# S. B. JAIN, I.T.O. NAGPUR v. MAHANDERA

- **Citation:** [1972] 1 S.C.R. 614
- **Court:** Supreme Court of India
- **Decided:** 1971-09-07
- **Case number:** Civil Appeals Nos. 1301 of 1971
- **Bench:** K. S. Hegde, A. N. Grover
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/s-b-jain-i-t-o-nagpur-v-mahandera-5412
- **Pages:** 5

## Headnote

Income-tax
Act,
1961, s. 291(2)(d) (ii)-lncome-tax Act,
1922,
S. 34(1) (a)--Notice under latter Act held beyond time-··l/ proceedings
pending within meaning of s. 297(2) (d)(ii).
The Income-tax Officer issued a notice to the respondent on January
5, 1962 under s. 34(l)(a) of the Indian Income-tax Act, 1922, seeking
to reopen his assessment for the assessment year 1945-47.
The respondent challenged the validity of that notice. The High Court quashed the
impugned notice by its order dated .March 6, 1963 on the ground that the
notice was issued beyond the time prescribed by law.
On April 1. 1962
the Indian Income-tax Act, 1961, came into force. Under s. 297(2) (d) (ii)
of this Act if "any income chargeable to tax had escaped assessment \vithin the meaning of that expression in s. 147 and no proceedings under s. 34
of the ·repealed Act in respect of any such income are pending at the
commencement of this Act, a notice under s. 148 may . . . . be issued
\Vith respect to that assessment year . ... " The Incon1e-tax Officer again
issued a noticl! under s .. 148 of the New Act in respect of the assessn1ent
which he earlier unsuccessfully sought to reopen by n1eatb of notice under
s. 34(1) (a) of the 1922 Act.
The respondent
again challenged
the
validity of the notice. The High
Court quashed
that notice on the
ground that the Income-tax Officer was not competent to issue that notice.
In appeal to this Court it was contended that the notice under
s. 34(l)(a) being an invalid ootice on the ground that it was barred by
limitation the proceedings initiated on the basis of the notice should be
considered as not pending when the new Act came into force. Dismissing
the appeal,
HELD : What s. 297(2) (d) (ii) requires is the factual pendency of a
proceeding under s. 34 of the repealed Act. Whether that proceeding was
barred by limitation or not is irrelevant.
The proceedings pending before
a competent authority cannot be said to be not pending merely because
no relief can be granted in that proceedings because of the bar of limitation. The proceedings in the present case were initiated by a competent
authority and those proceedings
were quashed for the reason that the
notice was issued beyond the time prescribed by law.
Hence it cannot
be said that no proceedings under s. 34 of the 1922 Act, either factually
or legally, \vas pending at the time when the new Act came into force.
[617 D]
_

