 the indian income-tax (amendment) bill , 195'9(as introduced in lok sabha)  the indian income-tax (amendmen1j bill, 1959 (as introduced in lok sabha) a billfurther to alnend the indian income-tax act, 1922 be it enacted by parliament in the tenth year of the republic of india as follows:-1 this act may be called the indian income-tax (amendment) short title act, 1959 19u" s z in section 34 of the indian income-tax act, 1922 (hereinafter amendment referred to as the principal act), after sub-section (3), the followine of ae«ion u· sub-section shall be inserted, namely:-10 "(4) a notice wlder clause (a) of sub-section (1) may be issued at any time notwithstanding that at the time of the isue of the notice the period of eight years specified in that sub-section before its amendment by clause (a) of lection 18 of the finan~e act, 1956, had expired in respect of the year to which the notice relates" 3 after section 49e of iht' principal act, the following section nscnion of is h all be insermd, name ly: __ ne:naectloll 49  · "49ee (1) where in pursuance of any settlement relatina power to let to the assessment, re-assessment or case of any person made or ~~~~l~~~:;: purported to have been made before the 17th day of january, ir ~he pot-h~59, whether under this act or otherwise, any sum of money z!~:'jil"~ 19-1 etc, be made ot any security for the payment of any sum of money has beefi paid or furnished by him, or on his behalf by any other person, no claim for the refund of any sum so paid or for the return of any security so furnished shall be entertained or allowed on the ground that the settlement is invalid-s (a) in any case where a notice under section 34 in respect of the income, profits or gains relating to the settlement aforesaid has been issued before the 17th day of january, 1959 and (b) in any other case, for a period of two years from 10 that date and, if during the period of the said two years any notice under section 34 is issued, pending the completion of the assessment, re-assessment or settlement in pursuance of such notice; and, accordingly, no application, suit or other legal proceeding is shall lie for the refund of any such sum of money or the retui'b of any such security-(i) pending the completion of the assessment, re-assessment or settlement in pursuance of the notice referred to in clause (a); or 20 of two years referred to in completion of the assessment, in pursuance of the notice (ii) during the period clause (b) or pending the re-assessment or settlement referred to in· that clause (2) the income-tax officer, appellate assistant commis- 25 sioner or the commissioner as the case may be, may set off the amount referred to in sub-section (1) or the amount of the security referred to in that sub-section which may be realised for the purpose against the tax, interest, penalty or any other sum which may become payable by reason of any assessment, 30 re-assessment or settlement made in pursuance of the notice referred to in clause (a) of that sub-section or in pursuance of any such notice issued within the period of two years referred to in clause (b) of that sub-section (3) in computing the period of limitation prescribed for any 3s legal proceeding in relation 'to any such sum or security aforesaid, the time during which any such proceeding cannot be instituted by reason of the provisions contained in sub-section (1) shall be exc1uded  4 no notice issued under clause (4) of sub-section (1) tlf section savil'g tlfnn-34 of the principal act at any time before the commencement of this tices, 8s&cs~­menb, etc in act and no assessment, re-assessment or settlement made or other cenain cases proceeding taken in consequence of such notice shall be called in 5 question in any court, tribunal or other authority merely on the ground that at the time the notice was issued or at the time the assessment or re-assessment was made, the time within which such notice should have been issued or the assessment or re-assessment should ha\'e been made under that -section as in force before its 10 amendment by clause (a) of section 18 of the finance act, 1956, had expired 5 (1) the indian income-tax (amendment) ordinance, 1959, is repeal and hereby repealed savin, (2) notwithstanding such repeal, anything done or any action is taken (including any notice issued) in the exercise of any powers conferred by or under the said ordinance shall be deemed to have been done or taken in the exercise of the powt:!rs conferred by or under this ac: as if this act were in force on the day on which such thing was done or action was taken tae objecti of the bill are two-fold:--(i) to make it clear that section 34, as amended by section 1 of the finance act, 1956, applies to all escaped incomes relatin, to any year commencing from the year ending on 311t march, u~41; (ii) to enable the governiiient to set ot! the amounti already paid by assessees in pursuance of settlements against taxes found due in pursuance of proceedinis to be completed hereafter 2 section 34(1) (a) of the income-tax act as it stood prior to itl amendment by section 18 of the finance act, 1956 (18 of 1956) permitted assessment or re-assessment as contemplated in clause (a) of sub-section (1) of section 34 within a per'od of eight years from the assessment year to which sucll assessment or re-assessment related this time limit was removed by an amendment in 1956 which empowered the income-tax department to re-open assessments in cases of escapement amounting to rupees one lakh or more for any back year without limitation of time subject only to the condition that the assessment reo~ned did not relate to any year prior to the year ending on 31st march, 1941 however, it has recently been held by the calcutta high