1963 PLP 59 (PTD)
RAO THAKUR NARAYAN SINGH Versus COMMISSIONER OF INCOME‑TAX, DELHI
| Citation | 1963 PLP 59 (PTD) |
| Forum / Court | Allababad India |
| Bench Members | V. Bhargava and Jagdish Sahai, JJ |
| Parties | RAO THAKUR NARAYAN SINGH Versus COMMISSIONER OF INCOME‑TAX, DELHI |
| Primary Law | Income‑tax Act (XI of 1922) |
Q1: What are the key laws and sections cited in 1963 PLP 59 (PTD)?
This judgment primarily cites: Income‑tax Act (XI of 1922) as referenced in Pakistani case law index.
Q2: Which judicial bench decided the case 1963 PLP 59 (PTD)?
The case was heard and decided by the Allababad India bench comprising: V. Bhargava and Jagdish Sahai, JJ.
Q3: What is the official citation format for this judgment on Pakistan Law Portal?
Cite this legal precedent as: 1963 PLP 59 (PTD) (RAO THAKUR NARAYAN SINGH Versus COMMISSIONER OF INCOME‑TAX, DELHI). Read the full summary and cross-referenced laws free on Pakistan Law Portal.
Laws Cited
Representation
- The contention of the assessee mentioned in the appellate order of the Tribunal is a very limited one. The Tribunal has stated that the contention on behalf of the assessee was that since a return under section 22(2) had been submitted in response to the notice under section 34 served upon the assessee in April 1945, it was not a case where income had escaped assessment by reason of the omission or failure on the part of the assessee to make a return of his income under section 22 and the provisions of section 34(1)(a) were, therefore, not attracted. This argument, it appears to us, was rightly rejected by the Tribunal on the basis that the disclosure in the return which was filed in response to the notice issued under section 34 in April 1945, was immaterial. The material fact was that the assessee had failed to disclose the interest income in his return which was filed under section 22(2) in connection with the original assessment. A disclosure made subsequent to the original assessment would in no way be material to the applicability of section 34 of the Income‑tax Act if proceedings under that provision of law are sought to be taken. The other view expressed by the Tribunal was based on the acceptance by the Tribunal of the point raised by the departmental represen tative that the proceedings started under section 34 in April 1945, were quashed by the Tribunal by its order dated April 25, 1949, and consequently there were no such valid proceedings at all. This point of view recited by the Tribunal in its appellate order was irrelevant to and had no bearing on the contentions of the assessee which were mentioned by the Tribunal in the appellate order. It was urged by learned counsel for the assessee before us that these remarks were made for the purpose of meeting the ground taken in the grounds of appeal to the effect that the assessment order dated July 12, 1945, for the assessment year 1942‑43 under section 23 (3) read with section 34 of the Act had become final under section 33 (6) of the Act and consequently the present assessment proceedings were without jurisdiction. In order to show that such a ground of appeal was taken before the Tribunal, learned counsel for the assessee put before us a copy of those grounds of appeal. Learned counsel for the department stated that he had no objection to the copy of the grounds of appeal being taken by the Court and considered when answering this reference in view of the fact that the Court could easily get a copy of the grounds of appeal by asking for a supplementary statement of the case under section 66 (4) of the Income‑tax Act and such a proceeding would only prolong the case and put parties to unnecessary expense without serving any useful purpose and that could be avoided by taking a copy from the assessee's counsel. We are in agreement with the learned counsel for the assessee that the point which was raised as ground No. 2 in the grounds of appeal and which has been mentioned above is the point in respect of which the views expressed by the Tribunal about the proceedings taken under section 34 in April 1945, are relevant. The Depart mental Representative's argument was that those proceedings under section 34 were quashed by the Tribunal by its order dated April 25, 1949, and that the submission of the Departmental Represen tative was accepted by the Tribunal by saying that the Departmental Representative had rightly pointed this out. Having accepted this argument the Tribunal also proceeded to hold that there were no valid proceedings under section 34 in April 1945. On this basis the contention raised in ground No. 2 of the grounds of appeal would naturally not help the assessee at all, because, if there were no valid proceedings under section 34 in the year 1945, the order passed by the Tribunal ultimately in the appeal arising out of those proceedings would not have the effect of governing subsequent proceedings on the ground of being a final order under section 33 (6) of the Act. An order falling within the provisions of section 33 (6) of the Act can only be effective if it be an order made in valid proceedings and not an order in invalid proceedings. The remarks of the Tribunal, there fore, in the judgment were really meant to meet this point of view which was put forward by the assessee in the grounds of appeal though it appears that the Tribunal when putting down the views failed to take notice in the earlier part of the judgment of the fact that such a ground was one of the grounds of appeal before it on behalf of the assessee. This aspect of the case is, therefore, one which can be considered by us when deciding this reference because, as we have just said, the Tribunal at least proceeded to base its decision on this aspect and the mere failure of the Tribunal to mention that this aspect was pressed before it in the course of arguments becomes immaterial. The contention of learned counsel for the department that we are not entitled to examine the question referred to us in this aspect on the ground that the question of law in this form does not arise out of the appellate order has, therefore, no force.
