The Income-Tax Officer, Bangalore Vs.
K. N. Guruswamy [1958] INSC 49 (28 April 1958)
DAS, S.K.
BOSE, VIVIAN DAS, SUDHI RANJAN (CJ) AIYYAR,
T.L. VENKATARAMA SARKAR, A.K.
CITATION: 1958 AIR 808 1959 SCR 785
ACT:
Income Tax-Re-assessment-Taxable Area in
Mysore within the jurisdiction of Governor-General in Council, retroceded in
1947 Constitutional changes resulting in Mysore becoming a Part B State
-Financial agreement between the President of India and the
Raj-Pramukh--Income-tax law applicable to Retroceded Area before and after the
Retrocession-Re- assessment Proceedings for period Prior to
1949--Validity-Mysore Income-tax Act, 1923 (Mysore V of 1923),s. 34 Mysore
Income-tax and Excess Profits Tax (Application to the Retroceded Area)
(Emergency) Act, 1948 (Mysore XXXI of 786 1948), ss. 3, 5 (b), 6-Retroceded
Area (Application of Laws) Act, 1948 (Mysore LVII Of 1948), ss. 3, 4-Finance
Act, 1950 (XXV Of 1950), s. 13 (1)--Indian lncome-tax Act, 1922 (XI Of 1922), s
. 34.
HEADNOTE:
The respondent was carrying on business as an
excise con- tractor in the Civil and Military Station of Bangalore in the State
of Mysore, called the retroceded area. The jurisdiction' over this area was
originally exercised by the Governor-General in Council by virtue of an
agreement with the Maharaja of Mysore, and the income-tax law applicable was
the Indian Income-tax Act, 1922. On July 26, 1947, the retroceded area was
given back to the State of Mysore but the income-tax law in force in that area
prior to that date continued to have effect and be operative till June 30,
1948, on which date was promulgated the Mysore Income-tax Act and Excess
Profits Tax (Application to the Retroceded Area) (Emergency) Act, 1948, the
effect of which was that the Indian Income-tax Act, 1922, stood repealed and
the Mysore Income-tax Act, 1923, came into force subject to certain saving
provisions. On August 5, 1948, was promulgated the Retroceded Area (Application
of Laws) Act, 1948. Between 1947 and 1950 there were political and
constitutional changes which ultimately resulted in Mysore becoming a Part B
State within the Constitution of India.
The legal effect of these changes was that
the income-tax law applicable to the retroceded area till June 30, 1948, was
the Indian Income-tax Act, 1922 ; from July 1, 1948, the Mysore Income-tax Act,
1923, became applicable except that the Indian Income-tax Act continued to
apply in respect of the total income chargeable to income-tax in the retrocede
area prior to July 1, 1948, and the provisions of that Act as in force in the
retroceded area prior to that date applied to all proceedings relating to the
assessment of such income upto the stage of assessment and determination of
income-tax payable thereon. This position continued till April 1, 1950, when
the Finance Act, 1950, came into force and as a result the Indian Income-tax
Act, 1922, became applicable again to the retroceded area, subject to the
saving provisions of s. 13(1) of the former Act. In respect of the assessment
for the four years between 1945 and 1949, the respondent was assessed to
income-tax under the law then in force in that area; subsequently, in 1954 the
Income-tax Officer served a notice on the respondent under s. 34 of the Indian
Income-tax Act, 1922, for the purpose of assessing " escaped " or
" under-assessed " income chargeable to income- tax for the said
years. The respondent challenged the jurisdiction of the Income-tax Officer to
take proceedings under S. 34 or to make an order of re-assessment on the
grounds inter alia (1) that s. 34 Of the Indian Income-tax Act, 1922, was not
saved by s. 13(1) of the Finance Act, 1950, because what was saved was the
prior law " for the purposes of the levy, assessment and collection of
income- tax ", which expression did not include re-assessment proceedings,
(2) that the 787 financial agreement made between the President of India and
the Rajpramukh of Mysore dated February 28, 1950, rendered the impugned
proceedings unconstitutional and void, (3) that the Indian Income-tax Act,
1922, as in force in the retroceded area stood repealed on June 30, 1948, by
the Mysore Income-tax and Excess Profits (Application to the Retroceded Area)
(Emergency) Act, 1948, and the saving provisions in s. 5(b) thereof or in para
(2), sub-para (b) of Sch. A to the Retroceded Area (Application of Laws) Act,
1948, did not save s. 34 in so far as it permitted re- assessment proceedings
in respect of years in which there had been an assessment already, and (4) that
after June 30, 1948, and until April 1, 1950, the Income-tax Officer in the
retroceded area could re-open the assessment under s. 34 Of the Mysore
Income-tax Act, 1923, within a period of four years specified therein, but
there was no authority to re- open the assessment under s. 34 Of the Indian
Income-tax Act.
