# KALAWATI DEVI HARLALKA v. COMMISSIONER OF INCOME-TAX, WEST BENGAL & ORS

- **Citation:** [1967] 3 S.C.R. 833
- **Court:** Supreme Court of India
- **Decided:** 1967-05-01
- **Bench:** J. C. Shah, S. M. SlKR!, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kalawati-devi-harlalka-v-commissioner-of-income-tax-west-bengal-ors-4028
- **Pages:** 15

## Headnote

Income-tax Act, 1961, ss. 297 and 298-Commissionu issuing notice
of revision of assessment under s. 33B of the Income-tax Act, 1922whether such proceedings covered by the expression "proceedings for the
assessment" in , .. 297(2) (a)-S. 6 General Clauses Act, 1897-Effect of
s. 298 and the Income-tax (Remol'al of Dilfu:ulties) Orders, 1962-ValidilY of.
The appeljant received a notice on January 24, 1963 from the Commissioner of Income-tax, We.t Bengal, initiating a revision under s. 33B
of the Income-tax Act, 1922, of her asse.sments for the years 19S2-S3
to 1960-61. The appellant thereupon filed a petition in tlie High Court
under Art.
~26 of the Constitution ?raying that the notice be quashed
and the 1espondent restrained from giving effect to it.
A single Bench
of the High Court dismissed the petition and an ·appeal to a Division
Bench was also dismissed.
It was contended on behalf of the appellant (i) that the Income-tax
Act, . 1922, having been repealed by the Act of 1961 which came into
force on April 1, 1962 the respondent had> no power, authority or jurisdiction to initiate the proceedings under s. 33B of the 1922 Act; (ii)
that •. 6 of the General Clauses Act, 1897, did not authorise the initiation of t'he proceedings inasmuch as no steps were taken in respect thereof
while the 1922 Act was in force; (iii) that s. 298 of the 1961 Act wa.<
void; and in any event, the powers under the SCl'tion, under which the
Government promulgated the Income-tax (Removal of Difficulties) Order
1962, clause 4 of which purported to cover a case like the present one,
can be exercised only in respect of the matters dealt' with in s. 297 of
that Act which docs not deal with proceedings tinder s. 33B of the
1922 Act.
HELD: (i) The procecdin~< initiutcd hy the respondent were valid as
they were covered hy the exptession "proceedings for £h.c ,,;sessment of
that person" in Clause (a) of s. 297(2) of th~ 1961 Act. [84\E; 846B]
The word "assessment" can cear a very eomprehensive meanin~; lt
can comprehend the whole procedure for ascertaining and imposing ltability upon the tax-payer, There was nothing in the context of s. 297
which required the expression ."procedure for the assessment" to be given
a narrower meaning.
S. 297 is meant to provide as far as possible for
all contingencies which may arise out of the repeal of the 1922 Act
[845A-CJ
'
Cou1111i.\·sio11er of lnco111e~u1x, Bonibay v. Khen1cha11d
Ramdas,
6
l.T.R. 414 at p. 423; A. N. Lakshman Shenoy v. Income-tax Officer,
Ernakul1un, 34 l.T.R. 275 at p. 291; C. A. Abraham v. lllcome-tax Oli·
cer, Kottt!Y"!!'• 41 I.T.R. 425 at pp. 429·430; Commlssi01ier of Incometax v. Bh1ku11 Dadabhal & Co., 42 J.T.R. 123 at p. 127; Commissioner of
lncome-t11.t v. Patlala. C•m•11t Co, Ltd., 32 I.T.R. 333; Bl1al/al Amin &
Sons Ltcl, ,., R. P. Dalal, 24 l.T.R. 229, referred to.
834
SUPREME COURT REPORTS
[1967] 3 S.C.R.
(ii) S. 6 of the General Clauses Act
would not apply because s.
A
297(2) evidences an intention to the contrary
by providlilg for many
matters, some in accord with what would have been the result under s, 6
nnd some contrary to such a rasult.
l846A]
Union of JndiG v,, Madan Gopal Kahrtl, 25 I.T.R. SB, referred to.
(Iii) Section 298 of the 1961 Act is 'valid and the present case was
covered by cl. 4 of the Income-tax (Removal
of Difficulties)
Order,
B
1962. [846 C·DJ
Jalan Trad/1111
Company
(Prlvt1tt) Ltd. v. Mill Mazdoor
Un/011,
[1!166] II L.L.J, 546; Commlssl1Jner of lncomt-ltu: v, Dewan Bahadur
Rmngopal Miiis, 41 I.T.R. 280 and Pandit Banarsl Das Bhanot v. Stall
of Madhya PradtJ'il, 9 S.T.C. 388, referre\I to.
