JUDGMENT

KAPUR J.-These three appeals by special leave are brought against the judgment and order of the High Court of Bombay. The appellant in all the three appeals is the Commissioner of Income-tax, but in each of the appeals the respondent is different, i.e., one of the three shareholders of a private limited company, A. C. E. C. Private (India) Limited, which was carrying on business in India and made profits during the calendar year 1947. The accounting year is the calendar year ending December 31, 1948, and the relevant assessment year 1949-50. Although the company had earned large profits during the year 1947, it did not declare any dividend at the shareholders meeting held on December 4, 1948. On March 29, 1954, the Income-tax Officer passed an order under section 23A(i) of the Income-tax Act, hereinafter termed the "Act", whereby the income of the company was, in accordance with that provision, deemed to have been divided amongst the shareholders. By that order the following dividends were deemed to have been distributed amongst the three shareholders, each a respondent in one of the appeals.

Untitled Document

Mr. Paul Raouffart

...          Rs. 1,09,859

Mr. Paul Victor Hermans

...          Rs. 1,00,189

Mr. Robert J. Sas

...          Rs. 1,09,859

The Income-tax Officer issued notices under section 34 of the Act and the notices were served on the respective respondents on April I, 1954. Thereafter the return of the income was submitted and the assessment was completed in regard to the shareholders. Appeals were taken first to the Appellate Assistant Commissioner and then to the Income-tax Appellate Tribunal. One of the points taken before the Tribunal was that the Income-tax Officer had no jurisdiction to take proceedings as the notices were served on the assessee-respondents beyond the period of four years allowed under section 34(1)(b) of the Act. This plea was accepted by the Tribunal and at the instance of the Commissioner of Income-tax a case was stated to the High Court under section 66(1) of the Act and the following two questions were referred to it:

" (i) Whether on the facts and circumstances of the case it was necessary for the Income-tax Officer to initiate action under section 34 of the Indian Income-tax Act in order to tax the deemed income distributed by virtue of the order under section 23A(I) of the Act made in the case of the A. C. E. C. Private (India) Ltd. ?

(2) If the answer to question No. 1 is in the affirmative whether having regard to the observations of their lordships in Navinchandra Mafatlal v. Commissioner of Income-tax{[1955] 27 I.T.R. 245.} the notice served on Ist April, 1954, was out of time ?"

The second question was reframed by the High Court as fellows :

" If the answer to question No. I is in the affirmative whether the notice served on Ist April, 1954, was out of time?"

Both the questions were answered in the affirmative and against the Commissioner of Income-tax. Against the judgment and order he has come in appeal to this court by special leave.

In view of the decision of this court in Sardar Baldev singh v. Commissioner of Income-tax{[1960] 40 I.T.R. 605 ; [1961] 1 S.C.R. 482.} and Commissioner of Income-tax v. Navinchandra Majatlal {[1961] 42 I.T.R. 53 (S.C.).} in which it was held that an assessment cannot be made under section 23A of the Act because that section does not make provision for an assessment to be made and assessment can only be made under section 34 of the Act, the first question no longer survives for decision and was rightly not argued before us.

The only question that remains for decision is the second question, i. e., whether the notice served on April I, 1954, was out of time. Counsel for the appellant-Commissioner of Income-tax-argued (I) that there was no limitation prescribed in regard to the order to be made under section 23A of the Act and if the period mentioned in section 34(i)(b) is made applicable to orders under section 23A then that section (section 23A) would