Summarize the following court judgment. Appeal No. 317 of 1955. Appeal by special leave from the judgment and order dated October 18	 1952	 of the Income tax Appellate Tribunal	 Calcutta Bench	 in Income tax Appeal No. 807/1950 51. A. V. Viswanatha Sastri and section C. Mazumdar	 for the appellant. 62 484 C. K. Daphtary	 Solicitor General of India	 K. N. Rajagopal Sastri	 R. Ganapathy Iyer	 R. H. Dhebar and D. Gupta	 for the respondent. September 2. The Judgment of the Court was delivered by SARKAR J. In 1944	 the appellant was a resident of Lahore. On October 14	 1944	 he was assessed to income tax by the Income tax Officer	 Lahore	 for the assessment year 1944 45 on an income of Rs. 49	047. As is well known	 in August	 1947	 India was partitioned and Lahore came to be included in the newly created Dominion of Pakistan and went out of India. After the partition	 the appellant shifted to Delhi and was residing there at all material times. The appellant held shares in a company called Indra Singh and Sons Ltd. which had its office at Calcutta. The other shares in that company were held by Indra Singh and Ajaib Singh. The holdings of all the shareholders were equal. An annual general meeting of this company was held on April 17	 1943	 in which the accounts for the year ending March 31	 1942	 were placed for consideration. The accounts were passed at the meeting but no dividend. was declared though the accounts disclosed large profits. On June 11	 1947	 an Income tax Officer of Calcutta passed an order under section 23A of the Income tax Act that Rs. 14	23	110 being the undistributed portion of the assessable income of the company for the year ending March 31	 1942	 after the deductions provided in the section	 be deemed to have been distributed as dividend among the three shareholders on the date of the general meeting	 that is	 April 17	 1943. As a result of this order a sum of Rs. 4	74	370. being his share of the amount directed to be distributed	 had under the section	 to be included in the income of the appellant for the assessment year 1944 45. The validity of this order was never challenged. The Income tax Officer	 Calcutta	 informed the Income tax Officer	 Delhi	 of the order made by him under a. 23A. Thereupon the Income tax Officer	 Delhi	 on April 10	 1948	 issued a notice under a. 34 485 of the Act to the appellant then residing in Delhi	 requiring him to file within thirty five days	 a revised return for the year 1944 45 as a part of his income for that year had escaped assessment. Obviously the notice was on the basis that the said sum of Rs. 4	74	370 had escaped assessment for the year 1944 45. On February 10	 1949	 the appellant submitted a revised return under protest and included in it the said sum of Rs. 4	74	370. The Income tax Officer	 Delhi	 then reopened the earlier assessment and on March 25	 1949	 made a fresh assessment order for 1944 45 assessing the appellant on an income of Rs. 5	23	417. The appellant appealed against this order to the Appellate Assistant Commissioner but his appeal was dismissed. He then appealed to the Income tax Appellate Tribunal but was again unsuccessful. He has filed the present appeal with special leave of this Court against the judgment and order of the Income tax Appellate Tribunal. A preliminary point as to the maintainability of this appeal was taken by the learned Solicitor General appearing on behalf of the respondent Commissioner of Income tax	 that the appellant having been unsuccessful in availing himself of the other remedy provided in the Act should not be allowed the extraordinary remedy of approaching this Court with special leave. Now	 under the Income tax Act	 the appellant could apply to the Tribunal to refer to a High Court any question of law that arose out of the former 's decision. The Act itself gave no right of appeal at all from that decision	 nor any other remedy against it. The appellant had applied to the Tribunal for an order referring certain questions arising out of its decision to the ' High Court at Calcutta but was unsuccessful in getting an order for reasons to be presently stated. The Tribunal was in Calcutta. The appellant	 who was in Delhi	 asked a firm of income tax practitioners named section K. Sawday & Co. in Cal cutta	 to move the Tribunal for an order of reference. Sawday & Co. had the necessary petition and papers prepared. They sent these to the appellant at Delhi by post on January 5	1953	 for his signature and the 486 papers reached Delhi on January 7	 1953. The appellant who was then the Defence Minister of the Government of India	 was at the time	 away from Delhi on official tour. Immediately on his return from tour he signed the papers and on January 21/22	 1953	 sent them from Delhi by post to Sawday & Co. in Calcutta. The papers reached Calcutta on January 24	 1953	 but were not delivered to Sawday & Co. before January 28	 1953	 due to a postman 's default as was admitted by the postal authority concerned. Sawday & Co. filed the petition in the Tribunal on the same date but that was one day too late as it should have been filed on January 27	 1953. The Tribunal thereupon dismissed the application as having been made out of time. The appellant appealed against this dismissal to the High Court at Calcutta