C1v1L APPELLATE JURISDICTION : Civil Appeal No. 1421 of
C
1966.
Appeal from the judgment and order dated December 8, 1964
of the Calcutta High Court in Appeal from Original Order No.
281 of 1963,
Debi Pal, R. K. Chaudhuri and B. P. Maheshwarl, for the
D
appellant and the Intervener.
D. Narsaraju and R. N. Sachthey, for respondents Nos. l
and 2.

## Text

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KALAWATI DEVI HARLALKA
v.
COMMISSIONER OF INCOME-TAX, WEST BENGAL & ORS.
May 1, 1967
[J. C. SHAH, S. M. SlKR! AND V. RAMASWAMI, JJ.)
Income-tax Act, 1961, ss. 297 and 298-Commissionu issuing notice
of revision of assessment under s. 33B of the Income-tax Act, 1922whether such proceedings covered by the expression "proceedings for the
assessment" in , .. 297(2) (a)-S. 6 General Clauses Act, 1897-Effect of
s. 298 and the Income-tax (Remol'al of Dilfu:ulties) Orders, 1962-ValidilY of.
The appeljant received a notice on January 24, 1963 from the Commissioner of Income-tax, We.t Bengal, initiating a revision under s. 33B
of the Income-tax Act, 1922, of her asse.sments for the years 19S2-S3
to 1960-61. The appellant thereupon filed a petition in tlie High Court
under Art.
~26 of the Constitution ?raying that the notice be quashed
and the 1espondent restrained from giving effect to it.
A single Bench
of the High Court dismissed the petition and an ·appeal to a Division
Bench was also dismissed.
It was contended on behalf of the appellant (i) that the Income-tax
Act, . 1922, having been repealed by the Act of 1961 which came into
force on April 1, 1962 the respondent had> no power, authority or jurisdiction to initiate the proceedings under s. 33B of the 1922 Act; (ii)
that •. 6 of the General Clauses Act, 1897, did not authorise the initiation of t'he proceedings inasmuch as no steps were taken in respect thereof
while the 1922 Act was in force; (iii) that s. 298 of the 1961 Act wa.<
void; and in any event, the powers under the SCl'tion, under which the
Government promulgated the Income-tax (Removal of Difficulties) Order
1962, clause 4 of which purported to cover a case like the present one,
can be exercised only in respect of the matters dealt' with in s. 297 of
that Act which docs not deal with proceedings tinder s. 33B of the
1922 Act.
HELD: (i) The procecdin~< initiutcd hy the respondent were valid as
they were covered hy the exptession "proceedings for £h.c ,,;sessment of
that person" in Clause (a) of s. 297(2) of th~ 1961 Act. [84\E; 846B]
The word "assessment" can cear a very eomprehensive meanin~; lt
can comprehend the whole procedure for ascertaining and imposing ltability upon the tax-payer, There was nothing in the context of s. 297
which required the expression ."procedure for the assessment" to be given
a narrower meaning.
S. 297 is meant to provide as far as possible for
all contingencies which may arise out of the repeal of the 1922 Act
[845A-CJ
'
Cou1111i.\·sio11er of lnco111e~u1x, Bonibay v. Khen1cha11d
Ramdas,
6
l.T.R. 414 at p. 423; A. N. Lakshman Shenoy v. Income-tax Officer,
Ernakul1un, 34 l.T.R. 275 at p. 291; C. A. Abraham v. lllcome-tax Oli·
cer, Kottt!Y"!!'• 41 I.T.R. 425 at pp. 429·430; Commlssi01ier of Incometax v. Bh1ku11 Dadabhal & Co., 42 J.T.R. 123 at p. 127; Commissioner of
lncome-t11.t v. Patlala. C•m•11t Co, Ltd., 32 I.T.R. 333; Bl1al/al Amin &
Sons Ltcl, ,., R. P. Dalal, 24 l.T.R. 229, referred to.
834
SUPREME COURT REPORTS
[1967] 3 S.C.R.
(ii) S. 6 of the General Clauses Act
would not apply because s.
A
297(2) evidences an intention to the contrary
by providlilg for many
matters, some in accord with what would have been the result under s, 6
nnd some contrary to such a rasult.
l846A]
Union of JndiG v,, Madan Gopal Kahrtl, 25 I.T.R. SB, referred to.
(Iii) Section 298 of the 1961 Act is 'valid and the present case was
covered by cl. 4 of the Income-tax (Removal
of Difficulties)
Order,
B
1962. [846 C·DJ
Jalan Trad/1111
Company
(Prlvt1tt) Ltd. v. Mill Mazdoor
Un/011,
[1!166] II L.L.J, 546; Commlssl1Jner of lncomt-ltu: v, Dewan Bahadur
Rmngopal Miiis, 41 I.T.R. 280 and Pandit Banarsl Das Bhanot v. Stall
of Madhya PradtJ'il, 9 S.T.C. 388, referre\I to.
