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MITTER J. - The question referred under section 66 (1) of the Act is :

Whether on the facts and in the circumstances of the case, assessment under section 34 (1) (a) of the Indian Income-tax Act was in accordance with law ?"

The facts discovered from the statement of the case are as follows :

The assessee is an individual doing business in stationary. The assessment year in question is 1946-47, the financial year ending on March 31, 1946. A notice under section 22 (2) of the Act was issued to the assessee on August 27, 1946. He filed his return on February 11, 1949, showing an income of Rs. 17,457. A provisional assessment was made on the basis of this return on February 16, 1949. Thereafter, the Income-tax Officer found that the assessee had done some business in stationary not disclosed in the return. He issued a notice under section 28 (1) (c) of the Act for the levy of penalty on February 21, 1952. The assessee came forward with a disclosure under the voluntary disclosure scheme in March, 1952. On the basis of this disclosure an assessment was made on an amount of Rs. 49,091. The Income-tax Officer thereafter came to know that the assessee had encashed high denomination notes worth Rs. 18,000 after the ordinance of January, 1946 and that he had also made certain deposits in the Midnapore Bank Ltd. which had not been disclosed before. He issued a notice under section 34 (1) (a) of the Act on March 4, 1955, with the previous approval of the Commissioner of Income-tax. An attempt was made to serve this notice though the process-server who reported on March 9, 1955, that the notice could not be served as the assessee was not available. A second attempt made by the process-server on March 11, 1955, was also not successful and the other inmates of the house of the assessee refused to accept the notice. The Income-tax officer thereafter directed service of notice by registered post. The notice was put in the post on March 14, 1955. As no acknowledgment or service was received from the postal authorities even on March 29, 1955, the Income-tax Officer ordered that the notice be served by affixation and service was accordingly effected in this manner by the inspector on March 30, 1955. According to the report of the inspector this affixation was done in the presence of two persons. No return was however filed by the assessee in spite of repeated opportunities allowed by the Income-tax Officer. An expert assessment under section 23 (4) of the Act was made by the said officer adding an amount of Rs. 68,000 to the originally assessed figure of Rs. 49,091.

On appeal, the Appellate Assistant Commissioner reduced the assessment by Rs. 50,000 but sustained the addition of Rs. 18,000 on account of the high denomination notes. He rejected the objection of the assessee about the service of the notice under section 34. He also did not agree that the original assessment for the year 1946-47 was barred by lapse of time because it was not completed before March 31, 1951. Before the Tribunal the assessment was challenged on two grounds, viz., (i) the impropriety of the service of notice under section 34 (1) (a), and (ii) service of the notice under section 28 (1) (c) after March 31, 1951, could not extend the time limit of assessment. According to the Tribunal, whatever might have been the validity of the earlier assessment the supplementary assessment had to be judged from the point of view of section 34 (1) (a) under which it was started. The appellant had not established that the exchange of high denomination notes was disclosed to the Income-tax Officer who made the original assessment at the time of making the return and it was not possible for the appellant to suggest that this was not a primary material or fact relevant to the assessment.

These two cases however do not help the assessee before us.

Under section 34, as it stood at the material time, no order of assessment under section 23 or of assessment or reassessment under sub-section (1) of the section could be made after the expiry, in any case to which clause (c) of sub-section (1) of section 28 applied of eight years and in any other case of four years from the end of the year in which the income, profits or gains were first assessable. The statement of the case before us show that it was after the provisional assessment in November, 1949, that the Income-tax Officer found that the assessee he done some business in stationary which had not been disclosed in return and he, consequently issued notice under section 28 (1) (c) on February 21, 1952. The case was therefore, one where the assessment could have been completed within 8 years from the end of the year in which the income, profits or gains were first assessable. We have already held in the case of Ashutosh Bhattacharjee v. Commissioner of Income-tax (Income-tax reference No. 65 of 1962) that a notice under section 28 (1) (c) of the Act can be given even beyond four years of the end of the year in which the income, profits or gains were first assessable. Consequently the assessment in 1952 was not invalid. Further, it was only after the said assessment that the Income-tax Officer came to know about the exchange of high denomination notes and he caused notice under section 34 (1) (a) to be served on March 30, 1952 that is to say, within eight years from the end of the year in which the income, profits or gains were first assessable. If the earlier assessment of 1952 was in order and thereafter, on further information coming to the Income-tax Officer, he gave notice under section 34 (1) (a) within the period of eight years, the notice was in order. If the earlier assessment of 1952 was not in order, or in other words, there was an invalid assessment resulting in the escapement of income, the only method available to the Income-tax Officer was under section 34 (1) (a) if it were applicable.