COMMISSIONER OF INCOME TAX Vs. KISHNI BAI

JUDGEMENT

(1.) On the 28th February, 1964, Shrimati Kishni Bai filed a voluntary return declaring an income of Rs. 29,547 before the income-tax authorities at Delhi. The income was for the year ending 31st March, 1959, and related to the assessment year 1959-60. The Income Tax Act, which was in force during the assessment year was the Act of 1922, but the return was filed when the Act of 1961 was in force. The Income Tax Officer issued a notice under Section 143(2) of the Income Tax Act, 1961 , but in the assessment order stated that the assessment had been made under Section 23(3), which was the relevant provision of the Act of 1922. The assessment order shows that the income was computed at Rs. 30,801.

(2.) The assessed appealed to the Appellate Assistant Commissioner partly on the ground that the assessable income had been increased and partly on the ground that the assessment could not be made under the Act of 1922. The Appellate Assistant Commissioner held that the assessment should have been made under the Act of 1961 in view of Section 297(2)(b) thereof. He held that the mention of Section 23(3) in the assessment order might be an oversight, but the notice of demand had also been issued under Section 29 of the old Act, which invalidated the assessment proceedings. He held that the Income Tax Officer had wrongly assessed the appellant under the provisions of the Indian Income Tax Act, 1922. Accordingly, the assessment order was set aside and the Income Tax Officer was directed to complete the assessment under the Act of 1961.

(3.) The assessed was not satisfied and appealed to the Tribunal on the ground that the direction to the Income Tax Officer to make the assessment under the Act of 1961 was invalid. The ground taken by the assessed was that the Appellate Assistant Commissioner had revived the assessment which had become barred by time. Thus, the contention of the assessed was that the initial assessment had been made under the wrong Act and the Appellate Assistant Commissioner could not direct the assessment to be made under the correct Act after the time limit of four years prescribed by Section 153(1)(a) of the Act of 1961 had expired. The Tribunal accepted this contention ; it held that the Appellate Assistant Commissioner's powers were circumscribed by Section 251 and he could not infuse life in what had already become dead. If the assessment was otherwise valid and had been made within the prescribed period of four years from the end of the assessment order, the Appellate Assistant Commissioner was competent to refer the case back to make a fresh assessment in accordance with his direction. However, if the assessment was not an assessment in the eyes of law, then the period for making a valid assessment could not be extended by the Appellate Assistant Commissioner. The Tribunal relied on the decision of the Supreme Court in S. C. Prashar V/s. Vasantsen Dwarkadas, 1963 49 ITR 1. The direction of the Appellate Assistant Commissioner was set aside and the appeal allowed. The Commissioner of Income- tax sought a reference to this court, which had led to the following question being stated for our opinion :