but the High Court dismissed the appeal. In these circumstances	 the appellant moved this Court for special leave to appeal and asked for condonation of delay in moving this Court	 placing before it all the facts which we have earlier mentioned. This Court on a consideration of these facts condoned the delay and granted special leave. There was no attempt by the appellant to overreach or mislead the Court and the Court in its discretion gave the leave. In these circumstances	 we are unable to agree with the contention that the appellant is not entitled to proceed with this appeal	 because he could have availed himself of the remedy provided by the Act and was by his own conduct	 unable to do so. This Court had inspite of this thought fit to grant leave to the appellant to appeal from the decision of the Tribunal. Further the learned counsel for the appellant intends to confine himself to questions of law arising from the Judgment of the Tribunal. We	 therefore	 see no reason why the appeal should not be heard. The main question in this appeal is whether the proceedings taken against the appellant under section 34 of the Act were valid. That section has been amended but we are concerned with it as it stood on April 10	 1948	 when the notice under it was issued. The first point is that the proceedings under section 34 487 could not be taken by the Income tax Officer	 Delhi. It is said that the proceedings under that section are only a continuation of the original assessment proceedings	 and therefore	 it is the Officer who made the original assessment order or his successor in office	 who alone could start the fresh proceedings. It is hence contended that it is the Income tax Officer	 Lahore	 who could proceed against the appellant under section 34 and the Income tax Officer	 Delhi	 had no jurisdiction to do so. The contention then comes to this that in the circumstances of this case	 ' no proceedings under section 34 could be taken against the appellant in India at all. The learned Solicitor General said that this was an objection as to the place of assessment under section 64 of the Act	 and could not be entertained as it had not been taken within the time provided under the second proviso to sub sec. (3) of that section. If that proviso applied to the present case	 the appellant had to raise the objection that proceedings under section 34 could not be taken at Delhi within the thirty five days Mentioned in the notice under the section. It is said that this had not been done. It seems to us however that the proviso would apply only if an objection to a place of assessment had been taken under section 64 and the objection that the appellant has taken in this case is not one under that section. That section applies where the assessment can be made in one place or another in India and an objection is taken to one of such places. Here the contention is that the assessment under section 34 can be made only in Lahore and therefore cannot be made. in India at all. To such a contention section 64 has no application. The Solicitor General 's point must therefore fail. We are however of the opinion that the contention of the appellant is without foundation. Section 34 provides that in the cases mentioned in it	 the income may be assessed or reassessed and the provisions of the Act shall	 so far as may be	 apply accordingly as if the notice issued under the section had been issued under section 22(2) of the Act. Now the place where an assessment is to be made pursuant to a notice under 488 s.22(2) has to be determined under section 64. Indeed that is the only provision in the Act for deciding the proper place for any assessment. There is nothing which makes section 64 inapplicable to an assessment made under section 34. Therefore	 it seems to us clear	 that the place where an assessment under section 34 can be made has to be decided under section 64. Now the appellant was not carrying on any business	 profession or vocation. He was working as the Defence Minister of the Government of India and residing in Delhi. He could be properly assessed by the Income tax Officer	 Delhi	 under section 64(2) if the assessment was the original assessment. This is not in dispute. It follows that no objection can legitimately be taken by the appellant to his assessment under section 34 by the Income tax Officer	 Delhi. We find nothing in the two cases cited by Mr.Sastri	 who appeared for the appellant	 to support the contention that in this case the assessment under section 34 could not have been made in India at all. In neither of these cases any question as to the place of assessment tinder section 34 or any other section arose. In the first	 C. V. Govindarajulu vs Commissioner of Income tax		 Madras (1)	 it was held that the proceedings under section 34 and the original assessment proceedings were not separate and therefore in the former	 a penalty could be levied under section 28 for failure to submit a return pursuant to a general notice under section 22(1) on which the latter were deemed to have commenced. It does not follow that because the two assessments are not separate for certain purposes	 the latter must take place only where the first had been made. In the second	 Lakshminarain Bhadani V. Commissioner of Income