COMMISSIONER OF INCOME TAX, WEST BENGAL vs. BALKRISHAN MALHOTRA

CIVIL APPEAL No. 1391/1967Supreme Court1971 INSC 16828 July 1971Bench: 2 JudgesAuthor: K.S. HEGDE, A.N. GROVER COMMISSIONER OF5 pages
AI SummaryDismissed

What were the facts?

The assessee, Balkrishan Malhotra, had his original assessment for assessment year 1944-45 made before March 13, 1953. The Income-tax Officer, with the Commissioner's sanction, reopened the assessment under Section 34(1)(a) of the Income-tax Act, 1922, issuing a notice on March 13, 1953. The Income-tax Officer computed the assessee's income at Rs. 60,000 on March 8, 1954, under Section 34 read with Section 23(4). However, the tax due was not determined on this date. The tax was determined, and a notice under Section 28(3) was issued on March 31, 1954. The assessee contended that the assessment was time-barred under Section 34(3). This contention was rejected by lower authorities but accepted by the High Court.

What did the Supreme Court hold?

The appeal by the Revenue is dismissed. The Tribunal held that the word 'assessment' in the proviso to Section 34(3) of the Income-tax Act, 1922, means not merely the computation of the assessee's income but also the determination of the tax payable by him. This interpretation was established by the Madras High Court in R.M.P.R. Viswanathan Chettiar's case (25 I.T.R. 79) and had not been contradicted by any other High Court. The Supreme Court noted that the Revenue must have acted on this interpretation for many years. While acknowledging that a different view might be possible, the Court declined to depart from a settled interpretation of a taxing statute, especially given that the Act had since been repealed and its corresponding provisions in the 1961 Act were materially different. Therefore, the assessment was considered incomplete on March 8, 1954, and the subsequent determination of tax on March 31, 1954, made it time-barred under Section 34(3).

What were the issues?

1. Whether the assessment is complete on the date when the income is assessed by the Income-tax Officer or on the date when the tax is computed by him and the challan demanding the tax is issued, under Section 34(3) of the Indian Income-tax Act, 1922? (Question of law) 2. Whether, on the facts admitted or found, the assessment was time-barred under the first proviso to Section 34(3) of the Indian Income-tax Act, 1922? (Question of mixed law and fact) Assessee's contentions: The assessment was barred under Section 34(3) because the tax due was not determined on March 8, 1954, when the income was computed. Therefore, the assessment was not complete on that date, and the subsequent determination of tax on March 31, 1954, fell outside the permissible period. Revenue's contentions: The Revenue argued that the assessment was complete when the income was computed by the Income-tax Officer, and the subsequent determination of tax was a procedural step that did not affect the completion of the assessment for the purpose of Section 34(3).

Which sections of the Income-tax Act were involved?

Section 34(3),Section 34(1)(a),Section 23(4),Section 28(3),Section 23,Section 22(2),Section 66(1)

AI-generated summary — verify with the full judgment below

951 COMMISSIONER OF INCOME TAX, WEST BENGAl. A, v. BALKRISHAN MALHOTRA July 28, 1971 [K. S. HEGDE AND A. N. GROVER, JJ.J Income-tax Act, 1922, s. 34(3)-.Assessment' meaning of-Whether assessment completed on day of computation of income by Income-tu Officer or when the tax due is computed.

The original assessment of the assessee for the assessment year 1944- 45 was made sometime before March 13, 1953. Subsequently after ob- taining the sanction of the Commissioner of Income-tax, the Income-tax Officer reopened the assessment nnder s. 34(l)(a) of the Income-tax Act, 1922. On March 13, 1953 he issued a notice to the assessee under s. 34 read with s. :.'!2(2) of the Act. After considering .the objection of the assessee, the Incon1e-tax Officer made an assessment order under s. 34 read with s. 23 (4) of the Act on March 8, 1954 in which he computed the income of the assessee. But on that day he' did not determine the tax due from the assessee. He determined the tax and issued a notice under s. 28(3) in Form 30 only on March 31. 1954. The assessee contended that the assessment was barred under s. 34(3). The contention was rejected by the authorities under the Act in

The order continues below.

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