JUDGMENT [ENTITY], J.
1. In this reference under [SECTION] of the Act, the following question of law has been referred by the Tribunal to this court :
" Whether, on the facts and in the circumstances of the case, the Tribunal was justified in applying the second proviso to [SECTION] of the [ACT] ? "
2. The relevant facts have been set out by the Tribunal in the statement of the case. However, the material facts may be set out.
3. The statement relates to the assessment year 1952-53, the corresponding previous year being the calendar year 1951. The respondent-company, M/s. [ENTITY], Calcutta, was assessed for the relevant year as the agents of a non-resident assessee, namely, M/s. Hungerford Investment Trust Ltd. (in liquidation). The original assessment was made on 23rd December, 1953. The assessment was, however, reopened under [SECTION] by notice, dated 9th June, 1956, to include dividends amounting to Rs. 25,01,660 (net) deemed to have been distributed to the said non-resident assessee, as a result of the application of [SECTION] on M/s. [ENTITY] The reassessment was assailed before the Tribunal on the ground that the notice under [SECTION] was issued after the expiry of the period of limitation prescribed by law. The Tribunal held that the assessment could be reopened in the present case only under [SECTION] and the assessee having been assessed as an agent of a non-resident principal, the second proviso to [SECTION] applied and the limitation for reopening the assessment in such a case was only two years from the end of the year of assessment. In the present case, the Tribunal found that the notice under [SECTION] having been issued on 9th June, 1956, long after the expiry of the prescribed period of limitation, was illegal and the Income-tax Officer had no jurisdiction to reopen the assessment for the year under reference. The order of the Tribunal is a short one and may be conveniently set out :
" IN THE INCOME-TAX APPELLATE TRIBUNAL ' A ' BENCH, CALCUTTA.
(Before Shri [ENTITY] and Shri [ENTITY]) [CASE NUMBER] (Assessment year 1952-53) Messrs. [ENTITY], Calcutta Appellant.
Income-tax Officer, Comp. Dist. IV, Calcutta Respondent.
Appellant by Shri [ENTITY] and Shri [ENTITY].
Respondent by Shri [ENTITY]. Order
The appellants have been assessed "as the agents for a non-resident assessee, namely, Messrs. Hungerford Investment Trust Ltd. (in liquidation). The assessment for the assessment year 1952-53 was reopened under [SECTION] to include dividend amounting to Rs. 25,01,660 (net) deemed to have been distributed to the said non-resident assessee, as a result of the application of [SECTION] on Messrs. [ENTITY] The reassessment is assailed on the ground that the notice under [SECTION] was issued after the expiry of the period of limitation prescribed by law. In this case, the assessment relates to the assessment year 1952-53. Normally, as laid down by the Bombay High Court in the case of [PRECEDENT], such notional dividend can only be included in the total income of a shareholder only by resorting to proceedings under [SECTION] and the period of limitation for serving a notice under that is four years from the end of the relevant, assessment year. The period Delimitation is, however, shorter where an agent, of a non-resident principal is sought to be made vicariously liable for assessment in respect of the income of the principal. The second proviso to [SECTION] restricts the period for such reassessment only to two years, in place, of four years provided for in the substantive'part of [SECTION]. In the present case, the notice under [SECTION] was issued on 9th June, 1956, long after two years from the end of the relevant assessment year. The notice under [SECTION] having been issued beyond the period of limitation was illegal and the Income-tax Officer should not have assumed jurisdiction to reopen the assessment originally made on 23rd March, 1953. The reassessment must, therefore, be set aside.
In the result the appeal is allowed.
(Sd.) [ENTITY], Judicial Member.
(Sd.) [ENTITY], Accountant Member. Calcutta, dated the 14th November, 1961. " 23rd Kartik 1883 (Saka)
4. On the basis of the above findings, the Tribunal referred the question to this court which we have already set out. It appears that this reference had come up for hearing before this court some time in 1967, and the court directed the Tribunal to submit a further statement of case under [SECTION] on the following points :
"(a) Whether Messrs. [ENTITY] was deemed to be an agent of Messrs. Hungerford Investment Trust Ltd. under [SECTION] ?