- It was urged by learned counsel for the department that the fresh notice under section 34 should be held by us to be valid in the special circumstances of this case that this notice was issued under the amended section 34 after the enforcement of the Income‑tax (Amendment) Act, 1948, and such a notice should not be held to be barred by a final order passed in proceedings under section 34 taken before the amendment of that section. There are two reasons why in our opinion this submission cannot be accepted. Firstly, when section 34 was amended by the Amending Act of 1948, the Legislature did not say that this amendment shall be retrospective and of such a nature that proceedings which have already been taken once under the unamended section 34 will not stand in the way of taking a second proceeding under the amended section. If the section had remained unamended there would have been no doubt that the proceedings taken under it by issue of the notice in April 1945, would bar a fresh proceeding under the same section because of the final order passed by the Tribunal on April 25, 1949. Once there was finality to the applicability of section 34 to the case of the assessee in respect of this interest income, the mare amendment of this section would not confer a right to take another proceeding and disregard that finality when the Legislature did not grant any such right to the Department and did not specifically make the amended section retrospective. The second reason which appeals to us is that the amendment to section 34 which was brought about by the amendment of 1948 was not of such a nature as to bring about any difference between the proceedings to be taken under the amended section 34 as compared with the proceedings which had already been taken under the unamended section 34 in April 1945, in so far as the proceedings related to this interest income. All the ingredients required for taking proceedings under section 34 in respect of this interest income which are relied upon for the issue of the notice under the amended section are the same which did exist and which were taken into account when issuing the notice under the unamended section 34. The main amendment related to the use of the words "definite information" in section 34. In the proceedings taken under the notice issued under the unamended section 34 in April 1945, there was a finding that there was definite information in respect of this interest income of the nature required and that finding of fact was never set aside. The assessment of tax was, however, set aside. In the proceedings taken under the amended section, the requirement of definite information was given up but that would be immaterial because even in the previous proceedings the want of definite information was not the reason for setting aside the assessment. In these circumstances, it would appear that the amendment of section 34 in no way brought about any change in the nature or validity of the proceedings under section 34 in respect of this interest income and consequently the mere fact that there was an amendment would give no right to the department to take a fresh proceeding. Consequently, our view earlier that the final order passed by the Tribunal on April 25, 1949, was a bar to the proceedings sub sequently taken under the notice dated January 19, 1950, remains unaltered.
- As a result the question referred to us is answered in the negative. The assessee will be entitled to the costs of this reference which we fix at Rs. 400. The same amount shall be treated as the fee of learned counsel for the department.