tax	 Bihar & Orissa (2)	 this Court held that a proceeding under section 34 may be taken against a karta of a Hindu undivided family to reopen an original assessment on the family	 though in the meantime	 there had been a disruption of the family and an order in respect of it had been passed under section 25A(1) of the Act. It was said that the position was as if the Income tax Officer was proceeding to assess the (1) I.L.R. (2) 489 income of the Hindu undivided family as in the year (if assessment. This of course does not mean that the assessment under section 34 must take place at the place where the original assessment was made or not at all. Then it is said that the Income tax Officer reassessed the appellant 's income under section 34 on the basis that part of it	 namely	 the dividend that became liable to be included in the appellant 's income under section 23A	 had escaped assessment. It is contended that on a proper reading of section 34 this would not be a case of income escaping assessment because that section applies to income actually escaping assessment and not to income deemed to have escaped assessment which is all that has happened in the present case. It is said that in order that income may escape assessment there must in fact have been an income. It is also said that in order to apply section 34 to this case two fictions have to be resorted to	 namely	 (a) bringing an income into existence where none existed and (b) holding that income has escaped assessment where no income actually did so. It is argued that the language of section 34 does not permit two fictions being created	 and that as the section reopens a closed transaction	 it must be strictly construed. Reliance was placed on certain decisions in support of this contention. First	 we were referred to two English cases	 namely	 Dodworth vs Dale (1) and D. & G. R. Rankine vs Commissioners Inland Revenue (2). These cases do not assist the appellant for they were not concerned with a statutory provision like section 23A on which the present case turns and which requires that an assessee would be deemed to have received a certain income on a specified date in the past and also requires that income to be included in his total income for assessment to tax. The other case to which we were referred was the decision of this Court in Chatturam Horliram Ltd. V. Commissioner of Income tax	 Bihar and Orissa (3) where it was said that the contention " that the escapement from assessment (1) (2) (3) ; 	 300 301. 490 is not to be equated to non assessment simpliciter	 is not without force	. This Court however in the very next sentence proceeded to state clearly that  it is unnecessary to lay down what exactly constitutes `escapement from assessment" '. The actual decision in this case affords no assistance to the appellant and has not been relied on by him. It is clear from what we have read from the judgment in it that it does not lay down a test to decide when an income may be said to have escaped assessment. On its own merits also we are unable to accept the argument of the learned counsel for the appellant. Section 23A requires that on an order being made under it	 the undistributed portion of the assessable income of the company for a year as computed for income tax purposes and after the deductions provided in the section	 is to be '	deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting "	 being the meeting at which the accounts for the year concerned were passed	 and "thereupon	 the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income ". The section creates a fictional income arising as on a specified date in the past and it does so for the purpose of that income being included in the income of the shareholders for assessment of their income tax. The income must therefore be 'deemed to have been in existence on the date mentioned for the purpose of assessment to tax. It is as if it actually existed then. Now if the assessment for the relevant year does not include that income	 it has escaped assessment. That is what happened in this case. Therefore the case is one to which a. 34 would clearly apply. It is said that section 23A was meant to apply only to cases where pending assessment for any year	 an order is made under that section creating a fictional income in that Year. We see no reason however so to restrict the operation of the section: the words in ' it do not warrant such restriction. There is no limitation of time as to when an order under B. 23A can be made. 491 Therefore it can be made at a time when the assessment of the income of the shareholder for the year concerned has been completed. There is no reason why that order should not be given effect to by proceedings duly taken under section 34. We do not also agree that the rejection of the appellant 's present argument will compel us to raise two fictions. There is only one fiction	 namely	 that raised by section 23A. That fiction having been raised	 the income that has thereby to be deemed to exist must be held to have actually escaped assessment. We are unable to agree that in order to apply section 34 to an income deemed to exist under section 23A	 we would have to read the former section to cover a case where income has to be deemed to have escaped