(b) Whether the question that Messrs. [ENTITY] was not deemed to be an agent by the Income-tax Officer under [SECTION] was ever canvassed before the Tribunal ? "
5. In the further statement of case, submitted by the Tribunal, the Tribunal has recorded in paragraphs 3, 4, 6, 7, 8, 9, 10 and 11 the facts which are material for the purpose of this reference and the said paragraphs may be set out :
" 3. Notice under [SECTION] of the [ACT] (hereinafter referred to as the Act), was issued on the 9th June to Messrs. [ENTITY] as agents of Hungerford Investment Trust Ltd. for the purpose of bringing to assessment dividend amounting to Rs. 25,01,360 deemed to have been distributed to Hungerford Investment Trust as a result of the application of [SECTION] of the Act to Messrs. [ENTITY]
4. No notice was issued by the Income-tax Officer under [SECTION] of the Act appointing Messrs. [ENTITY] as statutory agent for the relevant assessment year. According to the Income-tax Officer's application for rectification (referred to in para. 9 below), even in the original assessment for 1952-53, no notice under [SECTION] of the Act had been issued
6. There is no mention in the orders of the Income-tax Officer or of the Appellate Assistant Commissioner that the assessment has been made by recourse to [SECTION] of the Act and that Messrs. [ENTITY] had constituted themselves as the natural agents under that section.
7. It is a fact that for a number of years the assessments used to be made in the hands of Messrs. [ENTITY] as agents under [SECTION] of the Act, of Messrs. Hungerford Investment Trust Ltd.
without serving any notices under that section.
8. It was not canvassed before the Tribunal that the Income-tax Officer had not treated Messrs. [ENTITY] to be an agent under [SECTION] of the Act but the Income-tax Officer had treated the company as an agent under some other section of the Act, e.g., [SECTION].
9. Subsequent to the disposal of the appeal, the Income-tax Officer made an application under [SECTION] of the Act stating that Messrs. [ENTITY] had constituted themselves as natural agents under [SECTION] of the Act. A copy of the application is annexure ' D ' hereto forming part of the case.
10. The assessee, Messrs. [ENTITY], filed a reply opposing the said application of the department under [SECTION]. A copy of the company's reply is annexure ' E ' forming part of the case.
11. By order dated 4th May, 1962, the Tribunal rejected the prayer of the Income-tax Officer on the ground that no such contention had been raised before the Tribunal at the time of hearing of the appeal. A copy of the Tribunal's order is annexure ' F' hereto forming part of the case. "
6. Mr. [ENTITY], learned counsel appearing on behalf of the department, has submitted before us that the reference to [SECTION] is wrong and the respondent, [ENTITY]; could not be deemed to be agents under [SECTION] of the Act, as no notice required under [SECTION] was ever served upon [ENTITY] It is his submission that [ENTITY] should be considered to be agents under [SECTION] of the Act. He has argued that as [ENTITY] could not possibly be the deemed agent under [SECTION], as no notice as required under the said section has been served on them and as there is power and jurisdiction to issue such notice on agents under [SECTION] of the Act, the Tribunal erred in coming to the conclusion that the second proviso to [SECTION] of the Act applied. It is his submission that as the other section, namely, [SECTION] was there and [ENTITY] could be agents under the said section, the second proviso to [SECTION] of the [ACT] fixing the period of limitation to two years cannot be held to be 'applicable, because [ENTITY] can never be considered to be deemed agents within the meaning of [SECTION] in the absence of service of the statutory notice to them. Mr. [ENTITY] has referred to the decision of the Bombay High Court in the case of [PRECEDENT]. Mr. [ENTITY] has also referred to the decision of the Supreme Court in the case of [PRECEDENT] and also the decision of the Supreme Court in the case of [ENTITY] v. Commissioner of Income-tax [1953] 23 ITR 152.
7. Mr. [ENTITY] has argued that though this contention that [ENTITY] were not deemed agents within the meaning of [SECTION] of the Act might not have been raised before the Tribunal and though it might not have been contended before the Tribunal that they would be agents within the meaning of [SECTION] of the Act, he is entitled to raise this contention as, in view of the broad nature of the question, this is merely a facet of the question.