C1v1L APPELLATE JURISDICTION : Civil Appeal No. 1421 of
C
1966.
Appeal from the judgment and order dated December 8, 1964
of the Calcutta High Court in Appeal from Original Order No.
281 of 1963,
Debi Pal, R. K. Chaudhuri and B. P. Maheshwarl, for the
D
appellant and the Intervener.
D. Narsaraju and R. N. Sachthey, for respondents Nos. l
and 2.
The Judgment of the Court was delivered by
Slkrl, J, On January 24,' 1963, the Commissioner of Incometax, West Bengal, sent the following notice to Smt. Kolawati Harlalka, appellant before us, hereinafter referred to as the assessee :
"Sub : lncome·tax assessments of 1952-53 to
1960•61. Assessments erroneous and prejudicial to
the interests of revenue-Revision of assessments under
Section 3 3 B of the Indian Income-tax Act 1922proposal for-Notice regarding.
On calling for and examining the records of your
case for the assessment years 1952·53, 1953-54, 1954.
SS, 1955-56, 1956-57, 1957-58, 1958-59, 1959-60
and 1960'6 l and other connected records, I consider
that the orders of assessment passed by the Income-tax
Officer 'D' Ward, Howrah, on 7th February, 1961, are
erroneous in so far as they are prejudicial to the inte·
rests of revenue for the following reasons amongst
others.
2. Enquiries made have revealed that no business as
alleged was carried on from the address declared in the
returns, Also the said Income-tax Officer wns riot justi·
lied In ncceptin~ the initial capital, the ucqui~ition and
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KALAWATI DE\'! I'. c.I.T. (Slkrl, I.)
sale of jewellery, tho income from business, gift mado
by you etc. without any enquiry or evidence whatso·
ovor.
3. I, therefore, propose to pass suoh orders thereon
as the· circumstances of the cases justify after giving you
an .opportunity of being heard under tho powers vested
in me under Section 33B of tho Income-tax Act, 1922.
The cases will be heard at 11 a.m. on 1st February,
19613 at my above office when you are requested to
produce the necessary evidence in support of your con·
tcntions. Objections in writing accompanied by neces·
sary evidence, if any, received on or before the appoint·
men! for personal hearing will also be duly considered.
Please note that no adjournment of the hearing will
be granted."
835
The assesscc on February 1, 1963, protested to the Commissioner
against the issue of the notice and stated that tho said notice was
absolutely bad in law, illegal and void. On the same date the
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assesscc filed an application under Art. 226 of the Constitution
in tho High Court at Calcutta, Inter alla prayh:ig that tho said
notice, dated January 24, 1963, be quashed or set aside and the
Commissioner of Income-tax be restrained from giving olfect to
the said notice.
The petition was heard by Banerjee, J., and
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three points were urged before hhn :
(1) That the Income-tax Act, 1922---hereinafter· referred to
as the 1922 Act-having been repealed ·by Income-tax Act, 1961
-hereinafter referred to as the 1961 Act-which came into force
on April 1, 1962, the Commissioner of Income-tax had no power.
authority or jurisdiction to initiate the proceedings under s. 33B
of the 1922 Act;
(2) Section 6 of the General Clauses Act in no way authorises the initiation of the said proceedings inasmuch as no steps
were taken in respect thereof when the 1922 Act was in force
and/ or p,rior to its repeal; and
( ~) T_he powers under s. 298 of the 1961 Act can only be
exercised m ~espect of the matters dealt with by s. 297 of the
1961 Act which does not deal with proceedings under s. 33B of
the 1922 Act.
In order to appreciate the grounds and the findings of the
Ieam.e? Judge, it is necessary to set out the relevant statutory
prOVISIODS.
."S. 33B (1922 Act). l'ower of Commissioner to
reyts.e Income-tax Officer's orders.-( 1) . The Comnuss1oner may call for and examine the record of. any
836
SUPREME COURT REPORTS
[1967] 3 S.C.R.
proceeding under this Act and if he considers that any
A
order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the
revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be
made such enquiry as he deems necessary, pass such
order ·thereon as the circumstances of the case justify,
B
including. an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh
assessment.
(2) No order shall be made under sub-secti.on (1)
(a) to revise an order of re-assessment made under
c
the provisions of section 34; or
( b) after the expiry of two years from the date of
the order sought to be revised. . ..... ''
"S. 297. (1961 Act). Repeals
and savings. ( 1)
The Indian Jincome-tax Act 11 of 1922, is hereby reD
pealed.
( 2) Notwithstanding the
Income-tax Act, 11 of 1922
as the repealed Act),-
.