Headnotes / Summary
Ss. 33 (6), 34 (1) (a)‑Re‑assess ment‑Assessment of interest income and forest income‑Appeal to Appellate Tribunal contesting only inclusion of forest income‑Appel late Tribunal holding notice invalid as regards forest income but setting aside entire re‑assessment by mistake‑No application for rectification or reference‑Fresh re‑assessment whether permissible to tax interest income. From a re‑assessment for the assessment year 1942‑43 made on July 12, 1945, bringing to tax certain interest income and forest income, the assessee appealed to the Appellate Tribunal contesting only the inclusion of forest income. The Appellate Tribunal held that it could not be said that the Income‑tax Officer had come in possession of definite information within the meaning of section 34 of the Income‑tax Act, 1922 (before it was amended in 1948), in respect of the forest income. But by mistake instead of setting aside the assessment only in regard to the forest income, when passing the final order the Tribunal set aside the assessment of interest income as well and restored the original assessment order. No application for rectification of the mistake was made nor was any reference to the High Court sought from the appellate order of the High Court. The Income‑tax Officer made a fresh re‑assessment on Sep tember 25, 1950, under section 34(1)(a) to bring to tax the interest income : Held, (i) that the result of the appellate order of the Appellate Tribunal was not that the assessment proceedings taken in 1945 were invalid and the tribunal committed an error in restoring the original assessment under section
23. The Appellate Tribunal did not hold that the interest income was wrongly assessed. The remedy of the department against the order restoring the original assessment under section 23 was an application for rectification under section
35. The appellate order of the Tribunal was final by virtue of section 33 (6) as regards interest income and the department could not take fresh re‑assessment proceedings under section 34. (ii) That the amendment of section 34 of the Indian Income -tax Act, 1922, in 1948 in no way brought about a change in the nature of the validity of the proceedings under section 34 in respect of the interest income and the mere fact that there was an amendment did not give the department a right to take fresh proceedings. STATEMENT OF CASE By this application the assessee requires the Tribunal to refer to the High Court certain questions of law arising out of the Tribunal's order dated September 7, 1953, in I. T. A. No. 4169 of 1952‑
53. Inasmuch as, in our opinion, a question of law does arise out of the aforesaid order of the Tribunal, we hereby draw up a statement of the case and refer it to the High Court of Judicature at Allahabad under section 66 (1) of the Indian Income‑tax Act.
2. The assessment year to which the aforesaid appeal pertained was 1942‑
43. The original assessment for that year was completed by the Income‑tax Officer concerned on March 25, 1944. Later, it transpired that the assessee had also forest income and interest income which were not included in the original assessment. A notice under section 34 of the Income‑tax Act was accordingly issued to the assessee on April 5, 1945. In response to that notice, the assessee filed a return wherein he disclosed full and complete particulars of his interest income, but contended that his forest income was not taxable. The Income‑tax Officer made a revised assessment by his order dated July 12, 1945, in which, however, both the forest income and interest income were included. The assessee eventually came up in appeal before the Tribunal against that order of the Income‑tax Officer, his case being that, in so far as the forest income was concerned, the Income‑tax Officer had no jurisdiction to start proceedings under section 34 (as it existed before its amendment in 1948) since it was within his knowledge at the time of making the original assessment on March 25, 1944 that the assessee had such income. It was not disputed at any stage that, so far as the inte rest income was concerned, the proceedings under section 34 were validly initiated. In dealing with that appeal the Tribunal some how overlooked the matter of the interest income and confined its attention only to the contention relating to the forest income. The Tribunal came to the conclusion that section 34, as it was worded at the time of issue of the notice of April 5, 1945, did hot permit a revised assessment so as to include the forest income the existence of which was already within the knowledge of the Income‑tax Officer, and in that view erroneously set aside, in its entirety, the assessment made on July 12, 1945, under that section. The Tribunal's order is dated April 25, 1949. It is Annexure "A" and forms part of the case. The result of this decision was that the interest income, which admittedly was liable to tax and could properly have been assessed by virtue of section 34, was also excluded. The income‑tax authorities did not appear to have brought this mistake to the notice of the Tribunal by an application under section 35, nor were any steps taken by them to have a case stated to the High Court under section 66 (1). The aforesaid order of the Tribunal thus became final.
3. On January 3, 1950, the Income‑tax Officer moved the Commissioner of Income‑tax for sanction to start proceedings under the amended section 34 with respect to the interest income which had escaped assessment. The requisite sanction was accord ed by the Commissioner, and on January 19, 1950, the Income -tax‑Officer issued to the assessee a fresh notice under that section. In due course, on September 25, 1950, a revised assessment order with respect to the assessment year 1942‑43 was passed in which the assessee's aforementioned interest income was included. The assessee then once again came up in appeal to the Tribunal since the Appellate Assistant Commissioner maintained that order. It was contended 'before the Tribunal that since a return under section 22(2) was submitted by the assessee in response to the notice under section 34 served upon him in April, 1945, it was not a case of income having escaped assessment by reason of the omission or failure on the part of the assessee to make a return of his income under section 22, and the terms of section 34 (1) (a) were, therefore, not attracted. The departmental representative, on the other hand, pointed out that whatever proceedings were started under section 34 in April, 1945, were quashed by the Tribunal by its order dated April 25, 1949, and the position, therefore, was that any return which the assessee may have made in these proceedings had become non‑existent and of no effect. The Tribunal held that since the assessee had admittedly failed to disclose his interest income in the return filed by him under section 22(2) in connection with the original assessment made for the year 1942‑43, there was already a default on his part by reason of which his interest income had escaped assessment, and the provisions of section 34(1)(x) accordingly applied. The order of the Tribunal is Annexure‑B" and forms part of the case.