assessment. If the income had come into existence	 and not been assessed	 it has escaped assessment; it is not a case where the income has to be deemed to have escaped assessment. In our view	 therefore	 the present contention of the appellant must fail and the income deemed to have been received by him by virtue of the order made tinder section 23A on June 11	 1947	 must be held to have escaped assessment for the year 1944 45 and his income must therefore be liable to reassessment under section 34. It is now necessary to refer to one of the reasons on which the judgment of the Tribunal is based. It was there said that " It was incumbent on the Income tax Officer	 Calcutta ' passing the order under section 23A to have included the sum of Rs. 4	74	370/ in the other assessed income of the assessee and to have recomputed the assessable income and the tax thereon". It was held that " the Income tax Officer	 Delhi	 went wrong in having recourse to the provisions of section 34 and making an assessment thereunder " but that this a mounted to a mere irregularity not vitiating the assessment made under that section. In the end the Tribunal observed		 " Anyhow	 the Tribunal is empowered to substitute its own order for that of the Income Tax Officer and acting under that power we assess the assessee under the provisions of See. 23A(1) of the Indian Income tax Act 63 492 It seems to us that the Tribunal was wrong in the view that it took. The learned Solicitor General conceded that this is so. We are unable to agree that an assessment could be made under section 23A. That section does not provide for any assessment being made. It only talks of the fictional income being included in the total income of the shareholders " for the purpose of assessing his total income". The assessment therefore has to be made under the other provisions of the Act including section 34	 authorising assessments. In our view	 the assessment in this case had been properly made by the Income tax Officer	 Delhi	 under the pro. visions of section 34. Lastly	 it is said that a. 23A is unconstitutional inasmuch as it was beyond the competence of the legislature that enacted it. This section has been redrafted and amended several times since it was first enacted in 1930. We are concerned with the section as it stood on June 11	 1947	 when the order under it was made in this case. Sub section (1) of the section in the form that it stood then and that is the material portion of the section for our purposes was enacted by Act VII of 1939. It is that sub section which gave the power to make an order that the undistributed portion of the assessable income of the company shall be deemed to have been distributed as dividends and provided that thereupon the proportionate share thereof of each shareholder shall be ' included in his income for assessment. The enactment was by the Central legislature which then derived its competence to legislate from the Government of India Act	 1935. There is no doubt	 and neither is it disputed	 that sub section had been enacted under the power contained in entry 54 of List I in the Seventh Schedule to the Government of India Act	 1935. The entry read	 " Taxes on income other than agricultural income". The argument of Mr. Sastri is that this entry only authorises legislation for taxing a person on his income; under it a law cannot be made taxing one person on the income of another. Mr. Sastri says that in law a company and its shareholders are different persons a proposition 493 which is indisputable and therefore section 23A is incompetent as it purports to tax the shareholders on the income of the company in which they hold shares	 He points out	 and this again is not in dispute	 that the section does not give a right to a shareholder on an order being made under it	 to realise from the company the dividend	 which by the order is to be deemed to have been paid to him. He says	 and this also seems right	 that the income remains the income of the company and a shareholder is taxed on a portion of it representing the dividend deemed to have been paid to him. In spite of all this it seems to us that the legislation was not incompetent. Under entry 54 a law could of course be passed imposing a tax on a person on his own income. It is not disputed that under that entry a law could also be passed to prevent a person from evading the tax payable on his own income. As is well known the legislative entries have to be read in a very wide manner and so as to include all subsidiary and ancillary matters. So Entry 54 should be read not only as authorising the imposition of a tax but also as authorizing an enactment which prevents the tax imposed being evaded. If it were not to be so read	 then the admitted power to tax a person on his own income might often be made infructuous by ingenious contrivances. Experience has shown that attempts to evade the tax are often made. Now it seems to us that section 23A was enacted for preventing such evasion of tax. The conditions of its applicability clearly lead to that conclusion. The first condition is that the company must have distributed as dividend less than sixty per cent of its assessable income after deduction of income tax and supertax payable by it. The taxing authority must then be