.
repeal of the Indian
(hereinafter referred to
(a) where a return of income has been filed before
the commencement of this Act by any person for any
assessment year, proceedings for the assessment of that
person for that year may be taken and continued as if
this Act had not been passed;
(b) where a return of income is filed
after the
commencement of this Act otherwise than in pursuance
of a notice under section 34 of the repealed Act by any
person for the assessment year ending on the 31st day
of March. 1962, or any earlier year, the assessment of
that person for that year shall be made in accordance
with the procedure specified in this Act;
( c) any proceeding pending on the commencement
of this Act before any income-tax authority. the appellate tribunal or any court, by way of appeal, reference
or revision shall be. continued and disposed of as if this
Act had not been passed;
( d) where in respect of any assessment year after
the year ending on the 31st day of March, 1940,-
( i) a notice under section 34 of the repealed Act
had been issued before the commencement of this Act,
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K~LAWATI DEVI v. c.I.T. (Sikri, I.)
the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not
been
passed;
(ii) any income chargeable to tax had escaped
assessment within
the meaning of that expression in
section 147 and no proceedings under·section 34 of the
repealed Act in respect of any such income are pending
at the commencement of this Act, a notice under section
148 may, subject to the provisions contained ~ section
149, or section 150, be issued with respect to
that
assessment year and all the provisions of this Act shall
apply accordingly;
( e) section 23A of the repealed Act shall continue
to have effect in relation to the assessment of any company or its shareholders for the assessment year ending
on the 31st day of March, 1962, or any earlier year,
and the provisions of the repealed Act shall apply to all
matters arising out of such assessment as fully and
effectually as if this Act had not been passed;
(f) .any proceeding for the imposition of a penalty
in respect of any assessment completed before the 1st
day of April, 1962, may be initiated and any
such penalty may be imposed as if this Act had not
been passed;
837
(g) any proceeding for the imposition of a penalty
in respect of any assessment for the year ending on the
31st day of March, 1962, or any earlier year, which is
"completed on or after the 1st day of April, 1962, may
be initiated and any such penalty may be imposed under
this Act;
(h) any election or declaration made or option
exercised by an assessee under any provision of the
repealed Act and in force immediately before the commencement of this Act shall be deemed!'to have been
an .election or declaration made or option exercised
under the corresponding provision of this Act;
(i) where, in respect of any assessment completed
before the commencement of this Act, a refund falls due
after such commencement or default is made after such
commencement in the payment of any sum due under
such completed assessment, the provisions of this Act
relating to interest payabfe by the Central Government
on refunds and interest payable by the assessee for default shall apply; .
838
SUPREME COURT REPORTS
[1967] 3 S.C.R.
(j) any sum payable by way of income-tax, supertax, interest, penalty or otherwise under the repealed
Act may be recovered under this Act, but without pre·
judice to any action already taken for the recovery of
such sum under the repealed Act;
(k) any agreement entered into, appointment made,
approval given, recognition granted, direction, instruc·
tion, notification, order or rule issued under any provi·
sion of the repealed Act shall, so far as it is not inconsistent with the corresponding provision of this Act, be
deemed to have been entered into, made, granted, given
or issued upder the corresponding provision aforesaid
and. shall continue in force accordingly;
(1) any notification issued under sub-section ( 1)
of section 60 of the repealed Act and in force immediately before the commencement of this Act shall, to
the extent to which provision has not been made under
this Act, continue in force until rescinded by the
Central Government;
(m) where the period prescribed for any applica·
tion, appeal, reference or revision under t)).e repealed
Act had expired on or before the commencement of
this Act, nothing in the Act shall be construed as
enabling any such application, appeal, reference or
revision to be made under this Act by reason only of
the fact that a longer period therefor is prescribed or
provision is made for extension of time in suitable cases
by the appropriate authority."
"S. 298(1961 Act). Power to remove difficulties.
( 1) If any difficulty arises in giving effect to the provisions of this Act, the Central Government may, by
general or special order, do anything not inconsistent
with such provisions which appears to it to be necessary or expeditious for the purpose of removing the
difficulty.
(2) In particular, and without prejudice to the
generality of the foregoing power, any such order may
provide for the adaptations or modifications subject to
which the repealed Act shall apply in relation to the
assessment for the assessment year ending on the 31st
day of March, 1962, or any earlier year."
"S. 6. (The General-Clauses Act).