8. Dr. [ENTITY], learned counsel appearing on behalf of the respondent-assessee, has contended that as the case that [ENTITY] were agents within the meaning of [SECTION] of the Act and were not deemed agents within the meaning of [SECTION] of the Act was never canvassed before the Tribunal, this question really does not arise out of the Tribunal's order. He has argued that the department deliberately and advisedly did not make the case that [ENTITY] was an agent within the meaning of [SECTION] of the Act, as the said section would not have any application ; and the department had proceeded on the basis that [ENTITY] were deemed agents within the meaning of [SECTION]. In this connection, he has also drawn our attention to the order of the Appellate Commissioner passed in respect of assessment years 1949-50, 1950-51 and 1951-52, which has been referred to by the Tribunal in its order. Dr. [ENTITY] contends that this argument that [ENTITY] were agents under [SECTION] of the Act and were not deemed agents within the meaning of [SECTION] of the Act, cannot be said to be a mere facet of the question and this question not having been raised and argued before the Tribunal cannot now be canvassed in this proceeding. In support of this contention Dr. [ENTITY] has relied on the decision of the Supreme Court in the case of [PRECEDENT] , and he has relied on the following passage at page 72 :
" Before the Tribunal and the High Court, the case was argued on the footing that [SECTION] alone was applicable. Whether under the terms of [SECTION], penalty may be imposed upon the new partners for the failure of the partners of the firm constituted in the year of account relevant to the assessment year 1948-49 was never investigated. The question raised by the Tribunal is in terms sufficiently comprehensive to embrace an enquiry whether partners of the firm in existence on July 30, 1954, were liable to be assessed to penalty as successors-in-interest of the partners of the original firm in existence in the year of account relating to the assessment year 1948-49. But in a reference under [SECTION] of the [ACT], only the question which was either raised or argued before the Tribunal may be answered, even if the language of the question framed by the Tribunal may apparently include an enquiry into other matters which could have been, but were not, raised or argued."
9. Dr. [ENTITY] has submitted that as the entire case of the department had proceeded on the basis that [ENTITY] were deemed agents within the meaning of [SECTION] of the Act, the Tribunal was perfectly justified in holding that the second proviso to [SECTION] of the Act applies and the notices were clearly barred.
10. In the facts and circumstances of this case, we are of the opinion that the contention now sought to be raised by the department, namely, that [ENTITY] are agents within the meaning of [SECTION] of the Act cannot be said to form a facet of the question and this question really does not arise out of the order of the Tribunal. The department has advisedly and deliberately proceeded on the basis that [ENTITY] were deemed agents within the meaning of [SECTION] of the Act. Failure to serve notice as required under the said section does not entitle or enable the department which has always proceeded on the basis that [ENTITY] were deemed agents within the meaning of [SECTION] of the Act to argue before us that [ENTITY] should be treated as agents under [SECTION] of the Act. The notice contemplated in the said section is undoubtedly for the benefit of the agent. In any event, to attract [SECTION] of the Act, investigation into various other matters is necessary. These matters which could have been raised were never raised and were never argued. As will appear from the statement of the case submitted by the Tribunal, this contention was sought to be raised for the first time before the Tribunal in the application made by the department for rectification of the order. The Tribunal rejected the said application on the ground that no such contention was raised before the Tribunal. We are, therefore, of the opinion that the contention now sought to be raised on behalf of the revenue cannot be said to form a mere facet of the question. Even though the language of the question framed by the Tribunal may appear to be sufficiently comprehensive, it is well settled that in a reference under [SECTION] of the [ACT] only the question which was either raised or argued before the Tribunal may be answered. If [ENTITY] were deemed agents within the meaning of [SECTION] of the Act, the Tribunal was clearly right in coming to the conclusion that the second proviso to [SECTION] of the Act applies and the notice is barred by limitation.
11. We, therefore, answer the question in the affirmative, in favour of the assessee and against the revenue. There will be no order as to costs.
[ENTITY], J.
12. I agree.