4. In our opinion, the following question of law arises from the order of the Tribunal : "Whether on the facts, and in the circumstances of the case, the provisions of section 34(1)(a) were applicable in respect of the assessment year 1942‑43 on January 19 , 1950, when the notice under that provision was issued for the purpose of assessing the escaped interest income ?"
5. Copies of the draft of this statement of case were for warded to the parties for their comments, if any. The Commis sioner of Income‑tax has expressed that he has no comments to make. The assessee's counsel has made certain suggestions of a minor character, but these do not seem to us necessary. Z. S. Meratwal for the Assessee. Gopal Behari for the Commissioner.
Judgment & Decree
BHARGAVA, J.‑The question referred by the Income‑tax Appellate Tribunal for our opinion is "Whether on the facts and in the circumstances of this case the provisions of section 34(1)(a) were applicable in respect of the assessment year 1942‑43 on January 19, 1950. when the notice under that provision was issued for the purpose of assessing the escaped interest income ?" The statement of the case which is accompanied by copies of certain orders including the appellate order out of which this question arose shows that, for the assessment year 1942‑43, the original assessment on the basis of the return submitted under section 22 of the Income‑tax Act was made on March 25, 1944. Later the Income‑tax Officer on April 5, 1945 issued a notice under section 34 of the Income‑tax Act and called upon the assessee to file a fresh return. It was said that he had failed to disclose full and complete particulars of his interest income and his forest income in the return filed in the regular assessment. The In come‑tax Officer on receipt of a return in response to the notice under section 34 made a revised assessment by his order dated July 12, 1945, and imposed tax on both the forest income and the interest income. The assessee appealed and eventually his appeal came before the Income‑tax Appellate Tribunal. By the time this appeal came up the assessee no longer contested the liability to tax of the interest income which had been shown by him in the return filed in response to the notice under section 34 but contested the assessment in respect of the forest income mainly on the ground that the notice in respect of it was invalid inasmuch as it had been issued without any definite information that that income had escaped assessment which was required by section 34 as it stood at that time. The Income‑tax Appellate Tribunal, when deciding the appeal, examined this argument relating to the forest income and accepted the contention of the assessee that it could not be held that the Income‑tax Officer had come in possession of definite information within the meaning of section 34 in respect of this forest income. The Tribunal, however, when passing the final order set aside the assessment of tax not only in respect of the forest income but also in respect of the interest income and re stored the original order which had been passed under section 23(3). The statement of the case further mentions that this mistake which was committed by the Tribunal in setting aside the tax assessed even in respect of interest income which was not disputed before the Tribunal, was not sought to be rectified by any appli cation under section 35 nor was any reference to this Court sought in respect of that error. On the other hand on January 3, 1950, the Income‑tax Officer moved the Commissioner of Income‑tax for sanction to start proceedings under section 34, which had been amended by the amending Act of 1948, with respect to the interest income which had escaped assessment. The Commissioner granted the requisite sanction and then on January 19, 1950, the Income‑tax Officer issued a fresh notice under section
34. In the proceedings under that notice the Income‑tax Officer made a revised assessment order on September 25, 1950, imposing tax, including the interest income of the assessee also in the revised assessment. The assessee again appealed and ultimately the appeal came before the Income‑tax Appellate Tribunal. The Tribunal held that this income had been rightly assessed in the proceedings taken under section 34 on the basis of the notice dated January 19, 1950, and consequently dismissed the appeal. It is in these circumstances that the question mentioned above arose and has been referred for our opinion. In deciding this reference we have felt some difficulty because the statement of the case as well as the appellate order out of which the question of law referred to us arose, are so worded that it has been difficult for us to find what are the points decided by the Tribunal for giving the decision against the assessee in the appeal. In the first paragraph of the appellate order, the Tribunal mentions the facts most of which have been mentioned above. The first few sentences of the second paragraph also contain the same facts. Then the appellate order mentions what was contended before the Tribunal on behalf of the assessee. Thereafter comes a sentence in which the Tribunal mentions what the departmental representative pointed out in the course of arguments and when mentioning the arguments of the depart mental representative the Tribunal had put down the word "rightly" indicating that in their opinion the argument put forward by the departmental representative was correct. That