XC, Prashar, Income- Tax Officer, Market Ward, Bombay ¥. basentern Owarkades
Hideystulio’, J.
Desenbsr, 32.
130 SUPREME COURT REPORTS (1964) VOL.
Court in C. A. No. 585 of 1960 and C. As. Nos. 214 and 215 of 1958 but in view of the undertaking given in the High Court by the Department the appellants in C. A. No. 705 of 1957 shall bear the costs of the first and second respondents in this Court and also in C. A. No. 509 of 1958 we would make a similar order in view of the order of the High Court granting the certificate.
By Court: In accordance with the opinion of the majority, the appeal is allowed. The appellants will pay costs of respondents 1 and 2 as per consent of the parties referred to in the certificate, granted by the High Court.
Appeal allowed.
P. V. GODBOLE v,
JAGANNATH FAKIRGHAND
(S. K. Das, J. L. Kapor, A. K. Sarkar, M. Hmayatunian and Raquopar Dayat, JJ.)
Income-T'ac-—Escaped income—Limitation for asseaenuent—Saving provision—A pplicability and conatitutionality of— Iadian Income-lax Act 1922 (U1 of 1922), 3. 34—Indian Income-tac (Amendment) Act, 1953 (25 of 1953), 88. 18, 31— Conetitution of India, Art, 14.
In pursuance of the directions given by the Appellate Assistant Comunissioner in connection with the appeal of another assessee, the Income-tax Officer on February 18, 1957, issuted a notice under s,34(1) of the Indian Income-tax Act, 1922, to the respondent in respect of the assessment years 1944- 45, 1945-46 and, 1946-47, The respondent contended that the Income-tax Officer had no jurisdiction to assess him after four years of the expiry of the year of assessment. The appellant oe.
1S$.0.R. SUPREME COURT REPORTS 131 contended that the second proviso tos, 34 (3) introduced by the Amending Act of 1953 saved the procecdings.
Held {per Das, Kapur and Sarkar, JJ., Hidayatullah and Dayal, JJ., dissenting), that the proceedings were barred and were not saved by the second proviso to s, 34 (3).
Per Das and Kapur, JJ.—The second proviso tos. 34 (3) did not revive the power to assess which had already become barred by s. 34 (3).
8. C. Prashar, Income-tax Officer v. Vasantsen Dwarkadas, [1964] Vol. 1S. C. R. 29 followed.
Per Sarkar, J.—The second proviso to s, 34 (3) was unconstitutional as it offended Art. 1!4o0f the Constitution,
The Commissioner of Income-tax, Bihar & Orissa v. Sardar Lakhmir Singh, [1964] Vol. 1 S.C.R. 148, followed.
Per Hidayatullah and Dayal, JJ.—The notice and proceedings were valid. The assessment was governed by the second proviso tos. 34 (3) as amended in 1953 and by s. 31 of the Amending Act of 1953. The notice was further saved by the provisions of the Amending Act of 1959.
Crviz APPELLATE JURISDICTION : Civil Appeal No. 585 of 1960.
Appeal from the judgment and order dated September 4, 1957 of the Bombay High Court in Special Civil Application No. 1400 of 1957.
K. N. Rajagopal Sastri and P. D, Menon for the Appellants.
J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the Respondent,
1962. December 12. The following separate Judgments were delivered by Das, J., Kapur, J., and Sarkar, J. The Judgment of Hidayatullah and Razhubar Dayal, JJ., was delivered by Hidayae tullah, J.
P.V. Godbole v. Jagannath Fakirchand
P.V. Godbole v. Jagannath Fakirchand
——
Das, J.
leper, J.
132 SUPREME COURT REPORTS [1964] VOL.
-§. K. Das, J.—The facts of this appeal have been stated by my learned brother Kapur, J. As I am in agreement with him, I need not 1 re-state the facts.
