PANNALAL NANDLAL BHANDARI vs. THE COMMISSIONEE OF INCOME-TAX, BOMBAY CITY, BOMBAY.

CIVIL APPEAL No. 408/1957Supreme Court[1961] 2 S.C.R. 3518 October 1960Bench: 3 JudgesAuthor: S.K. DAS, M. HIDAYATULLAH, J.C. SHAH5 pages
AI SummaryDismissed

What were the facts?

The appellant, Pannalal Nandlal Bhandari, a non-resident for Indian Income Tax purposes, had dividend income accruing within the taxable territory for assessment years 1943-44, 1944-45, 1946-47, and 1947-48. He did not submit returns for these years. The Income Tax Officer issued notices under Section 34 read with Section 22(2) of the Indian Income Tax Act, 1922. These notices were served within eight years from the end of the respective assessment years. The assessments were completed, confirmed by the Appellate Assistant Commissioner and the Income Tax Appellate Tribunal. The High Court, on a reference, held that the notices were issued within the prescribed limitation period under Section 34(1)(a) and that the second question regarding invalidity of assessments did not arise.

What did the Supreme Court hold?

The Tribunal held that the expression 'every person' in Section 22(1) of the Indian Income Tax Act, 1922, includes all persons liable to pay tax, and non-residents are not exempted from the liability to submit a return pursuant to a general notice. Once a general notice is published under Section 22(1), every person, resident or non-resident, whose income exceeds the tax-exempt maximum is obliged to submit a return. Failure to do so is deemed an omission within the meaning of Section 34(1)(a). Section 34(1)(b) applies only when there is no omission or failure to make a return or disclose material facts. Since the appellant had taxable income accruing in India and did not submit a return, the Income Tax Officer was competent under Section 34(1)(a) to issue notices within eight years from the end of the assessment year. The High Court was correct in holding that the proceedings were properly commenced within the period of limitation. The appeal was dismissed.

What were the issues?

1. Whether the notices issued under Section 22(2) read with Section 34 of the Indian Income Tax Act, 1922, for the assessment years 1943-44, 1944-45, 1946-47, and 1947-48 were served after the period of limitation prescribed by Section 34 of the Act? Assessee's contention: The appellant argued that notices for assessment were governed by Section 34(1)(b) and not Section 34(1)(a). He contended that as a non-resident, a general notice under Section 22(1) did not create a liability to submit a return, and his inaction did not constitute an omission or failure to submit a return. He asserted that omission or failure for a non-resident only arises after a specific notice under Section 22(2) is served. Revenue's contention: The revenue implicitly argued that the notices were validly issued under Section 34(1)(a) as the appellant had an obligation to submit a return due to the general notice under Section 22(1) and his failure to do so constituted an omission.

Which sections of the Income-tax Act were involved?

Section 22(1),Section 22(2),Section 34(1)(a),Section 34(1)(b)

AI-generated summary — verify with the full judgment below

2 S.C.R. SUPREME COURT REPORTS 35 requirements of s. 57 of the Bombay Police Act, must be made bona fide, taking into account a conviction which is tmfficiently proximate in time. Since no absolute rule can be laid down, each case must depend on its own facts.

In the result, we set aside the acquittal, and remit the case to the High Court for disposal on the other points urged before it and in the light of observations ma.de here by us.

Appeal allowed. PANNALAL NANDLAL BHANDARI v. THE COMMISSIONEE OF INCOME-ll' AX, BOMBAY CITY, BOMBAY. (S. K. DAS, M. HIDAYATULLAH and J. c. SHAH, JJ.)

Income-tax-General notice-Non-resident liability to submit return-Period of Limitation-Indian Income Tax Act, 1922 (XI of 1922), s. 22(1) & (2), s. 34(1)(a) & (b).

The appellant, a non-resident for the purfoses of the Indian Income-tax Act, did not submit returns o certain dividend income accruing to him within the taxable territory. The Income-tax Officer served upon him notices under s. 34 read with s. 22(2) of the Act for assessment of tax in respect of those years. The notices in question were issued within eight years from_ the end of the years of assessment and were with

The order continues below.

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