assess or re-assess such income,  profits
\nor
\n104<\/span>
\ngains  or recompute the loss or depreciation allowance;\t and
\nthe  provisions\t of this Act shall, so far as may  be  apply
\naccordingly as if the notice were a notice issued under that
\nsub-section:\n<\/p>\n
Provided  that\tthe  Income-tax Officer shall  not  issue  a
\nnotice under clause (a) of sub-section (1)-\n<\/p>\n
\t      (i)   for any year prior to the year ending on
\n\t      March 31, 1941;\n<\/p><\/blockquote>\n
\t      (ii)  for\t any  year,  if\t eight\tyears\thave
\n\t      elapsed  after the expiry of that year  unless
\n\t      the  income,  profits or gains  chargeable  to
\n\t      income-tax  which have escaped  assessment  or
\n\t      have  been under assessed or assessed  at\t too
\n\t      low  a rate or have been made the\t subject  of
\n\t      excessive\t relief under this Act, or the\tloss
\n\t      or  depreciation\tallowance  which  has\tbeen
\n\t      computed\tin excess, amount to, or are  likely
\n\t      to  amount to, one lakh of rupees or  more  in
\n\t      the  aggregate. either for that year,  or\t for
\n\t      that  year and any other year or\tyears  after
\n\t      which or after each of which eight years\thave
\n\t      elapsed,\tnot  being a year  or  years  ending
\n\t      before March 31, 1941;\n<\/p><\/blockquote>\n
\t      (iii) for any year, unless he has recorded his
\n\t      reasons for doing so, and, in any case falling
\n\t      under clause (ii), unless the Central Board of
\n\t      Revenue,.\t  and,\tin  any\t other\t case,\t the
\n\t      Commissioner,  is\t satisfied on  such  reasons
\n\t      recorded\tthat it is a fit case for the  issue
\n\t      of such notice :\n<\/p><\/blockquote>\n
\t      Proviso\t......\t     (omitted)\n\t      Proviso\t......\t     (omitted)\n<\/pre>\n
Explanation.-Production\t before\t the Income-tax\t Officer  of
\naccount-books or other evidence from
\n105<\/span>
\nwhich  material\t facts could with due  diligence  have\tbeen
\ndiscovered  by the Income-tax Officer will  not\t necessarily
\namount to disclosure within the meaning of this section.\n<\/p><\/blockquote>\n
That  this  section was to operate on back period  does\t not
\nadmit  of any doubt.  No clearer language could be used\t for
\nthe  purpose.\tThe first proviso to sub-section  (1)  makes
\nthis  abundantly clear by allowing notices to be issued\t ‘at
\nany  time’ for any year later than the year ending on  March
\n31,  1941, and then limiting action to eight years from\t the
\nend of the year in cases coming in clause (a) involving less
\nthan rupees one lakh.  Though the section came into force on
\nApril 1, 1956, it covered in this way years going right back
\nto  1941,  of course, subject to  the  conditions  indicated
\nthere.\n<\/p>\n
For those cases in which there was no default on the part of
\nthe  assessee  the  period continued to\t be  four  years  as
\nbefore.\t  The  deletion of the time limit  of  eight  years,
\nallowing  action to be taken at any time in cases  involving
\nmore  than rupees one lakh and limiting time to eight  years
\nin   all  cases\t coming\t within\t clause\t (a)  led  to\tsome
\ncontroversy as to whether the issuance of a notice under the
\nsection\t as amended by the Amending Act of 1956\t but  served
\nbeyond\teight years as laid down in the 1948 Amendment,\t and
\nthe reopening of cases right back to 1941 which were subject
\nto  a  time limit under the 1948 Amendment  which  time\t had
\nexpired,  was legal.  The Calcutta High Court in Debi  Dutta
\nMoody  v.  T. Bellan (1) held that notices  which  were\t not
\nserved\twithin\tthe time limited for action under  the\t1948
\namendment  could  not  be  validly  served  after  the\t1956
\namendment which removed the time limit in certain cases.  In
\nthat case a notice was issued before but served after  April
\n1, 1956, when the 1956 amendment came into force.
\n(1)  A.I.R. 1959 Cal. 567.\n<\/p>\n
106<\/span><\/p>\n
This led to the passing of an Ordinance and later the Indian
\nIncome-tax  (Amendment) Act, 1959.  This Amending Act  added
\nsub-section (4) to s. 34 which read:–\n<\/p>\n
\t      “(4) A notice under cl. (a.) of sub-s. (1) may
\n\t      be issued at any time notwithstanding that  at
\n\t      the time of the issue of the notice the period
\n\t      of  eight years specified in that\t sub-section
\n\t      before its amendment by clause (a) of  section
\n\t      18  of  the Finance Act, 1956 had\t expired  in
\n\t      respect  of  the\tyear  to  which\t the  notice
\n\t      relates.”\n<\/p><\/blockquote>\n
\t      It also enacted by s. 4 as follows :-
\n\t      “No notice issued under cl. (a) of sub-s.\t (1)
\n\t      of  s.  34 of the principal Act  at  any\ttime
\n\t      before  the commencement of this ‘Act  and  no
\n\t      assessment,  re-assessment or settlement\tmade
\n\t      or  other proceeding taken in  consequence  of
\n\t      such notice shall be called in question in any
\n\t      court,  tribunal or other authority merely  on
\n\t      the  ground  that at the time the\t notice\t was
\n\t      issued  or at the time the assessment  or\t re-
\n\t      assessment  was  made, the time  within  which
\n\t      such  notice  should have been issued  or\t the
\n\t      assessment  or re-assessment should have\tbeen
\n\t      made under that section as in force before its
\n\t      amendment\t by cl. (a) of s. 18 of the  Finance
\n\t      Act, 1956, had expired.”\n<\/p><\/blockquote>\n
These  repeated\t amendments, in so far as  relevant  to\t the
\npresent\t  cases,  were\tin  two\t directions.   It  will\t  be
\nremembered  that  by the Amendment of 1939  two\t periods  in
\nwhich  action  could be taken were  created:  an  eight-year
\nperiod applying to the concealment or deliberate  furnishing
\nof  inaccurate particulars by the assessee and\ta  four-year
\nperiod applying to all other cases.  The 1948 Amendment\t did
\nnot make any change in these two periods but stated that the
\neight-year period applied also to a
\n 107<\/span>
\nfailure\t to  furnish a return.\tAll  other  provisions\tsub-
\nstantially remained the same.  In a case in which the return
\nwas not made, it would have been a question which of the two
\nperiods\t in  the  section  as amended  in  1939\t would\thave
\napplied.  The 1948 Amendment said the action could be  taken
\nwithin\teight years.  Another question thus  arose,  namely,
\nwhether\t the  four-year\t period\t as  provided  by  the\t1939
\nAmendment which had expired applied or the eight year period
\nas  provided  by  the 1948 Amendment.  The  answer  to\tthis
\nquestion  depended on the further question whether the\t1948
\nAmendment was retrospective in its operation.