Held : (1) that the expression " levy,
assessment and collection of income-tax " in s. 13(1) Of the Finance Act,
1950, was wide enough to comprehend re-assessment proceedings under s. 34 Of
the Indian Income-tax Act, 1922, and that the financial agreement between the
President of India and the Rajpramukh of Mysore, on a true construction of the
recommendations of the Indian States Finance Enquiry Committee, did not render
the impugned proceedings unconstitutional or void ;
Lakshmana Shenoy v. The Incomc-tax Officer,
Ernakulam, [1959] S.C.R. 751, followed.
(2) that the saving provisions in the Mysore
Income-tax and Excess Profits (Application to the Retroceded Area) (Emergency)
Act, 1948, and the Retroceded Area (Application of Laws) Act, 1948, made the
prior law available in all cases in which the income was assessed or was
assessable according to that law before July 1, 1948, and, therefore, they
saved s. 34 of the Indian Income-tax Act, 1922, with regard to re-assessment
proceedings ;
City Tobacco Mart and Others v. Income-tax
Officer, Urban Circle, Bangalore, A.I.R. 1955 Mys. 49, overruled.
Hirjibhai Tribhuwandas v. Income-tax Officer,
Rajnandgaon and another, A.I.R. 1957 M. P. 171, approved.
(3) that the Income-tax Officer had the authority
to re- open the assessments in the present case because the period of
limitation was that laid down in s. 34 of the Indian Income-tax Act, as it was
in force in the retroceded area prior to July 1, 1948.
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos.165-168 of 1956.
Appeals from the judgment and order dated
March 22, 1955, of the Mysore High Court in Writ Petitions Nos. 20 to 22 and 25
of 1954.
788 H. N. Sanyal, Addl. Solicitor-General of
India, R. Ganapathy Iyer and R. H. Dhebar, for the appellant.
A. V. Viswanatha Sastri, K. R. Choudhury and
G. Gopalakrishnan, for the respondent.
1958. April 28. The Judgment of the Court was
delivered by S.K. DAS J.-These four appeals brought by the Income-tax Officer,
Special Circle, Bangalore, on a certificate granted by the High Court of
Mysore, are from the judgment and order of the said High Court dated March 22,
1955, by which it quashed certain proceedings initiated, and orders of
assessment made, against the respondent assesse in the matter of reassessment
of income-tax for the years 1945-46, 1946-47, 1947-48, and 1948-1949.
The relevant facts are these. The respondent
K. N. Guruswamy was carrying on business as an excise contractor in the Civil
and Military Station of Bangalore, hereinafter called the retroceded area, in
Mysore. He was assessed to income-tax for each of the four years mentioned
above under the law then in force in the retroceded area by the Income- tax
Officer having jurisdiction therein. For 1945-46 the original assessment was made
on February 12,1946, for 1946- 47 on January 21, 1949, for 1947-48 on January
22, 1949, and for 1918-49 also sometime in the year 1949. The tax so assessed
was duly paid by the assessee. On January 5, 1954, more than four years after,
the Income-tax Officer, Special Circle, Bangalore, served a notice on the
assessee under s.
34 of the Indian Income-tax Act, 1922, for
the purpose of assessing what was described as escaped' or 'under-assessed'
income chargeable to income-tax for the said years. The assessee appeared
through his auditors and contested the jurisdiction of the Income-tax Officer
to issue the notice or make a re-assessment under s. 34 of the Indian
Income-tax Act, 1922. On February 19, 1954, the Income-tax Officer overruled
the assessee's objection, and made a re-assessment order for the year 1945-46.
On February 25, 1954, the assessee filed four writ petitions in the Mysore High
Court in 789 which he challenged the jurisdiction of the Income-tax Officer to
take proceedings under s. 34 or to make an order of re-assessment in such
proceedings; he asked, for appropriate orders or writs quashing the pending
proceedings for three years and the order of re-assessment for 1945-46.