argument was that whatever proceedings were started under section 34 in April, 1945, were quashed by the Tribunal by its order dated April 25, 1949. Having mentioned this the Tribunal puts down two more sentences to the following effect : "The position, therefore, was that there were no valid proceedings at all. The assessee failed to disclose the interest income in his return filed under section 22(2) in connection with the original assessment." There was some argument before us as to whether these two sentences represent the opinion of the Tribunal and their finding or whether they were also part of the argument of the depart mental representative. It appears to us that this aspect is immaterial because of the use of the word "rightly" by the Tribunal in the earlier sentence where they mentioned the argument of the departmental representative. Even if these sentences be treated as part of the argument of the departmental representative it should be held that the word "rightly" would affect the arguments contained in these two sentences also. This would mean that the point urged by the departmental repre sentative in the first sentence as well as the points which are men tioned in these two sentences, if they were parts of the argument of the departmental representative, were accented by the Tribunal as correct and formed the basis of the opinion which resulted in the dismissal of the appeal of the assessee. On the other hand, if these two sentences be read as apart from the argument of the departmental representative contained in the earlier sentence the position would still remain unaffected because it would mean that the Tribunal accepted that argument of the departmental representative and then proceeded further to express its own opinion in the subsequent two sentences in question. Consequently for the purpose of answering the reference before us, we proceed on the basis that the views or points contained in all these sentences amount to the decision of the Tribunal on the points which the Tribunal was called upon to decide in order to pass the final order in the appeal. The contention of the assessee mentioned in the appellate order of the Tribunal is a very limited one. The Tribunal has stated that the contention on behalf of the assessee was that since a return under section 22(2) had been submitted in response to the notice under section 34 served upon the assessee in April 1945, it was not a case where income had escaped assessment by reason of the omission or failure on the part of the assessee to make a return of his income under section 22 and the provisions of section 34(1)(a) were, therefore, not attracted. This argument, it appears to us, was rightly rejected by the Tribunal on the basis that the disclosure in the return which was filed in response to the notice issued under section 34 in April 1945, was immaterial. The material fact was that the assessee had failed to disclose the interest income in his return which was filed under section 22(2) in connection with the original assessment. A disclosure made subsequent to the original assessment would in no way be material to the applicability of section 34 of the Income‑tax Act if proceedings under that provision of law are sought to be taken. The other view expressed by the Tribunal was based on the acceptance by the Tribunal of the point raised by the departmental represen tative that the proceedings started under section 34 in April 1945, were quashed by the Tribunal by its order dated April 25, 1949, and consequently there were no such valid proceedings at all. This point of view recited by the Tribunal in its appellate order was irrelevant to and had no bearing on the contentions of the assessee which were mentioned by the Tribunal in the appellate order. It was urged by learned counsel for the assessee before us that these remarks were made for the purpose of meeting the ground taken in the grounds of appeal to the effect that the assessment order dated July 12, 1945, for the assessment year 1942‑43 under section 23 (3) read with section 34 of the Act had become final under section 33 (6) of the Act and consequently the present assessment proceedings were without jurisdiction. In order to show that such a ground of appeal was taken before the Tribunal, learned counsel for the assessee put before us a copy of those grounds of appeal. Learned counsel for the department stated that he had no objection to the copy of the grounds of appeal being taken by the Court and considered when answering this reference in view of the fact that the Court could easily get a copy of the grounds of appeal by asking for a supplementary statement of the case under section 66 (4) of the Income‑tax Act and such a proceeding would only prolong the case and put parties to unnecessary expense without serving any useful purpose and that could be avoided by taking a copy from the assessee's counsel. We are in agreement with the learned counsel for the assessee that the point which was raised as ground No. 2 in the grounds of appeal and which has been mentioned above is the point in respect of which the views expressed by the Tribunal about the proceedings taken under section 34 in April 1945, are relevant. The Depart mental Representative's argument was that those proceedings under section 34 were quashed by the Tribunal by its order dated April 25, 1949, and that the submission of the Departmental Represen tative was accepted by the Tribunal by saying