\nThe  Amending Act of 1948 was passed on September  8,  1948,
\nand  came into force from March 30, 1948.  In some cases  it
\nhas  been  held that its retrospectivity cannot\t be  carried
\nfurther than March, 30, 1948.  That is true in one sense but
\nnot in the sense how its provisions were to work in relation
\nto the assessees.  The section was meant to enable the issue
\nof  notices  with a view to re-assessing  income  which\t had
\nescaped\t assessment and allowed the re-assessment of  income
\nfor back years.\t It was meant to operate retrospectively for
\neight years in some cases and four years in others.  In\t our
\nopinion\t it had retrospective operation in respect  of\tback
\nyears  according to its own provisions.\t It the 1948  Amend-
\nment could be treated as enabling the Income-tax Officer  to
\ntake  action  at  any  point of\t time  in  respect  of\tback
\nassessment years within eight years of March 30, 1948,\tthen
\nsuch  cases  were within his power to tax.  We have  such  a
\ncase  here  in\tC.A. No. 509 of 1958 where  the\t notice\t was
\nissued\tin 1948 to the lady whose husband had  remitted\t Rs.
\n9,180  to  her\tfrom Bangkok in the  year  relative  to\t the
\nassessment  year  1942-43.   That  lady\t was  assessable  in
\nrespect\t of this sum under s. 4 (2) of the  Income-tax\tAct.
\nShe  did not file a return.  If the case stood\tgoverned  by
\nthe 1939 Amendment the
\n108<\/span>
\nperiod applicable would have been four years if she had\t not
\nconcealed the particulars of the income.  She had of  course
\nnot  deliberately furnished inaccurate particulars  thereof.
\nIf  the\t case was governed by the 1948 Amendment  she  would
\ncome  within the eight-year rule because she had  failed  to
\nfurnish\t a return.  Now, we do not think that we  can  treat
\nthe  different periods indicated under s. 34 as\t periods  of
\nlimitation, the expiry of which grant prescriptive title  to
\ndefaulting  tax-payers.\t It may be said that  an  assessment
\nonce made is final and conclusive except for the  provisions
\nof  ss. 34 and 35 but it is quite a different matter to\t say
\nthat a “vested right” arises in the assessee.  On the expiry
\nof the period the assessments, if any, may also become final
\nand  conclusive but only so long as the law is\tnot  altered
\nretrospectively.   Under the scheme of the Income-tax Act  a
\nliability  to  pay  tax is incurred when  according  to\t the
\nFinance Act in force the amount of income, profits or  gains
\nis  above the exempted amount.\tThat liability to the  State
\nis  independent\t of any consideration of time  and,  in\t the
\nabsence of any provision restricting action by a time limit,
\nit  can\t be enforced at any time.  What the law does  is  to
\nprevent\t harassment  of\t assessees to the  end\tof  time  by
\nprescribing  a\tlimit of time for its own officers  to\ttake
\naction.\t  This limit of time is binding upon  the  officers,
\nbut  the  liability under the charging section can  only  be
\nsaid  to  be unenforceable after the expiry  of\t the  period
\nunder  the  law as it stands.  In other\t words,\t though\t the
\nliability  to pay tax remains it cannot be enforced by.\t the
\nofficers  administering the tax laws.  If the disability  is
\nremoved\t or  according\tto a new law a\tnew  time  limit  is
\ncreated\t  retrospectively,  there  is  no  reason  why\t the
\nliability  should not be treated as still enforceable.\t The
\nlaw does not deal with concluded claims or their revival but
\nwith  the  enforcement\tof a liability to  the\tState  which
\nthough\texisting remained to be enforced.  This\t aspect\t was
\nadmirably summed up by
\n109<\/span>
\nChakravartti,  C.J., (Sarkar, J., concurring) in  Income-tax
\nOfficer v. Calcutta Discount Co. Ltd.<\/a> (1) as follows :-\n<\/p>\n
\t      “The  plain effect of the substitution of\t the
\n\t      new  Section  34\twith effect  from  the\t30th
\n\t      March,  1948,  is\t that  from  that  date\t the
\n\t      Income-tax Act is to be read as including\t the
\n\t      new section as a part thereof and if it is  to
\n\t      be so read, the further effect of the  express
\n\t      language\tof  the section is that\t so  far  as
\n\t      cases coming within clause (a) of\t sub-section
\n\t      (1) are concerned, all assessment years ending
\n\t      within eight years from the 30th March,  1948,
\n\t      and  from\t subsequent dates,  are\t within\t its
\n\t      purview  and it will apply to  them,  provided
\n\t      the  notice contemplated is given within\tsuch
\n\t      eight  years.  What is not within the  purview
\n\t      of  the  section is an assessment\t year  which
\n\t      ended before eight years from the 30th  March,
\n\t      1948.”\n<\/p><\/blockquote>\n
We entirely agree with these observations and in our opinion
\nafter  the  passing of the 1948 Amendment  which  came\tinto
\nforce  on March 30, 1948, the Income-tax Officer could\ttake
\naction\tin  all cases in which the  assessment\tyears  ended
\nwithin\teight years of the date of his action and  in  which
\nthere  was  an escapement of-an assessment for\tthe  reasons
\nindicated in cause (a) of the section as amended.  In  other
\nwords,\taction could be taken retrospectively in  the  cases
\nindicated by Chakravartti, C..J. If there be any doubt about
\nthe powers of the Income-tax Officer the validating  section
\npassed in 1953 (S. 31) quite clearly indicates that  section
\n34 as amended in 1948 was to be read in this manner.
\nWe  come  now to the next amendment in 1956.  It  created  a
\nchange of a far-reaching character by removing the limit  of
\ntime for action where the sum likely to be taxed amounted to
\nrupees one lakh or
\n(1)  [1953] 23 I.T. R. 471, 482.\n<\/p>\n
110<\/span><\/p>\n
more either for a single year or for a group of years  going
\nback to the year ending on March 31, 1941.  These cases were
\ngoverned  by the eight-year rule under the  1948  amendment.
\nIn other words, the eight-year period was retained for cases
\ninvolving less than one lakh of rupees and the limit of time
\nwas removed for those cases in which the amount involved was
\none  lakh  rupees  or more.  We are not\t concerned  at\tthis
\nmoment\twith the sanctions necessary before action could  be
\ntaken.\t That  is  a separate matter.  If  no  sanction\t was
\nobtained  then the notice would be bad for that\t reason\t but
\nnot  on\t the ground of a limit of time.\t What we  have\tsaid
\nabove  about the amendment of 1948 applies mutatis  mutandis
\nalso  to the amendment of 1956.\t That provision was also  to
\noperate\t retrospectively as has been stated by\tus  earlier.