Where this Act, or any (Central Act) or Regulation
made after the commencement of this Act, repeals any
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K~LAWATI DEVI\'. C.I.T. (Sikri, /.)
enactment hitherto made or hereafter to be made, then,
unless a different intention appears,
the repeal shall
not. ........... "
839
In exercise of the powers conferred under s. 298, the Central
Government issued the Income-tax
(Removal of Difficulties)
Order, 1962, which was published in the Gazette of India on
August 8, 1962. Clauses 2, 3 and 4 of the said order read a~
follows:
"2. Registration anti refund proceedings to
be
regarded as
part of Assessment Proceedings :-
For the
purpose.~ of clauses (a) and (b) of subsection (2) of section 297 of the Income-tax Act, 1961
(43 of.1961) (hereinafter referred to as the repealing
Act), proceedings relating to registration of a firm or a
claim for refund of tax shall be regarded as a part of
the proceedings for the assessment of the person concerned for the relevant assessment year.
3. Completion of assessments in cases covered· by
section
297(2)(b)
of
the
repealing
Act.-
In cases covered by clause (b)
of sub-section (2)
of section 297 of the repealing Act, the assessments shall
be made, inter a/ia, in accordance with the procedure
specified in the following sections of the repealing Act,
in so far as they may be relevant for this purpose;
Sections 13 l to 136, 140 to 146, 153 [except subsection ( 2) and clause (iii) of sub-section ( 3) ], 156
to 158. 185, 187 to 189, 282 to 284 and 288.
4. Avpeal, reference or revision /JrOCeedings in respect of orders passed u1Uier the revealed Act.-(1) Proceedings by way of the first or subsequent appeals,
referen'e or revision in. respect of any order made
under the Indian Income-tax Act, 1922 ( 11 of 1922)
(hereinafter referred to as the repealed Act) shall be
instituted and disposed of as if the repealing Act had
not been passed.
( 2) Any such proceedings instituted under the repealing Act after the 31st day of March, 1962 and
before the date of this Order shall be deemed to' have
been instituted under the repealed Act and shall be disposed of as if the repealing Act had not been passed;
Provided that if any such proceeding has been disP_Osed of before th~ date of .this Order under any provision of. the repeahng Act, 1t ·shall be deemed to have
been disposed of under the corresponding provision of
l9Sup.Cl/67~~-l 'l
840
SUPREME COURT REPORTS
[19"67] 3 S.C.R.
the. repealed Act and any appeal, reference or revision
A.
in respect of the proceeding so disposed of shall be instituted and disposed of as if the repealing Act had not
been passed."
The learned Judge held that the expression "proceedings for the
assessment" in s. 297(2)(a) of the 1961 Act had a comprehenB
sive meaning and included proceedings under s. 33A or s. 33B of
the 1922 Act.
He also held that clauses
(c) and
(d) of
s. 297 ( 2) of the 1961 Act must be deemed to have been enacted
by way of abundant caution.
Ln view of his findings, he did
not consider it necessary to determine whether s. 6 of the General
Clauses Act saved the power under s. 33B of the 1922 Act, but
~~~ed:
c
"If it had been necessary so to do, I would have
no hesitation in holding that such power would be saved
under Section 6 clauses ( c) and ( e) of the General
Clauses Act, there being no indication to the contrary
in the repealing Act of 1961."
D
He accordingly dismissed the petition.
The assessee appealed and the Division Bench dismissed the ·
appeal.
The Division Bench came to the conclusion that "the
provision for assessment are contained in Chapter· IV of the Act
of 1922 and section 33B finds place in this Chapter and the
expression "proceedings for the assessment" indicates that any of
the proceedings relating to assessment as contemplated in Chapter IV can be initiated and continued under clause (a) of subsection (2) of s~tion 297 including the proceeding by way of
Revision under section 33B of ·the Act." The Division Bench
repelled the contention of the assessee that cl. ( c) affected the
scope of cl. (a). It concluded . that els .. ( d) and ( f) had been
inserted by way of abundant caution. It also repelled the contention that cl. ( 4) of the Income-tax (Removal of Difficulties)
Order, 1962, was bad, and observed that "what clause ( 4) has
done is simply to make explicit what was implicit in clause (a)
and it is with the object of removing the doubt or difficulty, if
any, existing in respect of the construction of clause (a) of section 297(2) that a specific provision like clause (4) was introduced in the Removal of Difficulties Order." In view of these
conclusions the Division Bench felt that "it is not necessary to
express any definite opinion on the point whether section 6 of the
General Clauses Act 1897, is available for the purpose of interpreting the provisions of the Act of 1961." In the result the
appeal before the Division Bench failed and was dismissed. The
assessee having obtained a certificate of fitness under Art. 133
of the Constitution, the appeal is rtow before us.
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KALAWATI DEVI v. c.I.T. (Sikri, I.)
84!
The learned counsel for the assessee contends that the expres-
;ion "proceedings for the assessment" ins. 297(2)(a) of the 1961
Act meant original proceedings for the assessment of a person and
not appellate or revisional proceedings.