During the pendency of the cases in the High
Court, the Income-tax Officer was permitted to make an assessment order for
1946-47, subject to the condition that if the assessee succeeded in
establishing that the Income-tax Officer had no jurisdiction, that order would
also be quashed. The High Court heard all the four petitions together, and by
its judgment and order dated March 22, 1955, allowed the writ petitions and
quashed the proceedings in assessment as also the two orders of reassessment,
holding that the Income-tax Officer had no jurisdiction to initiate the
proceedings or to make the orders of re-assessment. The High Court, however,
granted a certificate that the cases were fit for appeal to this Court, and
these four appeals have been brought on that certificate. Before us, the
appeals have been heard together and will be governed by this judgment.
For a clear understanding and appreciation of
the issues involved in these appeals, it is necessary to set out, in brief
outline, the political and constitutional changes which the retroceded area has
from time to time undergone;
because those changes had important legal
consequences.
Under the Instrument of Transfer executed
sometime in 1881, when there was installation of the Maharaja of Mysore by what
has been called " the rendition of the State of Mysore ", the Maharaja
agreed to grant to the Governor-General in Council such land as might be
required for the establishment and maintenance of a British cantonment and to
renounce all jurisdiction therein. Pursuant to that agreement, the retroceded
area was granted to the Governor-General in Council, and jurisdiction therein
was exercised by virtue of powers given by the Indian (Foreign Jurisdiction)
Order in Council, 1902, made under the Foreign Jurisdiction Act, 1890. The laws
administered in the area included various enactments made applicable thereto
from time to 790 time by the promulgation of notifications made under the
aforesaid Order in Council, and one of such enactments was the Indian
Income-tax Act, 1922.
The year 1947 ushered in great political and
constitutional changes in India, which affected not merely what was then called
British India but also the Indian States, such as Mysore etc. The Indian
Independence Act, 1947, brought into existence two independent Dominions, India
and Pakistan, as from August 15, 1947. The Act, however, received Royal assent
on July 18, 1947. Section 7 set out the consequences of the setting up of the
two new Dominions: one such consequence was that the suzerainty of His Majesty
over the Indian States lapsed, and with it lapsed all treaties, agreements
etc., between His Majesty and the rulers of Indian States, including all
powers, rights, authority or jurisdiction exercisable by His Majesty in an
Indian State by treaty, grant, usage, suffrage etc.
In view of the aforesaid provision-perhaps in
anticipation of it, the retroceded area was given back to the State of Mysore
on July 26, 1947 by a notification Made by the Crown Representative under the
Indian (Foreign Jurisdiction) Order in Council, 1937. This did not, however,
mean that the Mysore laws at once came into force in the retroceded area.
On August 4, 1947, the Maharaja of Mysore
enacted two laws:
the Retrocession (Application of Laws) Act
1947, being Act XXIII of 1947, and the Retrocession (Transitional Provisions)
Act, 1947 being Act XXIV of 1947. The combined effect of these laws was this:
all laws in force in the retroceded area prior to the the date of retrocession,
which was July 26, 1947, continued to have effect and be operative in the
retroceded area (vide s. 3 of Act XXIII of 1947) and the Mysore officers were
given jurisdiction to deal with proceedings under the laws in force prior to
the date of retrocession (see s. 12 of Act XXIV of 1947). This state of affairs
continued till June 30, 1948, on which date was promulgated the Mysore
Income-tax and Excess Profits Tax (Application to the Retroceded Area)
(Emergency) Act, 1948, being Act XXXI of 1948. Section 3 of this Act said- 791
"Notwithstanding anything to the contrary in section 3 of the Retrocession
(Application of Laws) Act, 1947, (i) the Mysore Income-tax Act, 1923, and (ii)
the Mysore Excess Profits Tax Act, 1946, except sub-section (4) of section 2,
and all rules, orders and notifications made or issued tinder the aforesaid
Acts and for the time being in force shall with effect from the first day of
July, 1948, and save as otherwise provided in this Act, take effect in the
Retroceded Area to the same extent and in the same manner as in the rest of
Mysore." Section 6 said- " Subject to the provisions of this Act, the
Indian Income- tax Act, 1922, and the Excess Profits Tax Act, 1940, as
continued by the Retrocession (Application of Laws) Act, 1947, are hereby
repealed." The repeal of the Indian Income-tax Act, 1922, effected by s. 6
aforesaid, was subject to other provisions of Act XXXI of 1948, and one such
provision which is material for the dispute before us was contained in s. 5,
the relevant portion whereof was in these terms- " S. 5. Notwithstanding
anything to the contrary in the Mysore Income-tax Act, 1923, or the Mysore
Excess Profits Tax Act, 1946,-
(a).........................................................