\nThere is good reason to think that this is the correct\tview
\nbecause\t when  the  Calcutta High Court in  the\t Debi  Dutta
\nMoody’s\t (1)  case  held that the  1956\t amendment  was\t not
\napplicable  to\tthe cases, Parliament passed  the  1959\t Act
\nnullifying that decision.  By the same Act, Parliament\tgave
\npower  to issue a notice at any time in all these  cases  in
\nwhich  the eight-year period under the principal Act  as  it
\nstood  prior to the 1956 Amendment had expired.\t  The  words
\n“at  any  time”\t mean what they say.  There  is\t no  special
\nmeaning\t to be attributed to them.  “‘Any time”\t thus  meant
\naction\tto  be taken without any limit of time.\t  A  similar
\nresult was reached in certain cases under the 1953 Amendment
\nof the second proviso to sub-section (3) of section 34.\t  It
\nprovided  : nothing in the section limiting the time  within
\nwhich  any action may be taken shall apply to an  assessment
\nor  re-assessment  made\t on the assessee or  any  person  in
\nconsequence of or to give effect to any finding or direction
\ncontained in an order under section already mentioned.\tThis
\nproviso was challenged under Article 14 of the\tConstitution
\nbut  that  is  a  different  matter.   If  the\tsection\t  is
\nconstitutionally enacted then it also means
\n(1)  A.I.R. 1959 Cal. 567.\n<\/p>\n
 111<\/span><\/p>\n
what  it  says.\t It is hardly possible\tto  imagine  clearer
\nlanguage than the one used.  It says that the limit of\ttime
\nmentioned in section 34 is removed in certain cases, that is
\nto say, action can be taken at any time in these cases.\t  In
\nour judgment, each case of a notice must be judged according
\nto  the\t law existing on the date the notice was  issued  or
\nserved, as the law may require.\t So long as the notice where
\nthe  notice  is in question, and the assessment,  where\t the
\nassessment  is in question, are within the time\t limited  by
\nthe law, as it exists when the respective actions are taken,
\nthe actions cannot be questioned provided the law is clearly
\nretrospective.\tThe only case in which no further action can
\nbe taken is one in which action was not taken under the\t old
\nlaw  within the period prescribed by that law and  which  is
\nnot  also within the period mentioned in the new law if\t its
\noperation is retrospective.  All other cases are covered  by
\nthe  law in force at the time action is taken.\tIt  is\tfrom
\nthese view points that these appeals, in our opinion, should
\nbe judged.\n<\/p>\n
We  shall  now take up first this appeal and later  in\tthis
\njudgment  the  other appeals separately and  deal  with\t the
\nspecial\t  points  raised  in  them.   In  this\tappeal\t the
\nassessment  year in question was 1942-43.  We  have  already
\ndescribed how the firm “Purshottam Laxmidas” was held to own
\nthe firm “Vasantsen Dwarkadas”.\t The final order in the case
\nwas made by the High Court on October 8, 1953.\tBy that date
\nthe period of time prescribed by s. 34 of the principal\t Act
\nas amended in 1948 had expired.\t But s. 34 of the  principal
\nAct  was amended by the Indian Income-tax  (Amendment)\tAct,
\n1953, from April 1, 1952.  The action in the case was  taken
\non April 30, 1954, after the amendment.\t The second  proviso
\nto  sub-section (3) of s. 34 was by then amended to  provide
\nthat  nothing in the section limiting the time within  which
\naction might be taken, was to apply to an assessment or\t re-
\nassessment made
\n112<\/span>
\non  any\t person in consequence of or to give effect  to\t any
\nfinding or direction contained in an order under s. 66.\t  of
\ncourse,\t if  the  law as it stood prior\t to  this  amendment
\napplied the time for action would have expired in 1951,\t and
\nany action on April 30, 1954, would have been clearly out of
\ntime.\tBut the Income-tax Officer derived his\tjurisdiction
\nfrom the second proviso and that made S. 34 applicable with-
\nout the limit of time.\tThere was also s. 31 of the Amending
\nAct  of 1953, which made s. 34 of the principal\t Act  (which
\nmeant the Income-tax Act as amended till that date including
\nthe  amendments\t made  by the Amending Act of  1953  in\t the
\nsecond\tproviso to s. 34(3) ), applicable to any  assessment
\nor re-assessment for any year ending before April 1,   1948,
\nwhere proceedings were commenced after\tSeptember  8,  1948.
\nIt also saved all notices     issued  or  assessments  made,
\nwhether before or after the commencement of the Amending Act
\nof 1953 (1-4-1952) from the attack that the provisions of s.
\n34  (as\t amended  up  to  1-4-1952)  did  not  apply  to  an
\nassessment  or re-assessment for any year prior to April  1,
\n1948.\n<\/p>\n
The  effect of the amendment of the year 1953 on  this\tcase
\nmay be stated shortly thus : The assessment year being 1942-
\n43,  the  notice  under s. 34 had to issue in  1951  at\t the
\nlatest.\t  After that year notice could not issue unless\t the
\nlimit  of time was increased or removed.  But the fact\tthat
\nthe notice could not be issued after 1951 did not clothe the
\nassessee  with\ta  right not to pay the\t tax  if  it  became
\nlegally\t claimable again.  If the law conferred a  power  on
\nthe  income-tax\t Officer  to  deal with\t such  a  case,\t the
\nassessee would again be exposed to proceedings, provided  it
\nsaid in clear terms that the law was retrospective.  This is
\nwhat the law did in precise and clear terms.  In 1953 an Act
\nwas  passed amending s. 34 which enabled action at any\ttime
\nif there
\n113<\/span>
\nwas a finding or direction of the character indicated in the
\nsecond proviso to sub-s. (3) of s. 34.\tSection 31 also made
\nthis  position\tclear by applying the amended s. 34  to\t all
\nassessments commenced after September 8, 1948, and saved all
\nnotices\t issued and assessments made in respect of any\tyear
\nprior  to April 1, 1948, whether the notices were issued  or
\nthe assessments were made before or after April 1,1952.
\nThe  Department in this case had relied on the Amending\t Act
\nof  1953  before  the High Court.   Though  the\t High  Court
\nconsidered the case from the angle of the second proviso  to
\nsub-s.\t (3)   of  s.  34  and\talso  struck  it   down\t  as
\nunconstitutional  it did not take into consideration s.\t 31.
\nIt  was\t argued\t before us that we cannot take\ts.  31\tinto
\naccount if it was not referred to by the High Court.  But  a
\nCourt is required to take judicial notice of statutes and if
\ns. 31 of the Act of 1953 said that sub-ss. (1), (2) and\t (3)
\nof  s.\t34  of the principal Act (including  of\t course\t the
\namendments as made by the 1953 Act) shall apply and shall be
\ndeemed\talways\tto  have applied to any\t assessment  or\t re-
\nassessment for any year ending before April, 1948, it is the
\nduty of Courts and Tribunal to read s. 34 in that manner and
\nin  no\tother.\tIn our opinion it was not open to  the\tHigh
\nCourt  to  read\t s.  34 without\t s.  31\t which\tcontained  a
\nlegislative construction and made s. 34 retrospective.\tThis
\nomission has vitiated the High Court’s reasoning.
\nTo-day\twe  are\t faced with the\t provisions  of\t the  Indian
\nIncome-tax  (Amendment)\t Act, 1959.  These  provisions\thave
\nalready\t been set out by us.  Section 4 of the Amending\t Act
\nof  1959  precludes  Courts and Tribunals  from\t calling  in
\nquestion notices and assessments made even though ‘the\ttime
\nwithin\twhich  that  action was taken  was  more  than\tthat
\nprescribed by the principal Act as amended in 1948.\n<\/p>\n
114<\/span><\/p>\n
Mr.  Palkhivala raised five propositions in connection\twith
\nthe  1959  Act which were applied mutatis  mutandis  to\t the
\nAmending  Acts\tof 1953 and 1956 by other  learned  counsel.
