Judgement

Appeal (No. 85 of 1932) from a judgment of the High Court (February 14, 1932) upon a case stated and referred under s. 60 of the Indian Income-tax Act, 1922.

The appeal related to assessments to income-tax and super-tax made upon the appellants, an unregistered firm, for the year 1927-8 under the above Act. The appeal raised questions as to the effect of s. 34 of the Act, and the time within which an assessment can be made.

76 Law. Rep. 61 Ind. App. 10 ( 1933- 1934) Rajendra Nath Mukerjee V. Commissioner of Income-Tax

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The facts of the case, the three questions referred, and the terms of s. 34 appear from the judgment of the Judicial Committee.

The reference was heard by Rankin C.J., Ghose and Buckland JJ. The judgment of the Court, delivered by the learned Chief Justice, answered the first two questions in the affirmative and the third question in the negative, all three answers being adverse to the appellants contentions.

1933. Nov. 6, 7. Latter K.C. and H. C. Marks for the appellants.

Dunne K.C. and R. P. Hills for the respondent.

The respective contentions appear from the judgment.

Reference was made to In re Lachhiram Basantlal (( 1930) I. L. R. 58 C. 909.); Ganesh Das v. Commissioner of Income-tax (( 1927) I. L. R. 8 Lab. 354.); Commissioner of Income-tax v. Raja of Parlakimedi (( 1929) I. L. R. 49 M. 22.) ; Pickford v. Quicke (( 1927) 13 Tax Cas. 251.) ; Att.-Gen.

v. Aramayo (( 1925) 9 Tax Cas. 446.); and Commissioner of Income-tax v. Bombay Trust Corporation, Ld. (( 1929) L. R. 57 I. A. 49.)

Dec. 7. The judgment of their Lordships was delivered by

LORD MACMILLAN. On November 8, 1930, the income-tax officer for District V., Calcutta, made an assessment order on Burn & Co., an unregistered firm carrying on business in Calcutta, assessing them to income-tax and super-tax for the year 1927-28, under s. 23, sub-s. 1, of the Indian Income-tax Act, 1922. The main question in the present appeal, in which the individual partners of Burn & Co. are the appellants, is whether it was competent to make this assessment on the firm after the expiry on March 31, 1928, of the year in respect of which the assessment was made.

The explanation of the delay in making the assessment is as follows. It appears that towards the end of the year 1926-27 the partners of the registered firm of Martin & Co., which also carried on business in Calcutta, purchased the business and assets of Burn & Co. The purchase was effected not by or on behalf of the firm of Martin & Co., but by the partners of that firm as individuals who contributed funds for the purpose proportionally to their shares in Martin & Co. and became partners in Burn & Co. with the same shares therein as they held in Martin & Co. In the year 1927-28 Martin & Co. was a registered firm while Burn & Co. was unregistered. Under the Income-tax Act registered and unregistered firms are differently taxed in various important respects.

On April 7, 1927, the income-tax officer of District I. issued a notice to Burn & Co. under s. 22, sub-s. 2, calling for a return of their total income for the year to March 31, 1927, with a view to assessing them for the year 1927-28. A similar notice was issued to Martin & Co. on April 8, 1927, by the income-tax officer of District II. When they issued these separate notices the income-tax officers were unaware that the business of Burn & Co. had been bought by the partners of Martin & Co. On September 24, 1927, Martin & Co. made a return of their total income in compliance with the notice issued to them in April, and on January 13, 1928, Burn & Co. made their return. Meantime the purchase of the business of Burn & Co. by the partners of Martin & Co. having come to the knowledge of the income-tax authorities, Burn & Co.s file was transferred to the officer dealing with District II., and on February 25, 1928, he made an assessment on Martin & Co. in respect of the combined incomes returned by Martin & Co. and Burn & Co. on the footing that the busin