(b)in respect of the total income or profits
chargeable to income-tax or excess profits tax in the Retroceded Area prior to
the first day of July, 1948, but which has not been, assessed until that date,
the provisions of the Indian Income-tax Act, 1922,and the Excess Profits Tax
Act, 1940, as in force in the Retroceded Area immediately before that date
shall apply to proceedings relating to the assessment of such in-come or
profits until the stage of assessment, and the determination of the income-tax
and excess profits tax payable thereon, and the Mysore Income-tax Act, 1923, or
the Mysore Excess Profits Tax Act, 1946, as the case may be, shall apply to such
proceedings after that stage ;
101 792 (c)..................
(d)..................
(e)..................
The effect of ss. 3, 5 (b) and 6 of Mysore
Act, XXXI of 1948, inter alia, was that though the Indian Incometax Act, 1922,
stood repealed and the Mysore Incometax Act, 1923, came into effect from July
1, 1948 the former Act as in force in the retroceded area prior to July 1,
1948, continued to apply in respect of the total income chargeable to
income-tax in the retroceded area prior to July 1, 1948 but which had not been
assessed until that date, and it further applied to all proceedings relating to
the assessment of such income until the stage of assessment and the
determination of incometax but the Mysore Act, 1923, applied to such
proceedings after that stage. On August 5, 1948, was promulgated the Retroceded
Area (Application of Laws) Act, LVII of 1948, which came into effect from
August 15, 1948. Sections 3 and 4 of Act LVII of 1948, are material for our
purpose and may be quoted- "S. 3. Except as hereinafter in this Act
provided,- (3) all laws in force in Mysore shall apply to the Retroceded Area;
and (b)the laws in force in the Retroceded Area immediately before the
appointed day shall not, from that day, have effect or be operative in the Retroceded
Area,." " S. 4. The enactments in force in Mysore which are set out
in the first column of Schedule A to this Act shall apply to the Retroceded
Area subject to the modifications and restrictions specified in the second
column of the said Schedule and, the provisions of this Act." Schedule A,
paragraph (2), sub-paragraph (b) repeated' in substance what was stated earlier
in s. 5 (b). of Act XXXI of 1948. It read- " 2. Notwithstanding anything
to the contrary in the Mysore.
Income-tax Act, 1923, or the Mysore Excess
Profits Tax Act, 1946- (a)....................
793 (b) in respect of the total income or
profits chargeable to income-tax or excess profits tax in the Retroceded Area
prior to the first day of July 1948, but which has not been assessed until that
date, the provisions of the Indian Income-tax Act, 1922, and the Excess Profits
Tax Act, 1940, as in force in the Retroceded Area immediately before that, date
shall apply to proceedings relating to the assessment of such income or profits
until the stage of assessment, and the determination of the income-tax and
excess profits tax payable thereon, and the Mysore Income tax Act, 1923, or the
Mysore Excess Profits Tax Act, 1946, as the case may be, shall apply to such
proceedings after that stage; " There were further far-reaching political
and constitutional changes in 1949-50. The Maharaja of Mysore had acceded to
the Dominion of India in 1947; this, however, did not empower the Dominion
legislature to impose any tax or duty in the State of Mysore or any part
thereof. By a proclamation dated November 25, 1949, the Maharaja of Mysore
accepted the Constitution of India, as from the date of its commencement, as
the Constitution of Mysore, which superseded and abrogated all other
constitutional provisions inconsistent therewith and in force in the State. On
January 26, 1950, the Constitution of India came into force, and Mysore became
a Part B State within the Constitution of India. On February 28, 1950, there
was a financial agreement between the Rajpramukh of Mysore and the President of
India in respect of certain matters governed by Arts.
278, 291, 295 and 306 of the Constitution.