\nThese  five  propositions  were intended to  show  that\t all
\namendments  in the time limit by the various  amending\tActs
\nwere  meant  to operate on assessment  years  following\t the
\ncommencement  of the Acts and not on back  assessment  years
\nwhich  continued to be governed by the old  provisions.\t  He
\nalso  contended that even if an assessment year\t was  within
\nthe  time  indicated in the new law, the new law  could\t not
\ntake  note of it, if under the old law that assessment\tyear
\nwas  out  of time.  He also contended  that  the  validating
\nsections operate on the assessment years between the Act  as
\namended\t by the last preceding amendment and the  validating
\nsection.  Thus according to him s. 4 of the Amending Act  of
\n1959  operated\tto  validate action  taken  after  the\t1956
\namendment  and sub-s. (4) introduced in s. 34 operated\tfrom
\nthe  date of introduction.  Mr. Palkhivala tried to  support
\nthese  contentions  by\ta  textual  interpretation  of\t the
\nsections,  the\thistory\t of legislation on  the\t subject  of
\nincome,\t profits  and  gains escaping  assessment,  and\t the
\nmarginal notes to the sections.\t What lie argued in relation
\nto the 1959 Act was applied with suitable adaptations in the
\ninterpretation of the amendments of 1948, 1953 and 1956.
\nTo  begin  with\t we  do not accept  the\t contention  of\t Mr.
\nPalkhivala  that s. 4 of the 1959 Act is retrospective\tonly
\nup  to 1956.  That section is of course retrospective up  to
\nthat  year  but it operates on notices issued  even  earlier
\nthan  the  Act\tof  1956 or in other  words  in\t respect  of
\nassessment  years  prior to March 31, 1956.  There  is\tgood
\nreason\tto think that it covers all the period between\t1941
\nand  1959.   Since  it is conceded that it  does  cover\t the
\nperiod 1956-1959, all that we have to consider is whether it
\ncovers\tthe  period 1941-1956.\tFor this purpose,  we  shall
\nanalyse the section into its component parts.\n<\/p>\n
 115<\/span><\/p>\n
The  section first says: “No notice issued under clause\t (a)
\nof sub-section (1) of section 34 of the Principal Act at any
\ntime before the commencement of this Act and no\t assessment,
\nre-assessment…………  made……… in  consequence  of
\nsuch notice”.  This means that it is speaking of all notices
\nissued\tearlier\t than  the enactment of\t the  1959  Act\t and
\nassessments made as consequence.  The section sets no  limit
\nto  the time but says “at any time”.  By the  words  (clause\n<\/p>\n
(a)  of\t sub-s. (1) of s. 34 of the principal  Act”  and  by
\ndefining “principal Act” to mean the Indian Income-tax\tAct,
\n1922,  the Act refers to the Income-tax Act as amended\ttill
\nthen.\tThe  section  then  says  that\tsuch  a\t notice\t  or
\nassessment  made  in  consequence, shall not  be  called  in
\nquestion  on the ground that the time prescribed for  action
\nunder  the section as it stood before the amendment of\t1956
\nhad expired.  This clearly shows that it meant to operate on
\ncases  which  would be governed by the 1948  Amendment\teven
\nthough\tthe time limit prescribed by the 1948 amendment\t had
\nexpired\t and that the notices and the assessments made as  a
\nconsequence, were to be saved.\n<\/p>\n
Now the changes made by the 1956 amendment were two: (a) the
\neight  year  limit was to operate in all  cases\t falling  in
\nclause (a) of sub-s. (1) under the 1948 amendment but  under
\nthe  1956 amendment it was not to apply to  cases  involving
\nRs. one lakh or more.  This power could not be exercised for
\nany year prior to the year ending on March 31, 1941 and\t (b)
\nthe satisfaction of the Board had to be obtained before\t the
\nIncome-tax Officer could take action.\n<\/p>\n
By  the\t validating section 4 of the 1959  Act,\t any  notice
\nissued before 1959 could not be challenged even if under the
\n1948 Act they would be out of time.  The Amending Act  cured
\nnot  a\tdefect\tarising under the  1956\t amendment  but\t one
\narising under the 1948 amendment.  It is impossible to\tsay,
\nas contended, that the last words of s. 4 of the
\n116<\/span>
\nAmending Act of 1959 limit retrospectivity only up to  1956,
\neven   though  the  words  are\t“at  any  time\tbefore\t the
\ncommencement  of this Act.” Further, by sub-s. (4) added  to
\ns.  34, the Amending Act gave power to issue  fresh  notices
\nwhich under the 1948 amendment would have been barred.\t The
\nsub-section reads :-\n<\/p>\n
\t      “A notice under clause (a) of sub-section\t (1)
\n\t      may be issued at any time notwithstanding that
\n\t      at  the  time of the issue of the\t notice\t the
\n\t      period  of eight years specified in that\tsub-
\n\t      section before its amendment by clause (a)  of
\n\t      section  18  of the Finance Act, 1956  (18  of
\n\t      1956),  had expired in respect of the year  to
\n\t      which the notice relates.”\n<\/p><\/blockquote>\n
The  last words definitely refer to an year which  would  be
\ngoverned by the 1948 amendment.\n<\/p>\n
This  is  a law made in 1959 and it speaks  of\tnotices\t not
\ncomplying with the time limit as prescribed by the 1948 Act.
\nTo  test whether the retrospectivity goes back only to\t1956
\nwe  can\t look  at the matter this way.\tThe  time  limit  in
\nclause (a) of s. 34 (1) for all cases was eight years  under
\nthe  1948 amendment.  The years on which the 1948  amendment
\nwhich  came.  into force on  30-3-1948\toperated  admittedly
\nincluded  the year 31-3-1948 to 31-3-1949 as the first\tyear
\nand  so\t on  till  the 31-3-1956  to  31-3-1957.   The\t1956
\namendment  came\t into force on 1-4-1956.   Working  backward
\nfrom 1959 for eight years we come to 1951.  The years  1951-
\n1952 to 1955-56 admittedly were governed by the 1948 Act and
\nwere  still  within  the eight-year period  under  the\t1948
\namendment (if it applied) till 31-3-1960 to 31-3-1961.\t The
\nyears  1956-59 were within time because there was either  no
\nlimit  or a limit of eight years which would give  room\t for
\naction till 1964-1967.\tWhere was the need for the
\n 117<\/span>
\nvalidating provisions or the addition of sub-s. (4) of s. 34
\nin  1959  ? Action under the 1948 amendment could  be  taken
\ntill  the  year of assessment 1951-52  and  all\t intervening
\nassessment  years  till\t the year  ending  March,  31  1956.