## Text

614
S. B. JAIN, I.T.O. NAGPUR
v.
MAHANDERA
September 7, 1971
[K. S. HEGDE AND A. N. GROVER, JJ.J
Income-tax
Act,
1961, s. 291(2)(d) (ii)-lncome-tax Act,
1922,
S. 34(1) (a)--Notice under latter Act held beyond time-··l/ proceedings
pending within meaning of s. 297(2) (d)(ii).
The Income-tax Officer issued a notice to the respondent on January
5, 1962 under s. 34(l)(a) of the Indian Income-tax Act, 1922, seeking
to reopen his assessment for the assessment year 1945-47.
The respondent challenged the validity of that notice. The High Court quashed the
impugned notice by its order dated .March 6, 1963 on the ground that the
notice was issued beyond the time prescribed by law.
On April 1. 1962
the Indian Income-tax Act, 1961, came into force. Under s. 297(2) (d) (ii)
of this Act if "any income chargeable to tax had escaped assessment \vithin the meaning of that expression in s. 147 and no proceedings under s. 34
of the ·repealed Act in respect of any such income are pending at the
commencement of this Act, a notice under s. 148 may . . . . be issued
\Vith respect to that assessment year . ... " The Incon1e-tax Officer again
issued a noticl! under s .. 148 of the New Act in respect of the assessn1ent
which he earlier unsuccessfully sought to reopen by n1eatb of notice under
s. 34(1) (a) of the 1922 Act.
The respondent
again challenged
the
validity of the notice. The High
Court quashed
that notice on the
ground that the Income-tax Officer was not competent to issue that notice.
In appeal to this Court it was contended that the notice under
s. 34(l)(a) being an invalid ootice on the ground that it was barred by
limitation the proceedings initiated on the basis of the notice should be
considered as not pending when the new Act came into force. Dismissing
the appeal,
HELD : What s. 297(2) (d) (ii) requires is the factual pendency of a
proceeding under s. 34 of the repealed Act. Whether that proceeding was
barred by limitation or not is irrelevant.
The proceedings pending before
a competent authority cannot be said to be not pending merely because
no relief can be granted in that proceedings because of the bar of limitation. The proceedings in the present case were initiated by a competent
authority and those proceedings
were quashed for the reason that the
notice was issued beyond the time prescribed by law.
Hence it cannot
be said that no proceedings under s. 34 of the 1922 Act, either factually
or legally, \vas pending at the time when the new Act came into force.
[617 D]
_
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1301 of
1971 and 1981 of 1968.
Appeals by special leave from the judgml1nt and order dated
November 15, 1956 of the Bombay High Court, Nagpur Bench
in Special Civil Application No. 150 of 1963.
B. Sen, J. Ramamurthy, R. N. Sachthey and B. D. Slwrma,
for the appe!lant (in both the appeals).
A. S. Bobde, G. L. Sangh! and B. R. Agarwal, for the respo.ndent (in both the appeals).
B
c
D
E
F
G
H
A
B
c
D
E
F
G
H
s. B. JAIN v. MAHANDERA (Hegde, J.)
61 5
The Judgment of the Court was delivered by
Hegde, J.
Civil Appeal No. 1301 (NCT) of 71 is by special
leave. This appeal was filed under the following circumstances :
Civil Appeal No. 1981 of 1968 was brought on the strength
of a certificate issued by the High Court. That certificate, being
:not in accordance with law in as much as the High Court gave no
reason in support of the same, the appeal filed on the strength of
that certificate turned out to be not maintainable.
Hence the
appellant had to move this Court for special leave to appeal
against the judgment O·f the High Court.
The same having been
granted he has brought Civil Appeal No. 1301 of 71.
Hence
these two appeals. against the same judgment.
Now coming to the merits of the case, the Jjncome-tax Officer
issued a notice to the respondent on January 5, 1962 under section
34 ( 1) (a) of the India1n Income-tax Act, 1922 seeking to reopen
his assessment for the assessment year 1946-4 7 the relevant
accounting year being the calender year 1945. The assessee responde;nt challenged the validity of that notice by means of a writ
petition under Article 226 of the Constitution before the High
Court of Bombay.
The High Court accepted that writ petition
and quashed the impugned notice by its order dated March 6, 1963.
Qn April 1, 1962 the Income-tax Act, 1961 came into force.
Thereafter the Income-tax Officer again issued a notice on March
26, 1963 under section 148 of the new Act in respect of the very
'tSsessment which he earlier U;nsuccessfully sought to reopen by
means of a notice under section 34 ( 1) (a) of the 1922 Act. The
assessee again challenged the validity of the notice issued to him
by means of a:nother writ petition, before the High Court of
Bombay.
The High Court quashed that notice on the ground that
the Income-tax Officer was not competent to issue that notice. It
is against that decisioo, the present appeals have been brought to
this Court.
Section 147 of the 1961 Act provides: If-
( a) the Income-tax Officer has reason to believe that,
by reason of the omission or failure on the part
of an assessee to make a return Uillder Section
139 for any assessment year to the Income-tax
Officer or to disclose fully and truly all material
facts necessary for his assessment for that year,
income chargeable to tax has escaped assessment
for that year, or
( b) notwithstanding that there has been no omission
or failure as mentioned in clause (a) on the part
of the assessee, the Income-tax Officer has in
616
SUPREME COURT REPORTS
