Revenue appealed against a Bombay High Court writ quashing a s. 34 notice for three assessment years. By majority, the Supreme Court held the proceedings were barred by time and not saved by the 1953 amendment; Sarkar J additionally found the second proviso to s. 34(3) unconstitutional under Article 14.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
130 SUPREME COURT REPORTS [1964] VOL.
19'1
19'1 Court in C. A. No. 5~5 of 1960 and C. As. Nos. .fl.C. Pr""4r, fn.tom1· 214 and 215 of 1958 but in view of the undertaking 'f"a.t Offiur, M•klt given in the High Court by the Department the Word, Oomboy >. appellants in C. A. No. 705 of 1957 shall bear the ~ ~-fttl n•U(lr.'""'41 costs of the first and second respondents in this Court and also in C. A. No. Ci09 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 appell· ants will pay costs of respondents l and 2 a, per consent of the parties referred to in the certificate, ~rantrd by the High Court.
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A pptal allowtd.
P. V. GODBOLE
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v.
JAG.<\NNATH FAKIRCHAND
(S. K. DAS, J. L. KAPUR, A. K. SARKAR, .f. HmAYATUJ.LAH and RA<lllUBAR DAYAL, JJ.)
1"cot11•·1'a.c--E•~wd income-Limillllion for aaau.. nacnt-81111i11g prooi.ion-A pplirJJbilil11 and r,,,..titutionality ofJ..dian 1"cm11<-W.:t Ar.t 1922 (II of 19:!2), •· 34-lndian J11rmnt·"'-' (,ti.1<11dmr11l) Acl, /.953 (25 of 1953), 88. 18, 31Ct>t1t1:111tio11 of fo,(iu, Ari. 14.
In p11rsua11rc of the dir.ctions given by the Appellate Aldstaut Couunisioncr in connection with the appeal of another asscssce, the Income·la< Officer on February 18, 1957, ••ued a notice urnler s. 34 ( l) of the Indian Income·tax Act, J9Z2, to the 1-..po1u.lcnt in rc•pect of the assessment years 194445 \945-46 anrl 1946·47. The re•pondent contended that the ln~mC•W 0ffiCcr had no jur isdirtion to assess him after four years of the expiry of the year of assessment. The appellant
1 S.C.R. SUPREME COURT REPORTS
131
contended that the serond proviso to s. 34 (3) introduced by the Amending Act of 1953 saved the proceedings.
Held (per Das, Kapur and Sarkar, J ]., Hidayatullah and Dayal,lJ., dissenting), that the proceedings were barred and were not saved by the second proviso to s. 34 (3).
1962
P. V. Godbolt v. Jqannath Fal<irchand
Per Das and Kapur,.JJ.-The second proviso to s. 34 (3) did not revive the power to asse" which h•d already become barred by s. 34 (3).
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S. C. Prashar, Income-ta.< Officer v. Vasantsen Dwarkadaa, [1964] Vol. 1 S. C.R. 29 followed.
Per Sarkar, J .-The second proviso to s. 34 (3) was unconstitutional as it offended Art, 14 of the Constitution.
The Commi88ioner of Income-tax, Bihar & Orissa v. Saraar Lakhmir Singh, [1964] Vol. 1 S.C.R. 148, followed.
Per HidayatuUah and Dayal, JJ.-The notice and proceedings were valid. The asses.men! was governed by the secnnd proviso to s. 34 (3) as amended in 1953 and bys. 31 of the Amending Act of 1953. The notice was further saved by the provisions of the Amending Act of 1959.
CIVIL APPl!LLATE 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. 1400of1957.
K. N. Rajagopal Sastri and P. D. Menoo for thr Appellants.
J. B. D.idaclv.mji, O. C. Mathur and Ravinder Narain for the Rrspondent.
132 SUPREME COURT REPORTS [1964] VOL'.
1962
1962 S. K. DAs, J.-The facts· of this appeal have been stated by my learned brother Kapur, J. As I P. v. Godlou v. am in agreement with him, I need not re·state the J,,.,,..u. Fakirchond facts.
The assessment years were 1944-1945, 19451946 and 1946-4 7. The notice was issued by the Income-tax Officer on February 18, 19.57, pursuant to a direction given by the Appellate Assistant Commissioner in an appeal of another assessee. The only question is whether the second 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 Dwarkridas ('), in which judgment has been delivered to-day, I would dismiss the appeal with costs.
r. """'· J. KAPUR, J.-Thi~ 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. H00/57 the present respondent challenged .the jurisdiction of the Income-tax Officer to issue notice under s. !H(I) of the Indian Incomctax Act, hereinafter called the "Act". The assessment years arc 19~4.45, 19,15-46 and 1946--!7 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 of a partnership of which the respondent and the other assessee were partners. The High Court held that the.respondent was a stranger to the proceedings before the Appellate Assistant Commissioner and that the second proviso to s. !H(3) of the Act under which the notice was given was unconstitutional as it offended Art. 14 of the Constitution.