\nSimilarly  action  under the 1956 amendment could  be  taken
\ntill 19651968 in respect of years 1956-57, 1957-58 and 1958-\n<\/p>\n
59.  This is true of all cases under the  eight-years  limit
\nwhether\t  provided  by\tthe  1948  amendment  or  the\t1956
\namendment.   The  validating section was hardly\t needed\t and
\nsub-s.\t(4)  added to s. 34 not at all.\t It  is,  therefore,
\nquite\tclear  that  the  construction\tsuggested  for\t the
\nrespondent cannot be accepted and the two provisions in\t the
\n1959 Act mean what they say.\n<\/p>\n
It will, however, be noticed that though the time limit\t was
\nremoved\t there\twas  no validation in  respect\tof  want  of
\nsanction  by the Board of Revenue in cases above rupees\t one
\nlakh.  In cases started between 1956-1959 the Commissioner’s
\nsanction  in  cases below rupees one lakh  and\tthe  Board’s
\nsanction in cases above rupee, one lakh was needed.  But the
\nCommissioner’s\tsanction  was  needed even  under  the\t1948
\namendment.   So all cases in which there was  Commissioner’s
\nsanction  would\t be validated unless the case  required\t the
\nBoard’s\t sanction.  Such cases would be those  above  rupees
\none lakh and in view of the removal of the time limit by  s.
\n34 (4) it was possible to issue fresh notice after obtaining
\nthe  sanction.\t In this way the continuity of the  law\t was
\nobtained.   It had earlier been achieved in 1953 when  there
\nwas  a\tchangeover  from  the 1939  amendment  to  the\t1948
\namendment.   What  we  have said here  repels  an  identical
\nargument on the 1953 amendment.\n<\/p>\n
Where the language of an enactment is clear there is  hardly
\nany  need to go to the marginal note or the history  of\t the
\nlaw  before the amendment.  Even if the history be  examined
\none thing is quite
\n118<\/span>
\nclear.\t It is that at intervals the Indian Legislature\t and
\nParliament have been at pains to save notices issued to, and
\nassesments  made on, defaulting tax-payers and have  enabled
\nfresh  action to be taken and saved notices  and  assessment
\nout of time.\n<\/p>\n
The provisions made in 1959 were not present before the High
\nCourt.\tThe High Court decided this case in 1956 but we must
\ntake notice of them and give effect to s. 4 thereof.  In any
\ncase,  the provisions of s. 34, as amended by  the  Amending
\nAct of 1953 read with s. 31 of that Act, were sufficient  to
\nsave notice issued against the firm of “Purshottam Laxmidas”
\nunless\tthe amendment to the second proviso to s. (3) of  s.
\n34 was unconstitutional.  We are of opinion that the proviso
\nwas not unconstitutional and we shall give our reasons in  a
\nlatter part of this judgment.  That is a matter which can be
\ndealt with separately.\n<\/p>\n
In  our\t judgment  notice against the  firm  of\t “Purshottam
\nLaxmidas”  was\tvalidly\t issued\t under\tthe  amended  second
\nproviso\t to s. 34 (3) and its validity cannot be  called  in
\nquestion in any Court or Tribunal in view of the  provisions
\nof  s. 4 of the Amending Act of 1959.  We  would  therefore,
\nallow Civil Appeal No. 705 of 1957.\n<\/p>\n
       C. A. No. 509 of 1958.\n<\/p>\n
We have already referred to this appeal by the\tCommissioner
\nof  Income-tax,\t Madras.  The respondent  is  a\t lady  whose
\nhusband\t resided in Bangkok between September 1940 and\tJuly
\n1947.\tIn the year relative to the assessment year  1942-43
\nhe  remitted through his agent in India a sum of  Rs.  9,180
\nfor  payment  to  the respondent.  The\trespondent  did\t not
\nsubmit\ta  return  of this sum which was deemed\t to  be\t her
\nincome\tunder s. 4 (2) of the Income-tax Act.  In  the\tyear
\n1949, a notice was served on her under s. 34 of the  Income-
\ntax Act as amended by the Amending
\n119<\/span>
\nAct of 1948.  The question was whether the amendment of 1948
\napplied\t to the notice.\t The Tribunal held that it  did\t but
\nthe  High Court of Madras took the contrary view,  According
\nto the High Court the period of four years was applicable to
\nher  case  under the Income-tax Act as amended in  1939\t and
\nthat period expired on 31-3-1947 and the 1948 amendment\t did
\nnot  revive  the right to take action which had\t died.\t The
\nAmending Act of 1953 (Act 25 of 1953) had come into force by
\nthe time the High Court decided the case (22-2-1956) and  s.
\n31 of that Act was brought to the notice of the High  Court.
\nThe High Court however held that the validity of the  notice
\nhad to be tested with reference to the law existing on\tJuly
\n25,1949,  when\tthe notice was issued and the  Act  of\t1953
\ncould not be taken into account.\n<\/p>\n
We  have  already shown why the decision of the\t High  Court
\ncannot\tbe sustained.  The action was taken after  the\t1948
\namendment  by  which  income, profits and  gains  which\t had
\nescaped\t assessment by reason of the omission or failure  of
\nthe assessee to make a return of the income could be brought
\nto  tax after serving a notice within eight years  from\t the
\nend  of\t the  relevant year.  Here the notice  in  1949\t was
\nwithin\teight  years from 1942-43 and  was  validly  issued.
\nEven if an omission or failure to make a return was governed
\nby  the\t four-year  period under  the  1939  Amendment,\t the
\nassessee  did not get immunity except if no fresh  power  to
\nbring to tax such special income was created.  Such a  power
\nto tax was brought into being by the 1948 Amendment and\t the
\nnotice being within the fresh eight-year period was  validly
\nissued.\t In our judgment the order of the High Court  cannot
\nbe upheld.  We would, therefore, allow the appeal.
\n\tC.A. No. 585 of 1960.\n<\/p>\n
The  assessee in this appeal (Jagannath Fakirchand)  is\t the
\nmanager of a Hindu undivided family.\n<\/p>\n
120<\/span><\/p>\n
He  was\t assessed as karta for the assessment  year  194445,
\n1945-46\t and 1946-47.  These assessments were  completed  in
\n1949  and  1950.   Later those cases were  remanded  by\t the
\nAppellate   Assistant  Commissioner.   In  respect  of\t the
\nassessment  year 1945-46 a notice under s. 34 (1)  was\talso
\nissued but it was withdrawn.  Some of these cases are  still
\npending but we are not concerned with them.
