Patna High Court
Commissioner Of Income-Tax, Patna vs Smt. Rama Jain. on 20 August, 1965
Equivalent citations: [1966]60ITR655(PATNA)
JUDGMENT
Both these cases are reference under section 66(2) of the Income-tax Act, 1992. At the instance of the Commissioner of Income-tax, this court directed the Appellte Tribunal, under section 66(2) of the Income-tax Act (hereinafter referred to as "the Act") to draw up a statement of the case and to refer the following questions of law for the opinion of this court. The question referred are in indentical terms with only one difference that in one case it refers to the assessment year 1946-47, while in the other it refers to the assessment year 1947-48. So far as the assessment year 1946-47 is concerned, the question referred is as follows :
"Whether, on the facts and circumstances of this case, provisions of section 34 of the Income-tax Act have been validly applied by the Income-tax Officer for the assessment year 1946-47 ?"
Like wise, with reference to the assessment year 1947-48, the question reads as under :
"Whether, on the facts circumstances of this case, the provisions of section 34 of the Indian Income-tax Act have been validly apllied by the Income-tax Officer for the assessment year 1947-48 ?"
The Tribunal in the statement of the case in relation to the aforesaid two assessment years has given the full facts and the history of the cases culminating in the reference. The facts relevant for answering the questions referred are not in dispute.
It appears that the assessee, namely, Shrimati Rama Jain, wife of Shri S. P. Jain, voluntarily filed returns in respect of her income without any notices having been issued to her calling for such return, one in respect of the year 1946-47, on the 24th January, 1947, and the other in respect of the year 1947-48, on the 5th January, 1948. It further appears that assessment proceedings in respect of the return filed by the assessees husband, in pursuance of notice issued from the department, were pending and the amounts of both the returns which the assessee, namely, Shrimati Rama Jain, had filed were taken into account in Shri S. P. Jains assessments which, in so far as the assessment for 1946-47 was concerned, was completed on the 28th February, 1947, and for 1947-48, was completed on the 31st January, 1948. The result was that the assessee was not separately taxed. Shri S. P. Jain, however, aggrieved by the assessment in his own case, preferred two appeals, one in respect of the assessment year 1946-47, and the other in respect of the assessment year 1947-48; the former appeal was disposed of on the 31st January, 1948, and the latter on the 27th May, 1949, by the Appellate Assistant Commissioner. While disposing of the aforesaid appeals, the Appellate Assistant Commissioner deleted the income of the wife from the husbands assessment with a direction to assess the wife separately in respect of the income shown in her voluntary returns filed, as mentioned above. The departments appeal against the order of the Appellate Assistant Commissioner dated the 31st January, 1948 before the Tribunal failed and the Tribunal affirmed the order passed by the Appellate Assistant Commissioner which had directed the wifes income, namely, the present assessees income, to be separately taxed in her own name. Thereafter, on the 8th April, 1957, and the 6th May, 1957, notices under section 34 of the Act were issued in respect of the assessment years 1946-47 and 1947-48 respectively, and the Income-tax Officer actually proceeded to assess the present assessee in respect of both those years by his order dated the 12th December, 1957, on the basis of the income of the assessee having escaped assessment and her objection to the assessment were overruled. Thereupon, the assessee took appeals and urged two grounds in support thereof. In the first place, she urged that, in view of voluntary returns of her income which she had filed, it could not be described as a case of an escaped assessment and, accordingly, the provisions of section 34 of the Act were not attracted. In the second place, it was urged on her behalf that, under sub-section (3) of section 34, the assessment for both the years in question was barred by limitation; the assessment for 1946-47, having become barred after the 31st March, 1951, and that for 1947-48 having become similarly barred after the 31st March, 1952. The Appellate Assistant Commissioner upheld both the grounds urged on behalf of the assessee and annulled the assessments in respect of both the years in question, and allowed the appeals. The departments appeals to the Income-tax Appellate Tribunal filed, and the Tribunal affirmed the appellate order on the 30th March, 1960. Thereafter, applications on behalf of the department under section 66(1) of the Act having failed, two applications were filed by the Commissioner under section 66(2) of the Act in this court, and, as stated above, this court ultimately required the Appellate Tribunal to state a case in respect of both the years in question and framed questions which are the subject-matter of consideration in both these references. These reference have, therefore, been heard together, with the consent of the parties and this judgment will govern them both.
Learned counsel appearing for the department has, in our opinion, rightly point out that the question referred for the opinion of this court are, more or less, composite in native and can really be split up into two sub-question, namely : (i) Whether, on the facts and circumstances of this case, it could be said that it was a case of an income having escaped assessment and, therefore, calling for a notice under the provision of section 34 of the Act ? and (ii) Whether the assessment made in pursuance of the said notice was valid in view of the period of limitations provide in sub-section (3) of section 34 of the Act ? In view of the decision of the Supreme Court on the second sub-question, which is binding on us, the answer to the the first sub-question become merely academic, and we do not propose to answer the same. So far as the second sub-question is concerned, and which quite clearly is conclusive of the matter, it has been held in more than one decision of the Supermen Court, including the one in S. C. Prashar v. Vasantsen Dwarkadas, that the provisions of the second proviso to section 34(3) of the Act, in so far as they authorise assessment or reassessment of any person other than the assessee beyond the period of limitation specified in section 34, in consequence of or to give effect to a finding or direction given in appeal, revision or reference, arising out of the proceedings in relation to the assessee, violate the provisions of article 14 of the Constitution of India and were invalid to that tent. In the present case, the notices under section 34 were admittedly issued against the assess in consequence of the order passed by the Appellate Assistant commissioner holding that the assessee should be separately taxed on her own income. But for the second to sub-section (3) of section 34, it is quite clear that the assessment was hopelessly barred; and the provisions of that proviso to the extent that it makes it possible to assess a person who was not a party to the proceedings in which the order for his assessment was made or to initiated assessment in regard to such a person as a consequence of such an order, having been struck down by the Supreme Court, it must be held that, so far as the present assessments are concerned, the provisions of section 34 have not been validly applied and the answer to second sub-question, which is really comprised in the questions under reference, must, therefore, be answered in favour of the assessee. In the circumstances, there will be no order as to costs.