Case: Commissioner Of Income-Tax Vs. Sardar Lakhmir Singh

These are two appeals pursuant to a certificate granted by the High Court of Patna against the judgment and order of that Court in which the following question referred by the Incometax Appellate Tribunal was answered in the negative and against the appellant : "Whether having regard to the return dated March 7, 1951, by Sardar Lakhmir Singh in his individual capacity and to the provisions of section 34 (3), the assessment made on him on November 27, 1953, is validly made ?" The relevant years of assessment are 1946-47 and 1947-48 and the two appeals relate to these years respectively. The respondent is a son of S. Nechal Singh. Up to the assessment year 1943-44 the father and son were being assessed as a Hindu undivided family. For the assessment year 1944-45 a claim was made under s. 25A of the Income-tax Act, hereinafter referred to as the Act and it was contended that the income of S. Nechal Singh and S. Lakhmir Singh should be separately assessed as their individual incomes. This claim was not accepted and the income was assessed as that of a Hindu undivided family with S. Nechal Singh as the Karta. For the assessment year 1945-46, S. Nechal Singh and S. Lakhmir Singh filed two separate returns and made a claim under s. 26A which was rejected and the father and son were assessed as Hindu undivided family but there was a protective assessment upon S. Lakhmir Singh as an individual. An appeal was taken to the Income-tax Appellate Tribunal which held that the income of S. Nechal Singh and S. Lakhmir Singh was not the income of a Hindu undivided family but their individual incomes. The Appellate Tribunal set aside the assessment of the Hindu undivided family. In its order dated October 15, 1952, the Appellate Tribunal said : "The assessment, is therefore, set aside and the Income-tax Officer is directed to make a fresh assessment according to law as from the return stage upon the correct persons on the sources of income belonging to them as found above". For the assessment year 1946-47, three returns were filed (1) by respondent S. Lakhmir Singh on March 15, 1651, in regard to his separate income, (2) by S. Nechal Singh also in his individual capacity and the third under protest by S. Nechal Singh as the Karta of the Hindu undivided family. The latter return was dated June 20, 1950, and the total income in the return was declared as nil. On March 15, 1951, the Income-tax Officer assessed the total income of S. Nechal Singh and S. Lakhmir Singh as the income of the Hindu undivided family. On March 20, 1953, an appeal was taken against the assessment for the year 1946-47 and the Appellate Assistant Commissioner set aside the two orders of the Income-tax Officer in view of the order of the Incometax Appellate Tribunal dated October 15, 1952, above referred to. On November 27, 1953, the Income-tax Officer made assessment upon respondent S. Lakhmir Singh in his individual capacity. An appeal was taken against that assessment order to the Appellate Assistant Commissioner and the contention raised was that the order of assessment was barred under the provisions of the unamended s.34(3) of the Act. This contention was rejected and an appeal taken to the Appellate Tribunal was dismissed on September 6, 1955. The Tribunal held that under the amended proviso to s. 34(3) the Income- tax Officer was entitled to assess the income of the res- pondent even though he was not the appellant before the Appellate Assistant Commissioner and there is no limitation for such an assessment. At the instance of the respondent the question quoted above was stated to the High Court.The High Court held that the Amending Act of 1953 does not apply to the facts of the present case and the order of assessment of the Income-tax Officer dated November 27, 1953, was barred under the provisions of the unamended s. 34(3) of the Act; that was because on April 1, 1952, when the Amending Act of 1953 came into force the power of the Income-tax Officer to assess the tax for 1946-47 had already become barred and a right had accrued in favour of the respondent before April 1,regard to the assessment of 1947-48 also for the same reasons the assessment was held to be illegal. Two appeals have been brought against those orders in regard to the two assessment orders and the appeals have been consolidated.

Reasoning: In the present case the period applicable was four years. In regard to the assessments for the years 1946-47 and 1947- 48 the period of four years ended before April 1, 1952. For reasons given in S.C. Prashars case the assessment will be barred and in our opinion the High Court rightly held itthe first place no such question was raised before the High Court. It had only to answer the question which was referred to it as it was acting in its advisory jurisdiction; and it could not answer any other question. But it was, submitted that the form of the question itself is such that it takes in the applicability of s. 31 of the Amending Act of 1953. As we have said above this question was not referred to either in the High Court or in the Grounds of Appeal when the certificate was applied for nor in the appellants Statement of Case. The form of the question also does not take in the applicability of s. 31 of the Amending Act 1953. The question refers firstly to the return filed by the respondent S. Lakhmir Singh dated March 7, 1951, and then to the provisions of s. 34 (3). It has no reference to the validity of the proceedings because of the commencement of the proceedings after September 8, 1948. The commencement of the proceedings in regard to assessment year 1946-47 has not been shown to be after September 8, 1948. No doubt the return was filed on March 15, 1951, but there is nothing to show what the date of the commencement of the proceedings was. If the appellant wanted to rely on s. 31 it was his duty to place all the effectual materialsbefore the Appellate Tribunal on the basis of which a properly framed question could be referred and then answered by the High Court. On the material as it stands no question of the application of s. 31 of the Amending Act of 1953 arises nor is there a finding that the commencement of the proceedings was on March 7, 1951, when according to the question referred the return was filed. In this view of the matter the applicability of s. 31 of the Amending Act of 1953 is not available to the appellant.