\nThe  assessee filed a suit against one Jagannath Ram  Kishan
\nfor rendition of accounts as a munim.  Jagannath Ram  Kishan
\nclaimed\t to be a partner.  The suit was dismissed as it\t was
\nnot proved that Jagannath Ram Kishan was a munim.  Jagannath
\nRam  Kishan died and his widow Kalavati was  substituted  as
\nlegal representative.  The Income-tax Officer issued notices
\nunder s. 34 (1) to Kalavati for the assessment year 1944-45,
\n1945-46\t and 1946-47.  In the appeals arising therefrom\t the
\nAppellate  Assistant  Commissioner  held that  there  was  a
\npartnership  between  Jagannath Ramkishan and  the  assessee
\nwhich lasted till August 26, 1945, and directed the  Income-
\ntax Officer to assess the partnership.\tNotices under s.  34
\nwere  then issued on February 18, 1957, to  the\t partnership
\nand  also  to Jagannath\t Fakirchand.   Jagannath  Fakirchand
\nfiled  a  petition under Article 226\/227 in the\t High  Court
\ncontending that the notices were out of time and the  second
\nproviso to s. 34 (3) was unconstitutional.  The Bombay\tHigh
\nCourt following its decision in the previous case,  accepted
\nboth the contentions.  The sums involved in these cases were
\nRs.   14,000;  14,000  and  30,800  for\t the   three   years
\nrespectively.\n<\/p>\n
The  assessment in this case was the result of\ta  direction
\nand  the second proviso to s. 34 (3) as amended in 1953\t and
\ns.  31 of the Amending Act of 1953 governed this case.\t The
\nnotice\tis  also  further saved by  the\t provisions  of\t the
\nAmending  Act of 1959 as it was issued after 1956  (February
\n18, 1957).  It was
\n121<\/span>
\nnot  contended before us that these provisions do not  apply
\nto  a  notice  given  after  April  1,\t1956.  In  fact\t the
\ncontention  was that the provisions of the 1959\t Act  enable
\nnotices\t to be sent out at any time after 1956 and  validate
\nall  notices so sent.  In view of what we have held in\tthis
\nappeal,\t Civil Appeal No. 585 of 1960 must be  allowed.\t  We
\nwould,\ttherefore, allow this appeal.  We may  mention\there
\nthat  in this case also the second proviso to s. 34  (3)  as
\namended\t in  19’03 was declared\t unconstitutional.   In\t our
\nopinion\t that decision cannot be upheld.  We shall give\t our
\nreasons presently.\n<\/p>\n
\tC.A. Nos. 214 and 215 of 1958.\n<\/p>\n
These appeals arise out of the judgment of the High Court on
\na reference on the question:\n<\/p>\n
\t      “Whether having regard to the return dated the
\n\t      7th March, 1951, by Sardar Lakhmi Singh in his
\n\t      individual  capacity and to the provisions  of
\n\t      section 34 (3), the assessment made on him  on
\n\t      the 27th November, 1953, is validly made?”\n<\/p><\/blockquote>\n
The  assessments  are  for the years  1946-47  and  1947-48.
\nLakhmir\t Singh was the son of one Nechal Singh and  the\t two
\nused  to be assessed as a Hindu undivided family.  From\t the
\nassessment year 1944-45 two separate returns were filed\t and
\nclaimed\t under s. 25A of the Income-tax Act was made.\tThis
\nclaim  was rejected but there was an assessment\t of  Lakhmir
\nSingh  as  an individual out of abundant  caution.   In\t the
\nappeal against the assessment of the Hindu undivided  family
\nit was held that they were separate and on October 15, 1962,
\nthe    Income-tax   Appellate\tTribunal   directed    fresh
\nassessments.\n<\/p>\n
For  the assessment year 1946-47 three returns\twere  filed.
\nLakhmir Singh’s return was voluntary and was filed on  March
\n15, 1951.  Another return
\n122<\/span>
\nwas filed by Nechal Singh.  A third return under protest was
\nfiled  on  March 9, 1951, by Nechal Singh on behalf  of\t the
\nHindu undivided family, showing income “‘nil”.\tOn March 15,
\n1951, the Hindu undivided family was assessed by the Income-
\ntax  Officer by grossing up the income as disclosed  in\t the
\nreturns filed by Lakhmir Singh and Nechal Singh as  ‘indivi-
\nduals.’ The voluntary return of Lakhmir Singh as  individual
\nremained  on  file.   There  was  an  appeal  by  the  Hindu
\nundivided  family  and the assessment was set aside  by\t the
\nAppellate  Assistant  commissioner on March  20,  1953,\t who
\ndirected assessment of Lakhmir Sigh as an individual.\tThis
\nwas  done  on  November 17, 1953, on  the  voluntary  return
\nalready\t filed\tby him.\t On appeal by Lakhmir Singh  it\t was
\ncontended that the assessment was barred under the unamended
\nsecond proviso to s. 34 (3) which provided a period of\tfour
\nyears.\tThe appeals were dismissed as it was held that there
\nwas no limitation for an assessment under s. 31 (3) in\tview
\nof  the new proviso.  The High Court held on reference\tthat
\nthe  Amending Act of 1953 did not apply and the\t assessments
\nwere  barred under the unamended s. 34 (3) as the  amendment
\ncame  into force on April 1, 1952, after the assessment\t was
\nbarred already.\t The 1947-48 assessment was also held barred
\nfor the same reason.  No reference was made to s. 31 of\t the
\nAmending Act of 1953.\n<\/p>\n
The  Department contended before us that the assessment\t was
\nvalid under s. 31 of the Act 25 of 1953 and that the amended
\nproviso\t applied.  Section 31 applied the amended s.  34(1),
\n(2)  and  (3) of the Income-tax Act to assessments  and\t re-
\nassessments  for  any year ending before 1st day  of  April,
\n1948,\tin  which  the\tproceedings  were  commenced   after
\nSeptember 8, 1948.  It was contended by the assessee  before
\nus  that  the section cannot apply because (a)\tit  was\t not
\nrelied\tupon  before the High Court and (b) that  there\t was
\nnothing to show that the proceedings
\n123<\/span>
\ncommenced after September 8, 1948.\n<\/p>\n
We  shall first consider whether the questions\treferred  to
\nthe  High  Court embraced the application of s.\t 31  of\t the
\nAmending Act of 1953.  These questions in the two references
\nwere :\n<\/p>\n
\t      Whether  having  regard to  the  return  dated
\n\t      March 7, 1961, by Sardar Lakhmir Singh in\t his
\n\t      individual  capacity and to the provisions  of
\n\t      section  34(3), the assessment made on him  on
\n\t      the November 27, 1953, is validly made ?
\n\t      and Whether having regard to the return  dated
\n\t      14-1-1952\t by  Sardar  Lakhmir  Singh  in\t his
\n\t      individual  capacity and to the provisions  of
\n\t      section  34(3) the assessment made on  him  on
\n\t      27-11-53 is validly made ?\n<\/p><\/blockquote>\n
In  both the questions emphasis is placed upon the  date  of
\nthe  assessment and the date of the return.’ The return\t for
\nthe  year 1946-47 was filed on March 15, 1951, and that\t for
\nthe  year  1947-48 on January 14, 1952.\t The  assessment  in
\neither case was made on November 27, 1953.  The returns were
\nfiled after September 8, 1948, and the assessments were made
\nafter  the amendment of the second proviso to section  34(3)
\nby removing the limit of four years in it. It must be  noted
\nthat  the  returns  filed by Lakhmir  Singh  were  voluntary
\nreturns.   Till\t that  time the Department  had\t refused  to
\nrecognise  the ‘individual’ status claimed by Lakhmir  Singh
\nand  Nechal Singh under s. 25A of the Principal Act.   These
\nassessees  had\talso filed tinder protest  returns  for\t the
\nHindu undivided family.\n<\/p>\n
The questions as framed refer to the provisions of S.  34(3)
\nof  the\t Income-tax Act.  They also mentioned  two  sets  of
\ndates: namely, the dates of the returns (7-3-1951 and  14-1-
\n1952) and the date of the
\n124<\/span>
\nassessment (17-11-1953).  Now we know that before the  first
\nday  of\t April,\t 1952,\tthere  was  a  four-year  limit\t for
\nassessments  or re-assessments under sub-s. 3 of s.  34\t but
\nthereafter that limit was removed by the proviso added by s.
