The Income-tax Officer has jurisdiction to initiate proceedings under S. 34 of the Act against a person on the ground that the income, though it has been assessed in the hands of another, has escaped assessment in his hands.

Judgement

SUBBA RAO, J. : This appeal by special leave arises out of the order of the High Court of Judicature at Allahabad quashing the notice issued by the appellant under S. 34 of the India Income-tax Act, 1922, hereinafter called the Act, to the respondent as the karta of a Hindu undivided family for the assessment year 1955-56.

2. The facts may be briefly stated. Up to the assessment year 1952-53, the respondent, Bachulal Kapoor, was assessed to income-tax as karta of the Hindu undivided family consisting of himself, his wife and a minor son. In a suit filed by the wife and the son of Bachulal Kapoor against him, a compromise was effected between the parties and on October 20, 1952, a compromise decree was passed. On January 18, 1954, the Income-tax Officer, A-Ward, Lucknow, passed an order accepting the claim under S. 25-A by the respondent that the family was partitioned. For the assessment years 1953-54, 1954-55 and 1955-56, the members of the family were assessed as individuals. On March 24, 1960 the Income-tax Officer issued a notice under S. 34 of the Act to the respondent as the karta of the Hindu undivided family requiring him to file a return within the prescribed time of his world income on the ground that the respondent s income chargeable to tax for the assessment year 1955-56 had escaped assessment and also was under-assessed. Thereupon, the respondent moved the High Court at Allahabad under Art. 226 of the Constitution for quashing the said notice on two grounds, namely, (i) the income in respect of which the return had been called for had already been assessed in the hands of the individual members of the family and, therefore, the said income could not be assessed, again as that of the Hindu undivided family; and (ii) the Hindu undivided family had ceased to exist, that the partition of the family was recognised by the Income-tax Officer under S. 25-A of the Act, and, therefore, no valid notice could be issued to the respondent in his capacity as the karta of the Hindu undivided family. On an admission made by the learned counsel for the revenue, the notice, so far as it related to the re-assessment of the income on the ground of under-assessment, was ignored as it was inconsistent with the alternative ground of escaped assessment. The High Court held that the said notice was invalid as it offended the principle against double taxation. As the assessment of the same income in the hands of the members of the family for the same year was not set aside, the High Court held that the same income could not be assessed again in the hands of the Hindu undivided family by taking proceedings under S. 34 of the Act. In that view, it thought that it was not necessary to go into the second ground, namely, whether the proceedings under S. 34 of the Act could have been validly taken in view of the orders passed under S. 25-A of the Act. Pursuant to the view expressed on the first question, the said notice was quashed. Hence the appeal.

3. The 4th respondent in Civil Appeals Nos. 805 and 806 of 1962 filed Civil Miscellaneous Petition No. 2655 of 1965 praying for permission to intervene in the present appeal on the ground that a common question arose in the said appeals as well as in the present appeal and it was ordered.

4. Mr. A. V. Viswanatha Sastri, learned counsel for the Revenue, contended that under the Act a Hindu undivided family and the individuals thereof were different assessable entities; that, as the alleged compromise decree was a collusive one, the said Hindu undivided family continued to exit as a separate entity; that it had escaped assessment; and that, therefore, subject to the conditions laid down in S. 34 of the Act, the income-tax Officer was within his rights to issue a notice thereunder.

5. The argument of Mr. C. P. Lal, learned counsel for the respondent, may be put thus: the Income-tax Officer had assessed the same income assessable for the year 1955-56 in the hands of the individual members of the fa