The assessment years were 1944-1945, 1945- 1946 and 1946-47. The notice was issued by the Income-tax Officer on February 18, 1957, pursuant to a direction given by the Appellate Assistant Commissioner in an appeal of another assessee. The only question is whether the sccond proviso: to sub-s (3) of s. 34, as amended in 1953 saves the proceedings impugned.
For the reasons given by me in S.C. Prashar, Income-tax Officer v. Vasantsen Dwarkudas (‘), in which judgment has heen delivered to- orday, I would dismiss the appcal with costs.
Karur, J.—This is an appeal brought on behalf of Revenue against the judgment and order of the High Court of Bombay on a certificate granted by that Court.
In W. P. No. 1400/57 the present respondent challenged the jurisdiction of the Income-tax Officer to issue notice under s. 34(1) of the Indian Income: tax Act, hereinafter called the ‘Act’. The assessment years are 1944-45, 1945-46 and 1946-47 and the notice was issued by the Income-tax Officer on February 18, 1957, pursuant to a direction given by the Appellate Assistant Commissioner in an appeal of another assessce that the income was the income ofa partnership of which the respondent and the other assessee were partners. The High Court held that the respondent was a stranger to the proccedings before the Appellate Assistant Commissioner and that the second proviso to s. 34(3) of the Act under which the notice was given was unconstitutional as it offended Art. 14 of the Constitution.
(t} [1964] Vol. 1 S.C.R. 29.
<4
1 §.C.R. SUPREME COURT REPORTS 133
The facts of the appeal are these : The respondent was the karta of a Hindu Undivided F amily which carried on business as merchants and commission agents in cotton, grains and other commodities. That Hindu Undivided Family was assessed for the assessment years 1944-45, 1945-46 and 1946-47. The assessment for the year 1944-45 was completed by the Income-tax Officer on March 14, 1949, and an appeal was taken against that assessment to the Appellate Assistant Commissioner and was decided on February 9, 1956, and then an appeal was taken to the Income-tax Appellate Tribunal which has not been shown to have been decided. For the assessment years 1945-46 and 1946-47 the assessment was completed in March and May, 1950, respectively. Appeals were taken against these assessments to the
Appellate Assistant Commissioner who remanded the cases to the Income-tax Officer and they have not yet been decided. As regards the assessment year 1946-47 anotice under s. 34(1) was issued and the order in that case was passed on March 6, 1956.
_ Against that order an appeal was taken to the Appel- late Assistant Commissioner which is still pending. It appears that for the year of assessment 1945-46 no notice under s. 34(1) of the Act was issued.
In 1946 the respondent on behalf of the Hindu Undivided Family filed a suit against one Jagannath Ramkishan for rendition of accounts as the Munim
-of the respondent. His defence was that he was a _ partner and nota Munim which was accepted and the suit was dismissed. An appeal against that decree was dismissed by the High Court. Jagannath Ramkishan died during the pendency of the appeal and his widow Kalavati was impleaded. In the meantime proceedings under -s. 34(1) (a) of the Act were started against Kalavatibai for the assessment years 1944-45, 1945-46 and 1946-47 in respect of the business which her husband Jagannath Ramkishan had claimed to be a partnership business of the
Pp, V. Godbote Jagann wh Fakirchand Kapur, J
P. V. Godbole ‘ageanath Fakirchand
1384 SUPREME COURT REPORTS [1964] VOL.
respondent’s Hindu Undivided Family and himself. Two orders were passed by the Income-tax Officer for those years. Kalavatibai took appeals against those orders and the Appellate Assistant Commissioner on October 10, 1956, in allowing those appeals gave a finding that the business belonged to the partnership as claimed by Jagannath Ramkishan and the income-tax Officer was authorised to make assessments under the provisions of s. 34 on the said partnership as also onthe respondent for the assessment years 1944-45, 1945-46 and 1946-47. Thereupon a notice was issued with regard to the three assessment years on February 18, 1957, against M/s Jagannath Fakirchand and Jagannath Ramkishan. hese notices were challenged and were held to be illegal. Against that order of the High Court this appeal is brought on a certificate of the High Court under Art. 132(1) and Art. 133(1)(b) of the Constitution.