He says that Parliament
has left the question of appeal and revision to be determined
by the application of s. 6 of the General Clauses Act. He further
says that the word "assessment" has not been used in its wide
sense because Parliament has provided for the imposition of
penalty in els. (f) and (g), which ordinarily falls within the wide
~e.nse of "assessn1ent".
It has also provided for what is to happen to pending proceedings in cl. ( c). He urges that the High Court erred in holding
that these sub-clauses had been added by way of abundant
camion.
The learned counsel for the respondent, Mr. S. T. Desai, contends thats. 297(2) (a) is comprehensive in its scope and amplitude to include any proceedings under s. 33B of the 1922 Act.
He further says that s. 6 of the General Clauses Act will apply
to the extent there is no contrary intention in s. 297 (2) of the
1961 Act.
He finally contends that even if there is any doubt
regarding the scope of cl. (a) it is removed by the Removal of
Difficulties Order issued under s. 298.
It seems to us that the High Court is right in holding that
s. 297(2) (a) of the 1961 Act includes with its scope a proceeding
under s. 33B of the 1922 Act. There is no doubt that the word
'.'assessment" does have subject to the context a very wide meanmg.
The Privy Council in Commissioner of Income Tax, Bombay v. Khemchand Ramdas(') observed :
"In order to answer them, it is essential to bear in
mind the method prescribed by the Act making an
assessment to tax, using the word assessment in its comprehensive sense as including the whole procedure for
imposing liability upon the tax payer."
I~ A., N. Lakshman Shenoy v. Income-tax Officer, Ernakulam ( ') this Court held :
"Now the question is in what sense has the word
"~ssessment" been used !n section 13 ( 1) of the
Fmance Act, 1950. T\yo circumstances may be noticed
at one~. The long. utle says that the Finance Act.
1950, 1s an Act to give effect to the financial proposals
of t~e Central Government for the year beginninn on
Apnl 1, 1950, and in section 13(1) the collocatio"n of
. the words_ is ~le'IY, assessment and collection of income-
' I J 6 l.T.R. 414 at p.423.
(2J 3• f.T.R. 27; at p. 291.
842
SUPREME COURT REPORT~
[1967] 3 S.C.R,
tax". In our opinion, both these circumstances point
towards a comprehensive meaning; for it could not have
been intended, as part of the proposal of the Central
Government, that those whose income had totally escaped assessment should be liable but those who had been
under-asse.ssed should go scot free.
We can see nothing iii. the words of the section which would Justify such
a distinction; we say this quite apart from the argument
that section 13 ( 1 ) should be interpreted in consonance
with the financial agreement entered int<l between the
Rajpramukh and the President, an argument to which
we shall presently advert. Moreover, the collocation
of the words, "levy, assessment, and collection" indicates
that what is meant is the entire process by which the
tax is ascertained, demanded and realised."
Jn C. A. Abraham v. Income-tax Officer, Kottayam(') this
Court observed :
"A review of the provisions of Chapter IV of the
Act sufficiently discloses that the word
"assessment"
has been used in its widest connotation in that Chapter.
The title of the chapter is "Deductions and
Assessment". The section which deals with assessment
merely as computation of income is section 23; but
several sections deal not with computation of income,
but determination of liability, machinery for imposing
liability and the procedure in that behalf. Section 1 BA
deals with advance payment of tax and imposition of
penal ties for failure to carry out the provisions therein.
Section 23A deals with power to assess individual members of certain companies on the income deemed to have
been distributed as dividend, section 23B deals with
assessment in case of departure from taxable territories,
section 24B deals with collection of tax out of the
estate of deceased persons, section 25 deals with assessment in case of discontinued business, section 25A
with assessment after partition of Hindu undivided families and sections 29, 31, 33 and 35 deal with the issue
of demand notices and the filing of appeals and for
reviewing assessment and section 34 deals with ·assessment of incomes which have escaped assessment. The
expression "assessment" used in these sections is not
used merely in the sense of computation of income and
there is in our judgment no ground for holding that
when by section 44, .it is declared that the partners or
members of the association shall be jointly and severally
liable to assessment, it is only intended to declare the
(I )'"\il.T.R. 425 at pp. 429-43~.
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liability to computat•on of income under section 23 .and
not to the application of the procedure for declaration
and imposition of tax liability and the machinery for
enforcement thereof."
843
In Commissioner of Income-tax
v.
Bhikaji Dadabhai &
Co. ( ') this Court quoted with approval the observations regarding the word "assessment" in Abraham v. lncnmc·tax Officer(").
In Commissioner of Income-tax v. Pa11ala Cement Co. Ltd. (3)
a similar question arose. The question was whether under s. 13
of the Finance Act, 1950, the appeals in respect of assessments
for 1949-50 would be governed by the Pa!iala Income-tax Act,
2001, or by the Indian Income-tax Act.