(1972] 1 S.C.R.
consequence of information
in his possession
reason to believe that income chargeable to tax
has escaped assessment for any assessment year,
he may, subject to the provisions of Sections 148 to 153
assess or re-assess such income or re-compute the loss
or the depreciation allowance, as the case may be, for
the assessment year concerned (hereinafter in Sections
148 to 153 referred to as the relevant assessment year)".
Section 148 reads :-
" ( 1) Before making the assessment, re-assessment or
re-computation ll:Ilder Section 147, the Incometax Officer sha!J serve on the assessee a notice
containing all or any of the requirements which
may be included ~n a notice under sub-section
(2) of section 139; and the provisions of this
Act shall, so far as may be, apply accordingly
as if the notice were a notice issuec! under that
sub-section.
( 2) The lncome-tax Officer shall, before issuing any
notice under this section record his reasons for
doing so."
Section 149 prescribes the time limit for issuing a notice under
Section 148. Sub-section (i) of Section 149 says:
"No notice under Section 148 shal! be issued-
( a) in cases falling under Clause (a) of
Section
147-
(i) for the relevant assessment year, if eight years
A
B
c
D
E
have elapsed from the eind of that year, unless
F
the case falls under sub-clause (ii); ........ "
Section 297 deals with repeals and savings.
Section 297 2(d)(ii) reads thus:-
"Notwithstanding the repeal of the Indian lncometax Act 1922
(ii) of 1922 (hereinafter referred
G
to as the repealed Act) ........ (d) where in respect
of any assessment year after the year ending on the 31st
day of March 1940 :-
(i) ............. .
(ii) any income chargeable to tax had escaped
assessment within the meaning of that expression
in Section 147 and no proceeding$ under section
J4 of the repealed Act in respeci of any such'
H
A
B
c
D
E
F
s. B. JAIN V. MAHANDERA (Hegde, I.)
61 7
income are pending at the commencement of this
Act, a notice under Section 148 may, subject to
the provisions contained in Section 149 or section 150, be issued with respect to that assesment year and all the provisions of this Act shall
apply accordingly". (Emphasis supplied).
The only question for decision in these appeals is whether the
proceedings initiated by the notice under section 34(1) (a) of the
1922 'Act were pending at the time when the new Act came into
force.
It is mot denied that such proceedings were
factually
pending.
But what was contended by Mr. B. Sen, learned counsel
for the department was that that notice be\ng an invalid notice on
the ground that that was barred by limitation, the proceedings
initiated on basis of that notice should be considered as not pending in the eye o.f the law.
We are unable to accept this contentio,n.
What section 297(2) (a)( ii) requires is the factual pendency of a proceeding under section 34 of the repealed Act. The
question whether that proceeding was barred by limitation or not
is irrelevant. It is not denied that those proceedings were initiated
by a competent authority.
Those proceedings were quashed for
the reason that notice under section 34 of 1922 Act was issued
beyond the time prescribed by law.
Hence it ca,nnot be said that
no proceeding under section 34 of the 1922 Act either factually
or legally was pending at the time when the mew Act came into
force.
Our above conclusion receives support from the decision of
this Court in Raja Kulkarni and others v. The State of Bombay(').
There\n the question that arose for decision was whether an appeal
under section 24 of the Industrial Disputes Act, 1950 can be said
to have been pending if that appeal was incompetent or i,nvalid
for some reason. This Court ruled that what was necessary was
the factual pendency of the appeal a;nd not that it should have
been a valid or competent one under the provisions of the limitation Act or such other adjectival law.
G
The proceedings pe;nding before a competent autho•ity cannot
be said to be not pending merely became that no relief can be
granted in that proceedings because of the bar of limitatio,n.
In
Mela Ram & Sons v. Commissioner of Income Tax, Punjab(')
it was contended before this Court that any appeal which is barred
by limitation cannot be considered as an appeal properly pre;ented
H
under Sectia;n 30 of the Indian Income Tax Act, 1922.
This
Court rejected that contention observing :
(I) [1954] S.C.R 384.
(2) 29 I.T.R. p. 607.
618
SUPREME COURT REPORTS
[1972] l .s.c.R.
"ii an appeal is not presented within that time (withlill
the prescribed time) does that cease to be an appeal
as provided under section 30 (I ) ? It is well established
that rules of limitation pertain to the domai;n of adjectival
law, and that they operate only to bar the remedy but
not to extinguish the right.
An appeal preferred in
accordance with Sectio1n 30(1) must, therefore, be an
appeal in the eye of law, though having been presented
beyond the period mentioned in sectiQ!l 30(2) it is
liable to be dismissed in /imine.''
We have no doubt in our mind that the proceedings initiated
under Section 34(1) (a) of the 1922 Act were pending at the time
1961 Act came i!llto force and that being so the Income-tax Officer
was not competent to issue any fresh notice under section 148
of the 1961 Act.
In the result Civil Appeal No. 1301 of 71 fails aind the same
is dismissed with costs.
Civil Appeal No. 1981of68 is dismissed
as not being maintainable. Parties to bear their own costs in this
appeal.
K.B.N.
Appeals dismissed.
A
B
c
D
·.
-.