\n18 of the Amending Act of 1953 and by s. 31 of the same\t Act
\nassessments  made  before or after the commencement  of\t the
\nAmending  Act  of  1953 (1-4-1952) were\t declared  valid  if
\nproceedings commenced after September 8, 1948.\tThe question
\nas framed cannot be answered without reference to s. 31\t and
\neven if parties did not bring it to the notice of High Court
\nit  was\t the  duty  of\tthe High  Court\t to  look  into\t the
\nvalidating  provisions of s. 13.  If the High Court did\t not
\nwe know of no rule or decision of this Court which  prevents
\nus from looking into a validating provision which existed at
\nthe time of the High Court’s decision and was overlooked  by
\nit and which by itself furnished the answer to the  question
\npropounded  for the opinion of the High Court.\tNo  decision
\nof this Court lays down that in determining the true  answer
\nto a  question referred under s. 66, this Court is  confined
\nonly  to  those sections to which the Tribunal or  the\tHigh
\nCourt referred.\t Indeed, there are many cases which say\t the
\ncontrary: see Kusumben Mahadevia v. Commissioner of  Income-<\/a>
\ntax Zoraster & CO. V. Commissioner of Incometax\t  and\t the
\nrecent case of Scindia Steam Navigation Co. v.\tCommissioner
\nof Income-tax (3).  We must,  therefore, look into s. 31  to
\ndetermine these appeals.\n<\/p>\n
It  remains  only to consider now  whether  the\t proceedings
\ncommenced after September 8, 1948.  The application of s. 31
\ndepends on this circumstance.  Here the facts are plain\t and
\nadmit  of no doubt whatever and the complaint that there  is
\nno finding is of no avail.  The voluntary returns were filed
\nin  1951 and 1952, twenty-nine and thirty-nine months  after
\nthe datum line mentioned in s. 31.  These returns were filed
\nwith returns for the Hindu un-\n<\/p>\n
(1) [1960] 3 S.C.R. 417.\n<\/p>\n
(2) [1961] 1 S.C.R. 210,
\n(3) [1961] 42 I.T.R. 589.\n<\/p>\n
 125<\/span><\/p>\n
divided\t family which were, filed under protest.   A  return
\ntan  be\t voluntary only if no action has been taken  by\t the
\nDepartment.  The Department, till the success of the  appeal
\nby  the Hindu undivided family ignored the returns filed  as
\nindividuals.   There could not have been and there  were  in
\nfact no proceedings against Lakhmir Singh in his capacity as
\nan individual till he himself filed his returns in 1951\t and
\n1952.\tIn  our opinion it is futile to contend\t that  these
\nadmitted facts required a finding or that the foundation for
\nthe  application  of s. 31 of the Act of 1953 was  not\tlaid
\ndown  in these appeals.\t In our judgment the High Court\t was
\nnot  right in the answer it gave to the two questions  which
\nought to have been answered against the assessee.  We would,
\ntherefore,  allow these two appeals.  It may be pointed\t out
\nthat   in   these   appeals  also  the\t question   of\t the
\nconstitutionality  of  the second proviso to s. 34  (3)\t was
\nraised but the High Court refrained to give its decision.
\nBefore dealing with this question we wish to say a few words
\nabout  the well-known principle that subsequent\t changes  in
\nthe period of limitation do not take away an immunity  which
\nhas  been  reached under the law as it was  previously.\t  In
\nthis  sense statutes of limitation have\t been  picturesquely
\ndescribed  as  “‘statutes of repose”.  We were\treferred  to
\nmany  cases in which this general principle has been  firmly
\nestablished.  We do not refer to these cases because in\t our
\nopinion it is somewhat inapt to describe s. 34 with its many
\namendments and validating sections as a “section of repose”.
\nUnder  that section there is no repose till the tax is\tpaid
\nor  the\t tax  cannot be collected.  What  the  law  does  by
\nprescribing certain periods of time for action is to  create
\na  bar against its own officers administering the  law.\t  It
\ntries to trim between recovery of tax and the possibility of
\nharassment  to an innocent person and fixes a  duration\t for
\naction from these two points of views.\tThese periods
\n126<\/span>
\nare occasionally readjusted to cover some cases which  would
\notherwise  be  left  out and  hence  these  amendments.\t  An
\nassessment can be said to become final and conclusive if  no
\naction can touch it but where\tthe language of the  statute
\nclearly\t  reopens  closed  transactions\t there\tcan  be\t  no
\nfinality.   We would not raise these prescribed\t periods  to
\nthe  level of those periods of limitation which\t confer\t not
\nonly immunity but also give titles by the passage of time.
\nThe  attack on the second proviso to sub-s. (3) of s. 34  is
\nthreefold.  It is contended that (a) it deprives a party  of
\nthe  ordinary  period of limitation (b) it  results  in\t the
\nprejudging of the merits of a case before the party is heard
\nand  (c) there is discrimination between a stranger  to\t the
\nproceedings  in\t which a finding or direction is  given\t and
\nother  persons about whom there is no finding or  direction.
\nIt is said that the latter are protected by “a rule of limi-
\ntation”\t but  not  the former.\tThe  finding  also  is\tcha-
\nracterised as without authority of law and thus\t inoperative
\non  the ground that a finding in respect of other  years  or
\nother persons is not possible under the Income-tax Act.\t  In
\nsupport of the plea of discrimination reliance is placed  on
\nSurajmal  Mohota  v.  A.  V.  Vishwanath  Sastri  (1),\tShri
\nMeenakshi Mills Ltd.  Madurai v. A.V. Vishwanath Sastri<\/a> (2 )
\nand  M. C. Muthiah v. Commissioner of Income-tax  (3).\t The
\nother\tside  relies  on  A.   Thangal\tKunju  Musaliar\t  v.
\nM.Venkitachalam Potti<\/a> (4).\n<\/p>\n
Before\tdealing\t with  the contentions\traised\twe  find  it
\nnecessary  to say a few words about the manner in which\t the
\nproblem\t of discrimination should be approached.   One\tmust
\nfirst  find  out the object of the  impugned  provision\t and
\ncompare\t it  with the topic of legislation and then  try  to
\ndiscover  if  there is a connection between the\t two  and  a
\nreasonable  basis for making a difference between  different
\nclasses of persons affected by the law, in keeping with\t the
\ntopic
\n(1)  [1955] 1 S. C. R. 448.\n<\/p>\n
(3)  [1955] 1 S. C. R. 787.\n<\/p>\n
(2)  [1955] 2 S. C. R. 1247.\n<\/p>\n
(4) [1955] 2 S. C. R. 1196.\n<\/p>\n
127<\/span><\/p>\n
of   legislation  and  the  object  of\tthe  enactment.\t   A
\ndifference  which is aimless, arbitrary or unreasonable\t and
\nwhich  is unconnected with the object in view must remain  a
\ndiscrimination and incapable of being upheld.  In all  cases
\nin which laws were struck down under Article 14 this was the
\napproach.   It is hardly necessary to refer to the  previous
\ncases because each provision to be tested, must be tested in
\nits own setting and no two cases can be alike.
\nWe  are\t dealing  here with a  distinct\t class\tof  persons,
\nnamely,\t those whose tax liability has not  been  discharged
\nfor  one reason or another.  Some escape payment of tax\t not
\nbecause\t they  have  omitted  or  failed  to  make  a\ttrue
\ndisclosure  but\t because  in spite of their  full  and\ttrue
\ndisclosure  some portion of the income\tescapes\t assessment.