We may here set out
s. 13 of the Finance Act, 1950 :
"If immediately before the 1st day of April, 1950.
there is in force in any Part B State other than Jammu
and Kashmir or Manipur, Tripura or Vindhya Pradesh
or in the merged territory of Cooch-Behar any law
relating to income-tax or super-tax or tax on profits of
business, that law shall cease to have effect except for
the purposes of the levy, assessment and collection of
income-tax and super-tax in respect of any period not
included in the previous year for the purposes of
assessment under the Indian Income-true
Act,
1922
(XI of 1922) for the year ending on 31st day of March.
1951, or for any subsequent year, or, as the case may
be, the levy, assessment and collection of the tax on
profits of business for any chargeable accounting period
ending on or before the 31st day of March, 1949."
This Court held that it is the provisions of the Patiala Act 200 l
that applied. No point was raised that in any event the Patialo
Act having ceased to have effect, the provisions dealing with
appeals were not concerned with the levy, assessment and collection of income-tax .
. In Bhai/al Amin & Sons Ltd. v. R. P. Dalal(') the Bombay
High Court (Chaglu, C.J .. & Shah J.), interpreting s. 7 of the
Taxation Laws (Extension to Merged States and Amendment)
Act (~XVl'I of 1949) the relevant portion of which is in
th<:
followmg terms :
"7. ( 1) lf, immediately before the 26th day of
August, 1949, there was in force in any of the merged
Stat.es any law
relating to income-tax, super-tax, or
~usmes~ profits_ta~ •. that law shall cease to have effect
Cl) 42 l.T.R. 123 at p. 127.
(3) 321.T.R. 333.
(2) 41 l.T.R.425
(4) 24 f.T.R. 22~
844
SUPREME COURT REPORTS
[1967) 3 S.C.K.
except for the purposes
of the levy, assessment and
collection of income-tax, and super-tax in respect of
any period not included in the previous year . for the
purposes of assessment under the Indian Income-tax
Act, 1922, as extended to that State by Section 3, or,
as the case may be, the levy, assessment and collection
of business profits tax for any chargeable accounting
period ending on or before the 31st day of March,
1948, ·and for any purposes connected with such levy,
assessment or collection . . . . . . .. "
observed:
"It is urged by Mr. Palkiwalla for the petitioners
that the words "levy, assessment and collection" do not
include a right of appeal against the assessment order
and the Baroda law did not continue to apply to any
rights of appeal that the petitioners might have had in
respect of the order of assessment.
In the first instance
this argument appears to roe to be a perfectly futile
argument, because,
if I were induced to take such a
'view of the section it would leave the petitioners without
any right of appeal at all. If the Baroda Act ceases to
apply and obviously the Indian Act does not apply to
the assessments of accounting years prior to the accounting year 1948-49, there is no right of appeal; and the
petitioners could not have gone to the Tribunal at all,
for there is no other section or sections which confer
any right of appeal under the Indian Income-tax Act,
in respect of assessments made under the Baroda Act.
But, apart from this, in my opinion the words "for the
purposes of .levy, assessment and collection of incometax" include all procedure for .the levy, assessment and
collection of income-tax, for without the procedure there
can be no levy, assessment or collection; and taking in
particular "assessment" with which we are concerned
on this petition the assessment is not final
until all
remedies by way of appeals which are given by the Act
are exhausted.
This view is emphasized by the concluding words of sub-section ( 1) which are "for any
purposes in connection with such levy, assessment and
collection." There can in any event be no doubt that
the procedure for assessment including rights of appeal
are included
in the words "purposes connected with
assessment." In my opinion. therefore. the true construction of sub-section ( 1 ) of section 7 is that the
Baroda Act continues to apply to the assessments of the
petitioners even as regatds the right of apeal
which
was given under that Act to the Huzur Adalat."
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8 45
ll
It is quite clear from tbe authorities cited above tbat the word
"assessment" can bear a very comprehensive meaning; it can
comprehend the whole procedure for ascertaining and imposing
liability upon tbe tax-payer.