satisfied Chat the payment of a dividend or of a larger dividend than that declared	 would	 in view of losses incurred in earlier years or the smallness of the profit made	 be unreasonable. Lastly	 the section does not apply to a company in which the public are substantially interested or a subsidiary company of a public company whose shares are held by the parent 494 company or by the nominees thereof The section provides by an explanation as follows: For the purpose of this sub section	 a company shall be deemed to be a company in which the public are substantially interested if shares of the company (not being shares entitled to a fixed rate of dividend	 whether with or without a further right to participate in profits) carrying not less than twenty five per cent of the voting power have been allotted unconditionally to	 or acquired unconditionally by	 and are at the end of the previous year beneficially held by the public (not including a company to which the provisions of this sub section apply)	 and if any such shares have in the course of such previous year been the subject of dealings in any stock exchange in the taxable territories or in fact freely transferable by the holders to other members of the public. The section thus applies to a company in which at least 75 per cent of the voting power lies in the hands of persons other than the public	 which can only mean	 a group of persons allied together in the same interest. The company would thus have to be one which is controlled by a group. The group can do what it likes with the affairs of the company	 of course	 within the bounds of the Companies Act. It lies solely in its hands to decide whether a dividend shall be declared or not. When therefore in spite of there being money reasonably available for the purpose	 it decides not to declare a dividend it is clear that it does so because it does not want to take the dividend. Now it may not want to take the dividend if it wants to evade payment of tax thereon. Thus by not declaring the dividend the persons constituting the group in control	 could evade payment of super tax	 which	 of course	 is a form of income tax. They would be able to evade the super tax because super tax is payable on the dividend in the hands of the shareholders even though it may have been paid by the company on the profits out of which the dividend is paid	 and because the rate at which super tax is payable by a company may be lower than the rate at which that tax is payable by other 495 assessees. By providing that in the circumstances mentioned in it	 the available assessable income of a company would be deemed to have been distributed as dividend and be taxable in the hands of the shareholders as income received by them	 the section would prevent the members of such a group from evading by the exercise of their controlling power over the company	 payment of tax on income that would have come to them. That being so	 the section would be within entry 54. In conceivable circumstances the section may work hardship on members of the public who hold shares in such a company but that would not take the section outside the competence of the legislature. It would still be an enactment preventing evasion of tax. Considerations of hardship are irrelevant for deciding questions of legislative competence. It is further quite clear that in the absence of a provision like section 23A it is possible so to manipulate the affairs of a company of this kind as to prevent the undistributed profits from ever being taxed and experience seems to have shown that this has often happened. The following passage from Simon 's Income Tax	 2nd Edn.	 Vol. 3	 p. 341	 fully illustrates the situation : " Generally speaking	 surtax is charged only on individuals	 not on companies or other bodies corporate. Various devices have been adopted from time to time to enable the individual to avoid surtax on his real total income or on a portion of it	 and one method involved the formation of what is popularly called a 'one man company '. The individual transferred his assets	 in exchange for shares	 to a limited company	 specially registered for the purpose	 which thereafter received the income from the assets concerned. The individual 's total income for tax purposes was then limited to the amount of the dividends distributed to him as practically the only shareholder	 which distribution was in his own control. The balance of the income	 which was not so distributed	 remained with the company to form	 in effect	 a fund of savings accumulated from income which had not immediately 64 496 attracted surtax. Should the individual wish to avail himself of the use of any part of these savings he could effect this by borrowing from the company	 any interest payable by him going to swell the savings fund; and at any time the individual could acquire the whole balance of the fund in the character of capital by putting the company into liquidation. " The section prevents the evasion of tax by	 among others	 the means mentioned by Simon. The learned Solicitor General sought to support the competence of the legislature to enact the section also on another ground. He said that entry 54 permitted tax on income and contended that it. authorised taxing of A on the income of