Under Art. 277 of the Constitution, however, all taxes which immediately before
the commencement of the Constitution were being levied by the State continued
to be so levied, notwithstanding that those taxes were mentioned in the Union
List, until provision to the contrary was made by Parliament by law. Such law
was made by the Finance Act, 1950, by which the whole of Mysore including the
retroceded area became " taxable territory " within the meaning of
the Indian Income-tax Act, 1922, from April 1, 1950, and the 794 Indian
Income-tax Act again came into force in the retroceded area from the aforesaid
date. Section 13 of the Finance Act, 1950, dealt with repeals and savings. As
the true scope and effect of sub-s. (1) of s. 13 is one of the questions at
issue before us, it is necessary to read it.
" If immediately before the 1st day of
April, 1950, there is in force in any Part B State other than Jammu and Kashmir
or in Manipur, Tripura or Vindhya Pradesh or in the merged territory of
CoochBehar 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, assess- ment 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, for the year ending on the 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:
Provided that any reference in any such law
to an officer, authority, tribunal or court shall be construed as a reference
to the corresponding officer, authority, tribunal or court appointed or
constituted under the said Act, and if any question arises as to who such
corresponding officer, authority, tribunal or court is, the decision of the
Central Government thereon shall be final.," Now, the legal effect of the
constitutional changes referred to above, so far as it has a bearing on the
present dispute, may be briefly summarised as follows: the Indian Income-tax
Act, 1922, remained in force in the retroceded area till June 30, 1948 ; from
July 1, 1948, the Mysore Income-tax Act, 1923, applied, subject to this saving
that the Indian Income-tax Act continued to apply in respect of the total
income chargeable to income tax in the retroceded area prior to July 1, 1948,
and the provisions of that Act as in force in the retroceded area prior to that
date applied to all proceedings relating to the assessment of such income 795
upto the stage of assessment and determination of income-tax payable thereon.
This position continued till April 1, 1950, when the Finance Act, 1950, came
into force and the Indian Income-tax Act, 1922, again came into force in the
retroceded area, subject to the saving mentioned in s. 13(1) thereof.
The principal question before us, as it was
before the High Court, is one of jurisdiction. Did the Income tax Officer
concerned have jurisdiction to issue the notice under s. 34 of the Indian
Income-tax Act, 192 and to make a re- assessment order pursuant to sue notice ?
The High Court pointed out that though the notice did not clearly say so, the
Income-tax Officer clearly acted under s. 34 of the Indian Income-tax Act,
1922, as it was in force in the retroceded area prior to July 1, 1948, and the writ
applications were decided on that footing.
The four main lines of argument on which the
respondent assessee rested his contention that the Incometax Officer concerned
had no jurisdiction were these : firstly, it was urged that s. 34 of the Indian
Incomtax Act, 1922, was not saved by s. 13(1) of the Finance Act, 1950, because
what was saved was the prior law " for the purposes of the levy,
assessment and collection of income-tax ", which expression did not
include re-assessment proceedings; secondly, it was argueed that, even
otherwise, the financial agreement made between the President of India and the
Rajpramukh of Mysore on February 28, 1950, which received constitutional
sanctity in Art. 278 of the Constitution rendered the impugned proceedings unconstitutional
and void; thirdly, it was submitted that the Indian Income-tax Act, 1922, as in
force in the retroceded area stood repealed on June 30, 1948, by Mysore Act
XXXI of 1948, and the saving provisions in s.
5(b) thereof or in paragraph (2), sub-paragraph
(b), of Schedule A to Mysore Act LVII of 1948, did not save s. 34 in so far as
it permitted re-assessment proceedings in respect of years in which there had
been an assessment already; and lastly, it was contended that after June 30,
1948, and until April 1, 1950, the Income-tax Officer in the retroceded area
could re-open 796 the assessment under s. 34 of the Mysore Incometax Act, 1923,
within a period of four years specified therein, but there was no authority to
re-open the assessment under s. 34 of the Indian Income-tax Act.
Following its own decision, City Tobacco Mart
and Others v. Income-tax Officer, Urban Circle, Bangalore (1), on certain
earlier writ petitions (nos. 52 and 53 of 1953 and 105 and 106 of 1954), the
High Court held in favour of the assessee on the construction of s. 13 (1) of
the Finance Act, 1950 and also oil the effect of the saving provisions in s. 5
(b) of Mysore Act XXXI of 1948, and paragraph (2), sub-paragraph (b) of
Schedule A to Mysore Act LVII of 1948. On these findings, it held that the
Income-tax Officer concerned had no jurisdiction or authority to start the
impugned pro- ceedings or to make the impugned orders of assessment. It did not
feel called upon to pronounce on the validity of the argument founded on the financial
agreement dated February 28, 1950.