\nFor such persons there is a smaller period for assessing the
\nescaped income.\t But those who are guilty of an omission  or
\nfailure\t or  who give incorrect particulars or\tconceal\t the
\nparticulars of their income must stand exposed to action for
\na  longer time.\t The difference between these two  cases  is
\nunderstandable.\t  Those\t who  are  deliberately\t in  default
\ngenerally  cover  up  their action and it  takes  longer  to
\ndetect them and open proceedings against them.\tThey  cannot
\nbe  allowed to say that theirs is a case on par with  a\t man
\nwho  acts innocently.  The section also draws a\t distinction
\nbetween\t two more classes one above rupees one lakh and\t the
\nother below it.\t In the former there is no limit of time ex-
\ncept  that the income-tax officer cannot go beyond the\tyear
\nending\ton  the March 31, 1941, arid that he must  take\t the
\nsanction  of the Board of Revenue.  In the other  cases\t the
\nIncome-tax  Officer can take action within eight  years\t and
\nmust  obtain  the sanction of his Commissioner.\t  These\t two
\ndistinctions have never been challenged as discriminatory.
\nWhat  is  challenged  is  the  provision  that\tif  in\t the
\nassessment  proceedings\t against  A there is  a\t finding  or
\ndirection against B, proceedings can be started
\n128<\/span>
\nagainst\t B  at\tany time while the  time  limit\t for  action
\notherwise is either four years or eight years.\tBut it\tmust
\nbe  remembered that the law is dealing with the\t subject  of
\ntax  evasion.  No uniform system applicable to all kinds  of
\ndefaulters can be made.\t The methods of tax evaders are both
\ningenious  and\tvaried.\t One such method is to\tconfuse\t the
\nissue  by  mixing up incomes, profits and gains\t of  several
\nparties so that the income of A may appear to be the  income
\nof B or of A B. There is of course always the chance that it
\nmay not be discovered to be the income of either A or B or A
\nB. The cases with which we have dealt are admirable examples
\nof  such  actions.  Whether the firm  “Vasantsen  Dwarkadas”
\nbelonged to its three partners, or to Dwarkadas alone or  to
\nthe firm “Purshottam Laxmidas”; whether Jagannath  Ramkishan
\nwas a munim of Jagannath Fakirchand or his partner;  whether
\nLakhmir Singh or Nechal Singh from a Hindu undivided  family
\nor were seperate are questions the answers to which may\t not
\nbe  known till some Court or Tribunal finds the\t true  facts
\nand  there  is no reason why a law should not be  framed  in
\nsuch a way as to give more time for action.  If A keeps\t his
\nmoney  with B and this fact is discovered in the  assessment
\nproceedings against B and a finding to that effect is given,
\na situation arises in which the law thinks that A should  be
\nbrought\t to  book even though, if action  against  him\twere
\ncommenced  in  the ordinary way,-it would have been  out  of
\ntime.\tThe  finding does not hurt A. He need not  be  heard
\nbefore\tthe finding is given because he is heard in his\t own
\nproceedings and the finding given earlier does not bind him.
\nAll  that happens is that he is faced with an inquiry  which
\nhe  would  have\t avoided  if the true  facts  had  not\tbeen
\ndiscovered.   He would have faced an inquiry if\t the  matter
\nhad  been  discovered earlier independently of\tthe  finding
\nwithin a shorter period. He now faces\tthe same enquiry but
\nwithout the limit of time.    He  need not  compare  himself
\nwith others but\t    only with himself. The  different
\n 129<\/span>
\ntreatment  arises  under different  circumstances  and\tthey
\nserve  the object which is to bring to tax the\ttax  evader.
\nIn this connection, reference may be made to the decision in
\nA.  Thangal  Kunju Musaliar v. M.  Venkitachalam  Potti<\/a>\t (1)
\nwhere  two classess of tax evaders contemplated by s. 47  of
\nthe   Travancore  Income  Tax  Act  XXIII  of  1121,   which
\ncorresponded to s. 34 (1) of the Income-tax Act as it  stood
\nbefore\tthe  amendment\tof  1948, and by s.  5\t(1)  of\t the
\nTravancore Taxation on Income (Investigation Commission) Act
\nXIV  of\t 11 24, were held to be different  classes  and\t not
\nfalling\t within the same category on the ground that  action
\nagainst\t the  former class could be taken on  the  basis  of
\ndefinite  information coming into possession of the  Income-
\ntax  Officer that income had escaped, while, in the case  of
\nthe  latter,  the Government could refer the  cases  to\t the
\nCommission  on\tfinding prima facie reason to  believe\tthat
\nthey had evaded payment of tax to a substantial amount.\t The
\npersons\t who came under s. 34 (1) (a) of the Income-tax\t Act
\nafter  the amendment of 1948 are those in respect  of  whose
\nincome the Income-tax Officer has reason to believe that due
\nto  certain conduct on their part their income\thas  escaped
\nassessment,  while action can be taken against\tthe  persons
\ncontemplated  by  the second proviso to sub-s.\t(3)  against
\nthose  persons\talone with respect to whose  escaped  income
\nsome  authority\t had given a finding or\t directions.   These
\nlatter\tpersons\t would therefore correspond to\tthe  persons
\ncontemplated  by  s. 47 of the\tTravancore  Income-tax\tAct,
\nwhile  the  other tax evaders contemplated by s. 34  (1)  as
\namended in 1948 would correspond to persons contemplated  by
\ns.  5  (1) of the Investigation Commission Act.\t We  see  no
\nreason to hold that the second proviso to s. 34 (3)  offends
\nArticle 14.\n<\/p>\n
In  the result, as we have already said, we would allow\t all
\nthese appeals.\tWe would also grant costs of the  appellants
\nboth here and in the High
\n(1)  [1955] 2 S.C.R. 1196.\n<\/p>\n
130<\/span><\/p>\n
Court in C. A. No. 585 of 1960 and C. As.  No#. 214 and\t 215
\nof  1958  but in view of the undertaking given in  the\tHigh
\nCourt  by the Department the appellants in C. A. No. 705  of
\n1957   shall  bear  the\t costs\tof  the\t first\tand   second
\nrespondents in this Court and also in C. A. No. 509 of\t1958
\nwe  would make a similar order in view of the order of\tthe,
\nHigh Court granting the certificate.\n<\/p>\n
By COURT : In accordance with the opinion “of the  majority,
\nthe  appeal  is allowed.  The appellants will pay  costs  of
\nrespondents  1 and 2 as per consent of the parties  referred
\nto in the certificate, granted by the High Court.\n<\/p>\n
\t\t\t\t\t Appeal allowed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India S. C. Prashar, Income-Tax … vs Vasantsen Dwarkadas And Others on 12 December, 1962 Equivalent citations: 1963 AIR 1356, 1964 SCR (1) 29 Author: S Das Bench: Das, S.K., Kapur, J.L., Sarkar, A.K., Hidayatullah, M., Dayal, Raghubar PETITIONER: S. C. PRASHAR, INCOME-TAX OFFICER,MARKET WARD, BOMBAY AND AN Vs. RESPONDENT: VASANTSEN DWARKADAS […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-98668","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nS. C. 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