For the reasons given in S. C. Prashur, Incometux Officer v. Vasantsen Dwarkadas (‘), judgment in which has been delivercd today, this appeal is dismissed with costs.
SARKAR, J.—This case is concerned with the three asscssment years 1944-45 1945-46 and 1946-47. The assessce is the respondent Jagannath Fakirchand, the Karta of a Hindu undivided family who had been cssessed assuch forthe years 1944- 45 to 1946-48, and appeals from the assessment orders in respect of these years were pending.
The assessee had filed in 1946 a suit against an ex-employee, Jagannath Ramkishan for accounts of certain transactions, Jagannath Ramkishan contended that he was not an employee but the transactions were the transactions of a business carried on in partnership between him and the assessee. The trial court upheld the contention of Jagannath Ramkishan.
(1) {1964) Vol. 1 S.C.R. 29.
18.C.R. SUPREME COURT REPORTS: 135
The assessee appealed to the High Court of Bombay against the decision of the trial court but in the meantime Jagannath Ramkishan had died and his wife, Kalavatibai, had been substituted in his place in that appeal. The High Court dismissed the appeal but said nothing as to whether Jagannath Ramkishan was a partner.
In view of the decision in the appeal mentioned in the preceding paragraph, the revenuc authorities started proceedings against Kalavatibai under s. 34 (1) (a) of the Income-tax Act and assessed her on the entire income in the aforesaid three years, realised from the said transactions. Kalavatibai then appealed from this assessment and in the appeal she contended that her husband’s estate was not liable for the tax on the entire income as the income belonged to a firm of which her husband was only one of the partners. The appellate Assistant Commissioner accepted this contention of Kalavatibai and observed : “In view of my finding ............ that the business belonged to the partnership .. .......6144. the Income-tax Officer ‘is hereby authorised to make assessments under the provisions of s. 34 on the said partnership as also on the other partner, Shri Jagannath Fakirchand for the assessment years 1944-45, “1945-46 and 1946-47.”
In pursuance of this order the Income-tax Officer started proceeding under s. 34 (3) ol the Income-tax Act, 1922, against the assessee by issuing a notice on February 18, 1947, calling on him to filc a return in respect of the aforesaid three assessment years as that income had escaped assessment. T'hereupon the assessee moved the High Court of Bombay under Art. 226 of the Constitution for a writ to quash the aforesaid notice and to prohibit proceedings being taken thereunder. he High Court ‘allowed the writ. Hence this appeal.
‘1962 P ¥. Gedbols Jagannath Fakir. hond
—— Sarkar, y
“PLY. Godbole
. 136 SUPREME COURT REPORTS [1964] VOL. 1662. Phe only question in this appeal is whether the Second proviso to s. 34 (3) of the Income-tax Act, 1922
¥. - Jagannath Fakirchand
Sarkar, J.
fee TN eno TN ‘ as amended in 1953, could save the proceedings impugned. For, the reasons mentioned in my judgment in
. The Commissioner of Income-tax, ~Bihar'& Orissa v.
“Raghubar Dayal, JJ., see 8. C. Prashar, Income-ta
Sardar Lakhmir Singh (), I think that that proviso is invalid as offending Art. 14 of the Constitution and
. ... affords no protection to the revenue authorities. It may be added that the impugned notice was issued in consequence of an order under s. 31 in a proceeding to which the assessee was not a party.
In the result the appeal is dismissed with costs.
For the Judgment. - of Hidayatullah and
Officer v.. Vasantsen Dwarkadas, ante p. 29.
By Court :'“In accordance with the opinion of
: the majority, this appeal is dismissed with costs.
_ Appeal dismisse d.
(1) 31964} Vol. 1S.C.R. 148, ©