In Civil Appeals 143-145 of 1954, Civil
Appeals 27 to 30 of 1956 and Civil Appeals 161 to 164 of 1956, Lakshmana Shenoy
v. The Income-tax Officer, Ernakulam (2), in which judgment has been delivered
today, we have fully considered the arguments as to the true scope and effect
of s. 13(1) of the Finance Act, 1950, and of the financial agreement of
February 28, 1950, taken along with the recommendations of the Indian States
Finances, Enquiry Committee. We have held therein that the expression I levy,
assessment and collection of income-tax in s. 13 (1) is wide enough to
comprehend re-assessment proceedings under s. 34 and that the financial
agreement aforesaid, on a true construction of the recommendations of the Enquiry
Committee, does not render the impugned proceedings Unconstitutional and void.
That decision disposes of these two arguments
in the present appeals.
The two additional points which remain for
consideration depend on the interpretation to be put on the saving provisions
in s. 5(b) of Mysore Act XXXI of 1948 and paragraph (2), sub-paragraph (b) of
Schedule (1) A.I.R. 1955 MYS. 49.
(2) [1959] S.C.R. 751.
797 A to Mysore Act LVII of 1948. These
provisions are expressed in identical terms, and the question is if they save
s. 34 of the Indian Income-tax Act with regard to re- assessment proceedings.
We think that they do. It is worthy of note that the saving provisions say that
the Indian Income-tax Act, 1922, as in force in the retroceded area prior to July
1, 1948, shall apply in respect of the total income chargeable to income tax
prior to that date and it shall apply to proceedings relating to the assessment
of Such income, until the stage of assessment and determination of income-tax
payable thereon. 'Total income' means the total amount of income, profits and
gains computed in the manner laid down in the Act, and there are no good
reasons why the word 'assessment' occurring in the saving provisions should be
restricted in the manner suggested so as to exclude proceedings for assessment
of escaped income or under-assessed income. On behalf of the assessee our
attention has been drawn to the words "in respect of the total income
chargeable to income-tax............ but which has not been assessed until that
date " occurring in the saving provisions and the argument is that, those
words show that there was no intention to permit reopening of assessments which
had been made already. We are unable to accept this argument. In its normal
sense, I to assess' means 'to fix the amount of tax or to determine such
amount'. The process of re-assessment is to the same purpose and is included in
the connotation of the term " assessment ". The reasons which led us
to give a comprehensive meaning to the word " assessment " in s. 13
(1) of the Finance Act, 1950, operate equally with regard to the saving
provisions under present consideration. We agree with the view expressed in
Hirjibhai Tribhuvandas v. Income- tax Officer, Rajnandgaon and another (1),
that s. 34 of the Income _tax Act contemplates different cases in which the
power to assess escaped income has been given; where there has been no
assessment at all, the, term " assessment " may be appropriate and
where there was assessment at too low a rate or with (1) A.I.R. 1957 M.P. 171.
798 unjustified exemptions, the term
re-assessment' may be appropriate, and it may have been necessary to use two
different terms to cover with clarity the different cases dealt with in the
section ; but this does not mean that the two terms should be treated as
mutually exclusive or that the word 'assessment' in the saving provisions
should be given a restricted meaning. The object of the saving provisions was
obviously to make the prior law available in all cases in which the income was assessed
or was assessable according to that law before July 1, 1948, and it is
difficult to see why only a part of the process of assessment should be saved
and the other part repealed.
We, therefore, hold that the saving
provisions save s. 34 of the Indian Income-tax Act, 1922, in its entirety, as
it was in force in the retroceded area prior to July 1, 1948, and the
contention of the respondent that it stood repealed from that date is not
correct. As to the period of limitation, it would be the period laid down in s.
34 of the Indian Income-tax Act as it was in force in the retroceded area prior
to July 1, 1948.
The result, therefore, is that these appeals
succeed and the judgment and order of the High Court of Mysore dated March 22,
1955, are set aside and the writ petitions filed by the respondent assessee are
dismissed. The appellant will get his costs in this Court and the High Court.
Appeals allowed.
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