(I) [1964] Vol. I s.c.R. 29.
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l S.C.R. SUPREME COURT REPORTS
•
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The facts of the appeal are these : The respondent was the karta of a Hindu Undivided Family 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 wa~ 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 aud 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 a notice 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 Appellate ·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 .
1962
P.V. Got/bole v. Jagannzth Fakirehantl
Kapu,, J
In 1946 the respondent on behalf of the Hindu Undivided Family filed a suit against one J agannath Ramkishan for rendition of accounts as the Munim of the respondent .. His defence was that he was a . partner and not a 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
134 SUPREME COURT REPORTS [1964] VOL.
1962
1962 respondent's Hindu Undivided Family and himself. f. V. G.dbol• Two orders were passed by the Income-tax Officer .. for those years. Kalavatibai took appeals against . 'o,att1th Foiircluwl those orders and the Appellate Assistant Commis· sioner 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 on the respondent for the assessment years l!J-U-4fi, 19!5-46 and 1946-4 7. There· upon a notice was issued with regard to the three assessment years on February 18, 1957, against M/s Jagannath Fa~irchand and jagannath Ramkishan. These 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. l33(l)(b) of the Constitution.
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For the reasons given in S. C. Prashar, lncom.etax Officer v. Va8antsen Dwarkadas (1 ), judgment in which has been delivered today, this appeal is dismissed with costs.
s.u., J. SARKAR, J.-This case is concerned with the three assessment years WH-45 1945-46 and Hl46-4 7. The assessee is the respondent J agannath Fakirchand, the /(aria of a Hindu undivided family who had been ::ssessed as such for the years 1944· 45 to 1946-48, and appeals from the a<sessment 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. J agann11 th Ramkishan cont en· ded 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. (I) (1964] Vol. I s.c.R. 29.
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135
1 S.C.R. SUPREME COURT REPORTS
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.
196"2 P P'.Gud0.11 . v. Jagllflflath .F<kir •. hond - Sarkgr, '·
In view of the decision in the appeal mentioned in the preceding paragraph, the revenue 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. Kalavatiba1 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 Com· missioner accepted this contention of Kalavatibai and observed : "In view of my finding : .... ~ ...... that the business belonged to the partnership .. .... .. . .. .. . 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 Jagan· nath Fakirchand for the assessment years 1944·45, '1945-46 and 1946-47."
In pursuance bf this o~der 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 file a return in respect of the aforesaid three assessment years as that income had escaped assessment. Thereupon 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 proceed· ings being taken thereunder. The High Court allowed the writ. Hence this appeal.
...... -,·--;-,: .... ----;···"':' :.\
j i ' (_ I i
.136 '"SUPREME COURT REPORTS . . . . ' (1964] VOL, . . '
_' ' . . ' l!li2- The only question in this appeal is whether the -.P. V. Godbolt second proviso to s. 34 (3) of the Income· tax Act, 1922 l•gannathvFakirehand as amended in 1953, could save the proceedings impuSmlar~ J. gned. ·For. the reasons mentioned in my judgment in The Commissioner of Income-tax, ·:Bihar & Orissa v. Bardar Lakhmir Singh (1), 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 Raghubar Dayal, JJ., see 8. 0. Prashar, Income-tax Officer v. Vasantsen Dwarkadas, ante p. 29.
. - ··-- BY COURT : In accordance with the opinion of · the majority, this appeal is dismissed with costs.
___ Appeal dismissed._
(I) ]196i] Vol. I S.C.R. 148.
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I
I
3 issues framed by the court
Whether the notice under s. 34(1) issued more than four years after the assessment years was barred by limitation.
Whether the second proviso to s. 34(3) as amended in 1953 saved the impugned reassessment proceedings.
Whether the second proviso to s. 34(3) was unconstitutional as offending Article 14.
Colour shows how this judgement treated each authority
S. C. Prashar, Income-tax Officer v. Vasantsen DwarkadasFollowed
[1964] Vol. 1 S.C.R. 29 · Who else cites this
The Commissioner of Income-tax, Bihar & Orissa v. Bardar Lakhmir SinghFollowed
[1964] Vol. 1 S.C.R. 148 · Who else cites this
4 provisions across 3 enactments
P. V. Godbole
Jagannath Fakirchand
S. K. Das
L. Kapur
A. K. Sarkar
M. Hidayatullah
Raghubar Dayal
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