that the Departmental Representative had rightly pointed this out. Having accepted this argument the Tribunal also proceeded to hold that there were no valid proceedings under section 34 in April 1945. On this basis the contention raised in ground No. 2 of the grounds of appeal would naturally not help the assessee at all, because, if there were no valid proceedings under section 34 in the year 1945, the order passed by the Tribunal ultimately in the appeal arising out of those proceedings would not have the effect of governing subsequent proceedings on the ground of being a final order under section 33 (6) of the Act. An order falling within the provisions of section 33 (6) of the Act can only be effective if it be an order made in valid proceedings and not an order in invalid proceedings. The remarks of the Tribunal, there fore, in the judgment were really meant to meet this point of view which was put forward by the assessee in the grounds of appeal though it appears that the Tribunal when putting down the views failed to take notice in the earlier part of the judgment of the fact that such a ground was one of the grounds of appeal before it on behalf of the assessee. This aspect of the case is, therefore, one which can be considered by us when deciding this reference because, as we have just said, the Tribunal at least proceeded to base its decision on this aspect and the mere failure of the Tribunal to mention that this aspect was pressed before it in the course of arguments becomes immaterial. The contention of learned counsel for the department that we are not entitled to examine the question referred to us in this aspect on the ground that the question of law in this form does not arise out of the appellate order has, therefore, no force. On this aspect of the case, we find that the: Tribunal ha: gone wrong. The Tribunal without carefully examining the correct position accepted the submission of the Departmental Representative that the proceedings started untie: section 34 in April 1945, were quashed by the Tribunal by its order dated April 25, 1949. We have looked at the appellate order of the Tribunal dated April 25, 1949, and we are unable to find any words in that order quashing the proceedings which had been taken on the notice under section 34 at that time. The appellate order of the Tribunal dated April 25, 1949, shows that the Tribunal concentrated its attention on the question whether the notice under section 34, inasmuch as it affected the forest income was or was not a valid notice. Examining that aspect in detail, the Tribunal at the end recorded its conclusion that it cannot be said that the Income‑tax Officer had come in possession of definite information within the meaning of section 34 and that the proceedings under section 34 could not be initiated against the assessee for this year. Thereafter, the Tribunal proceeded to pass the operative order and that order was to the effect that the order passed by the Income‑tax Officer was set aside and the original order under section 23 (3) was restored. In passing this order, on the face of it, the Tribunal committed an error. The order of the Income -tax Officer which was set aside by the Tribunal affected two items of income : there was the forest income and there was thus interest income. The conclusions which had been arrived at n% the Tribunal were all with reference to the forest income and the view that had been expressed by the Tribunal was that the notice in respect of that income was void. There was no finding that the notice in respect of the interest income was void nor was there any finding that the assessment of tax in respect of the interest income was incorrect and was liable to be set aside. Yet the Tribunal proceeded to set aside the assessment of tax in respect of both the forest income and the interest income. In respect of the forest income, therefore, the order of the Tribunal would amount to a decision that the proceedings under section 34 were void as the requirements for issue of the notice under section 34 in respect of that income did not exist. So far as the interest income is concerned, it would appear that the Tribunal set aside the tax assessed on it without applying its mind to the question whether that income was or was not taxable and without recording any finding even incidentally that the proceedings in respect of that income were void. This was, therefore, a case where the Tribunal did not hold that the notice under section 34 was void in respect of the interest income but committed a clear and manifest error of setting aside the assessment of tax on the interest income without going into the correctness of the imposition of the tax. Such an error would certainly be a manifest error apparent on the face of the record but it cannot be said that the result of the decision by the Tribunal was that the proceedings which had been taken under section 34 were quashed and became invalid so that they could be treated as non‑existent proceedings. In fact, this correct position seems to have been realised by the Tribunal in their subsequent appellate order dated September 7, 1953, out of which e present reference has arisen, The Tribunal has stated that the income‑tax authorities did not bring this to the notice of the Tribunal by an application under section 35 nor were any steps taken to have a case stated to the High Court under section 66(1). An application could have been presented under section 35 or proceedings initiated under section 66(1) only on the basis that the order of the Tribunal setting aside the imposition of tax on interest income was an order within the jurisdic tion of the Tribunal, though an order which suffered from an error of law which could be rectified either by the Tribunal itself under section 35 or by the High Court on receipt of a reference under section