B. He said that	 where a shareholder was taxed on the income of the company	 the two being considered separate legal entities	 the tax was none the less on income though the burden of the tax was put on one to whom the income had not accrued or by whom it had not been received and so was within the scope of entry 54. In support of this contention he referred to B. M. Amina Umma vs Income Tax Officer. Kozhikode (1)	 Janab Jameelamma vs The Income tax 'Officer	 Nagapattnam (2) and C. W. Spencer vs Income Tax Officer(3). As earlier stated	 Mr. Sastri disputes the correctness of this contention. We do not consider it necessary to pronounce on this question or as to the correctness of the decisions cited so far as they support it. In our view	 the legislative competence to enact the section can be clearly upheld on the ground that it was to prevent evasion of in come tax and that would be enough to dispose of the argument advanced by Mr. Sastri that the section was an incompetent piece of legislation. This appeal therefore fails and it is dismissed with Costs. Appeal dismissed.

The appellant	 at the time a resident of Lahore	 was asses sed to income tax on an income of Rs. 49	047 for the assessment year 1944 45 by the Income tax Officer	 Lahore. After the partition in 1947 he shifted to Delhi and resided there. He was one of the three share holders of a company called Indra Singh and Sons Ltd. of Calcutta	 the shares of all the three shareholders being equal. The company at a meeting held oil April 17	 1943	 passed its accounts for the year ending March 31	 1942	 but declared no dividends although the accounts disclosed large profits. On June 11	 1947	 the Income tax Officer	 Calcutta	 passed an order under section 23A of the Income tax Act that the sum of Rs. 4	74	370	 being the appellant 's share of the undistributed assessable income of the company	 be included in his income for the assessment year 1944 45. Thereupon the Income tax Officer	 Delhi	 on April 10	 1948	 issued a notice to the appellant	 who was then working as the Defence Minister of India and residing in Delhi	 under section 34 of the Act to file a revised return	 which he did under protest	 reopened the earlier assessment and by a fresh order made on March 25	 1949	 assessed the appellant on an income of Rs. 5	23	417 for the year in question. It was contended on behalf of the appellant that the proceeding under section 34 could be held only in Lahore and not in India at all. The question for determination was whether the Income tax Officer	 Delhi	 could validly reassess the appellant under section 34 of the Act. Held	 that the issue of a notice under section 34 of the Income tax Act	 1922	 under the provision of the section itself	 attracted such provisions of the Act as might apply to a notice issued under section 22(2) of the Act and since section 64 of the Act was the only provision under which the place of assessment upon a notice under section 22(2) could be determined	 in absence of anything to the contrary in the Act	 section 64 applied to an assessment under section 34 of the Act. The appellant was	 therefore	 rightly assessed by the Income tax Officer	 Delhi	 under section 64(2) of the Act. 483 C. V.Govindarajulu vs Commissioner of Income tax	 Madras	 I.L.R. and Lakshminarain Bhadani vs Commissioner of Income tax	 Bihar and Orissa	 	 held inapplicable. The time specified by the proviso to section 64(3) could have no application since the contention in the present case was that the assessment under section 34 could be made only in Lahore and not in India at all. Section 23A of the Act	 as it then stood	 raised only one fiction	 and not two	 and that was of an income arising on a specific date in the past with the purpose that such income might be included in the income of a share holder for assessment. That income must	 therefore	 be deemed to have existed on the date for the purpose of assessment and	 if not included in the assessment for the relevant year	 must be taken to have actually escaped assessment so as to attract section 34 of the Act. Dodworth vs Dale	 	 D. & G. R. Rankine vs Com missioners of Inland Revenue	 and Chatturam Horliram Ltd. vs Commissioner of Income tax	 Bihar and Orissa	 ; 	 held inapplicable. There is no warrant for the proposition that section 23A of the Act was meant to apply only to cases where pending assessment for any year	 an order is made under that section creating a fictional income that year. Such an order could	 therefore	 be made even after the assessment of the income of the share holder for the year concerned had already been completed. But section 23A does not itself provide for any assessment being made and that has to be made under other provisions of the Act authorising assessment including section 34. It is not correct to say that section 23A(1)	 as it then stood	 was beyond the competence of the Legislature and was as such unconstitutional. Under Entry 54 of List I of the Seventh Schedule to the Government of India Act	 1935	 the Legislature could pass not only a law imposing a	 tax on a person on his own income but also a law preventing him from evading the tax payable on his income and there can be no doubt that section 23A	 properly construed	 was meant to prevent such evasion.