court that in the absence of an express provision to that effect, the amended section cannot be applied to assessments which had become more than eight years old by 1st april, 1956, the present bill seeks to place this matter beyond doubt by an amendment to section 34 of the act 3 the supreme court has, by a judgment delivered recently, held that the proceedings completed under the taxation on income (investigation commission) act, 1947 on or after the 26th january, 1950 resulting in settlements under section 8a of the said act offend article 14 of the constitution it is now proposed to re-open these cases under the ordinary law pending completion of the fresh proceedings, the bill provides th~t po claim for refunds shall be entertained or allowed and that the 3mounts already paid shall be available for being set off against any sums which may be found due as a result of the fresh proceedings any right which the uaessee may have in regard to the sums so paid is, however sought to be protected by sub-eection <,,> of clause 3 of the bill 4 an ordinance (no 1 of 1959) wail promulgated b1 the pre-dent on the 17th january, ujs9, amending the income-tax act on the above linea this bill replaces that ordinance morarji desai haw delhi; the 30th janua'1l ld50 as explained in the statement of objects and reasons, if this bill is passed into law, the income tax department will have to take action under section 34 of the income tax act to re-assess the incomes in all the cases of settlement affected by the recent supreme court's judgment there is already a special organisation called the directorate of special investigation to which the disposal of commission cases invalidated by the previous judgments of the supreme court has been entrusted for taking over the fresh cases to be re-assessed now, it will be necessary to add to the existing staff of the directorate the additional expenditure on the 'extra staff is estimated at rs 4' 81 lakhs  i-volume of worknumber of cases to be assessed is 516 involving 7,224 assessments for both income-tax and excess profits tax  ii-requirement of personnel and financeno coet ra 43,200 3 3 x i200 x i2 96,000 10 10 x 800 >< 12 18,000 12,600 15,000 5>400 16,800 86,400 27,360 6 6 x 250 x i2 3 3 x 350 x 12 5 5 x 250 x 12 3 3 x 150 x 12 10 10 x 140 x i2 48 48 x 150 x i2 19 19 x 120 x 12 i inspec ing a8sis~aot commissi0ners 2 ineome-tax officers (class i, grdi) b-staff 3 inspectors 4 supervisors (grade i) 5 head clerks 6 stctlographera 7 s'me-1ypis's 8 upper division clerks 9 lower division clerks | liay     ||----------|| ra      || 3,21,000 || 1,60,000 |rs total  rs  (11 01' 1922)- - - - 34 (1) 1£-(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 of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains charieable to incometax have escaped assessment for that year, or have been underassessed, or assessed at too iowa rate, or have been made the subject of excessive relief under the act, or excessive loss or depr:!ciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the asse~e, the income-tax officer has in consequence of information in his possess'on reason to believe that income profits or gains chargeabloe to income-tax have escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this act, or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal offic'er thereof, a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 22 and may proceed to assess or re-assess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this act shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection: provided that the income-tax officer shall not issue a notice under clause (a) of sub-section (1)-(i) for any year prior to the year ending on the 31st day of ~arch, 1941; (u) for any year, if eight years have elapsed afoor the expiry of that year, unless the income, profits or gains chargeable to income-tax which have escaped assessment or have been under-assessed or assessed at too low a rate or have been made the subject of excessive relief under this act, or the 10s8 or depreciation allowance which has been computed in excesi, amount to, or are likely to amount to, one lakh of rupees or more in the agil'eiate, either for that year, or for that year and any other year or years after which or after each of which eight years have elapsed, not beini a year or yearll endine before the 31st day of march 1941; (iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under clause (ii), unless the central board of revenue, and, in any other case, the commissioner, is satisfied on such reasons recorded that it is a fit case for the issue of such notice: provided further that the income-tax officer shall not issue a notice under this sub-section for any year, after the expiry of two years from that year, if the person on whom the assessment or reassessment is to be made in pursuance of the notice is a person d'eemed to be the 8ient of a non-resident person under section 43: provided further that the tax shall be chargeable at the rate at which it would have been charged had the income, profits or gain; not escaped assessment or full assessment, as the case may be explanation-production before the income-tax officer of account books or other evidence from which material facts could with due diliience have been discovered by the income-tax officer will not necei5arily amount to disclosure within the meanini of this ection a - bill further to amend the indian income-tax act, 192z the president has, in pursuance of clauses (i) and (3) of article 117 and clause (i) of article 274 of the constitution of india, recommended to lok sabha the introduction and consideration of the bill m n kaul, s~ctelary (shri moratji desai, minister of finan~) gipnd- ls 1- 18ar, ls-6-2-s~16so 