66. The order passed by the Tribunal on April 25, 1949, did not, therefore, invalidate the proceedings which were taken by issue of the notice under section 34 in April 1945, and the Tribunal committed an error in accepting the interpretation of the Departmental Representative that these proceedings had been quashed and that there had been no such valid proceedings at all. There having been proceedings which were valid but which terminated in an order made by the Tribunal, we think that the order which was made by the Tribunal will be a proper order to which the provisions of section 33(6) of the Act would apply. The result of the application of the provisions of section 33(6) would be that the order would be final and the logical conclusion would be that no subsequent pro ceedings under section 34 on the same facts and in respect of the same income could be taken by the department by issue of a fresh notice under section
34. If the department could take fresh proceedings under section .i4 ignoring that appellate order of the Tribunal it would mean that the order would have no. finality at all. The proper procedure which the department should have adopted and which has been indicated by the Tribunal itself was not adopted by the department. On the other hand, this procedure of issue of afresh notice under .section 34 was adopted and that, in the circumstances mentioned above, was clearly an incorrect procedure and not permissible in law. It was urged by learned counsel for the department that the fresh notice under section 34 should be held by us to be valid in the special circumstances of this case that this notice was issued under the amended section 34 after the enforcement of the Income‑tax (Amendment) Act, 1948, and such a notice should not be held to be barred by a final order passed in proceedings under section 34 taken before the amendment of that section. There are two reasons why in our opinion this submission cannot be accepted. Firstly, when section 34 was amended by the Amending Act of 1948, the Legislature did not say that this amendment shall be retrospective and of such a nature that proceedings which have already been taken once under the unamended section 34 will not stand in the way of taking a second proceeding under the amended section. If the section had remained unamended there would have been no doubt that the proceedings taken under it by issue of the notice in April 1945, would bar a fresh proceeding under the same section because of the final order passed by the Tribunal on April 25, 1949. Once there was finality to the applicability of section 34 to the case of the assessee in respect of this interest income, the mare amendment of this section would not confer a right to take another proceeding and disregard that finality when the Legislature did not grant any such right to the Department and did not specifically make the amended section retrospective. The second reason which appeals to us is that the amendment to section 34 which was brought about by the amendment of 1948 was not of such a nature as to bring about any difference between the proceedings to be taken under the amended section 34 as compared with the proceedings which had already been taken under the unamended section 34 in April 1945, in so far as the proceedings related to this interest income. All the ingredients required for taking proceedings under section 34 in respect of this interest income which are relied upon for the issue of the notice under the amended section are the same which did exist and which were taken into account when issuing the notice under the unamended section
34. The main amendment related to the use of the words "definite information" in section
34. In the proceedings taken under the notice issued under the unamended section 34 in April 1945, there was a finding that there was definite information in respect of this interest income of the nature required and that finding of fact was never set aside. The assessment of tax was, however, set aside. In the proceedings taken under the amended section, the requirement of definite information was given up but that would be immaterial because even in the previous proceedings the want of definite information was not the reason for setting aside the assessment. In these circumstances, it would appear that the amendment of section 34 in no way brought about any change in the nature or validity of the proceedings under section 34 in respect of this interest income and consequently the mere fact that there was an amendment would give no right to the department to take a fresh proceeding. Consequently, our view earlier that the final order passed by the Tribunal on April 25, 1949, was a bar to the proceedings sub sequently taken under the notice dated January 19, 1950, remains unaltered. As a result the question referred to us is answered in the negative. The assessee will be entitled to the costs of this reference which we fix at Rs.
400. The same amount shall be treated as the fee of learned counsel for the department. Question answered in the negative.