Is tbere then. any thing in the context of s. 297 which compels us to give to tbe expression "procedure for the assessment" the narrower meaning suggested by the
8
learned counsel
for the appellant? In our view, the answer
to tbis question must be in tbe negative. It seems to us that
s. 297 is meant to provide as far as possible for all contingencies
which may arise out of the repeal of the 1922 Act. It deals
witb pending appeals, revisions, etc. It deals witb
non-completed assessments pending at tbe commencement of the 1961
Act and assessments to be made after the commencement of the
C
1961 Act as a result of returns of income filed after the commencement of tbe 1961 Act. Then in cl. (d) it deals with assessments in respect of escaped income; in els. (f) & (g) it deals
with levy of penalties; cl. (h) continues the effect of elections
or declarations made under the 1922 Act; cl. (i) deals with
refunds;
cl. (j) deals with recovery;
cl. (k) deals generally
D
with all agreements, notifications, orders issued under the 1922
Act; cl. (1) continues the notifications issued under s. 60 ( l) of
the 1922 Act and cl. (m) guards against the application of a
longer period of limitation prescribed under the 1961 Act to certain applications, appeals, etc.
It is hardly believable in this context that Parliament did not think of appeals and revisions in
It
respect of assessment orders already made or which it hacl autho-
. rised to be made under cl. (a) of s. 297(2).
p
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The learned counsel for the appellant submits tbat Parliament had s. 6 of the General Clauses Act in view, and therefore
no express pro".ision was made dealing with appeals and revisions,
etc. In our view, s. 6 of tbe General Clauses Act would not
apply ?ecause s .. 297(2) evidences an intention to the contrary.
In Union of India v. Madan Gopal Kabra(') while interpreting
s. 13 of the Finance Act, 1950, already extracted above
thi~
Court observed at p. 68 :
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"Nor can Section 6. of the General Clauses Act.
189?, serve to keep alive the liability to pay tax on
the income of the year 1949-50 assuming it to have
~ccru:i<1 ~nder the repealed State law, for a ''different
1~tention clearly appears in Sections 2 and 13 of the
Finance Act read together as indicated above,"
It is true that whether a different intention appears or not must
depend on the language and content of s 297(2)
It.
us however that b
'd'
,
·
·
seems to
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above,_ so~ll_!ccord with what would have been the result under
(I) 25 l.T.R. 58.
846
SUPREME COURT REPORTS
(19671 3 S.C.R.
s. 6 of the General Clauses Act and some contrary to what would
have been the result under s. 6, Parliament has clearly evidenced
an intention to the contrary.
If s. 6 of the General Clauses Act is out of the way, there
is no doubt that Parliament should not be credited with the intention of not providing for appeals and revisions, etc. against the
asse-ssment orders made under the 1922 Act.
In this context, we
must give the expression "proceedings for the assessment of that
person" in cl. (a) of s. 297(2) a very comprehensive meaning.
At any rate, if the Income Tax (Removal of Difficulties)
Order, 1962, is valid, para 4 of the said order clearly covers tlw
present case and would give jurisdiction to the Commissioner to
issue the impugned notice.
Relying on Ja/an Trading Company (Private) Ltd. v. Mill
Ma:.door Union(') the learned counsel for the appellant urges
that s. 298 is void.
In our view, the present case is covered by
the decision of this Court in
Commissioner of Jncome·lax v.
Dewan Bahadur Ramgopal Mills(") where a similar order ca!fod
the Taxation Laws (Part B States)
(Removal of Difficulties\
Order, 1950, made under s. 12 of the Finance Act, 1950, wa>
upheld.
Section 12 read as follows :
"If any difficulty arises in giving effect to the provisions of any of the Acts, rules or orders extended by
section 3 or section 11 to any State or merged territory,
the Central Government may, by order, make such
provision, or give such direction, as appears to it to be
necessary for removing the difficulty."
S. K. Das, J., speaking for the Court observed at p. 288 :
"Furthermore, the true scope and effect_ of section 12
seems to be that it is for the Central Government to
determine if any difficulty of the nature indicated in
the section has arisen and then to make such order, or
give such direction, as appears to it to be necessary to
remove the difficulty. Parliament has left the matter to
the executive; but that does not make the notification
of 1956 bad.
In Pandit Banarsi Das Bhanot v. State
of MfU/hya Pradesh(") we said at p. 435 : "Now, the
authorities are clear that it is not unconstitutional for
the legislature to leave it to th-e executive to determine
details relating to the working of taxation laws, such as
the selection of persons on whom the tax is to be .laid,
the rates a't which it is to be charged in respect of different classes of goods, and the like." We are, therefore.
{t)[i966j ll L. L.J. 546-:---
(3) 9 S.T.C. 388.
(2l 41 l,T.R. 28 l.
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of the view that the notification of 1956 was validly
made under section 12 and is not ultra vires the powers
conferred on the Central Government by that section."
847
It is true that in that case the attack was on the notification and·
not on the section itself, but it seems to us that the ratio given
by the Court is appropriate to cover the validity of the section
itself.
Furthennore, the tenns of s. 37 of the Payment of Bonus
Act, 1965 are different and the Bonus Act is not a taxing law.
In the result the appeal fails and is dismissed with costs.
R.K.P.S.
Appeal dismissed ..