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PATNA HIGH COURT
V.Ramaswami and Kanhaiya Singh JJ.
Lakhmir Singh
Versus
Commissioner Of Income Tax
Miscellaneous Judicial Case No. 263 of ; 156 of ;
Decided On : MAY 07, 1957
INCOME TAX - Assessment - Limitation - Amendment of Sec.34(3) of the Income-tax Act by Act 25 of 1953 - Retrospective effect - Whether the amendment applies to a case where the right to assess was already barred under the un-amended section - Held, no.
Fact of the Case:
The assessee filed a return for the assessment year 1946-47 on 15th March, 1951. The Income-tax Officer amalgamated the income of the assessee with that of his father and assessed the total income as the income of a Hindu undivided family. The assessee preferred an appeal against the assessment, which was allowed by the Appellate Assistant Commissioner. The Income-tax Officer made an assessment upon the assessee in his individual capacity on the basis of the return filed by him on 27th November, 1953. The assessee contended that the assessment was time-barred under the provisions of Sec.34(3) of the Indian Income-tax Act.
Finding of the Court:
The court held that the amendment made in Sec.34(3) by Act 25 of 1953 did not apply to the case of the assessee and that the order of the Income-tax Officer making the assessment on 27th November, 1953, was barred by limitation and was, therefore, legally invalid.
Issues: Whether the amendment made in Sec.34(3) of the Income-tax Act by Act 25 of 1953 applies to a case where the right to assess was already barred under the un-amended section.
Ratio Decidendi: The court held that the amendment made in Sec.34(3) by Act 25 of 1953 did not apply to the case of the assessee because the right of the Income-tax Officer to assess tax for 1946-47 had already become barred on 1st April, 1952, when the Amending Act came into operation. A correlative right had, therefore, accrued in favour of the assessee before 1st April, 1952, and that right could not be taken away by legislation except in clear and express language.
Final Decision: The court answered the question of law referred to the High Court by the Appellate Tribunal against the Income-tax Department and in favour of the assessee.
Ramaswami, J.
1. In this case the assesses is an individual, namely, Sardar Lakhmir Singh, son of Nehchal Singh, and the assessment year is 1946-47. Up to the assessment year 1943-44, Messrs. Nehchal Singh and Lakhmir Singh were being assessed in the status of a Hindu undivided family. The said Hindu undivided family consisted of Sardar Nehchal Singh and his two sons, Sardar Lakhmir Singh and Sardar Dhanbir Singh, The Hindu undivided family used to declare income from property, contract works, interest on securities and dividends from shares. From the assessment year 1944-45 a claim was made under Sec.25A and it was contended that there was no joint family business or joint family property and that the income of Sardar Lakhmir Singh and Sardar Nehchal Singh were their individual income and should be separately assessed. The claim was rejected by the Income-tax Department and the income of both Sardar Lakhmir Singh and Sardar Nehchal Singh were amalgamated and the total amount was assessed in the hands of the Hindu undivided family with Sardar Nehchal Singh as the Karta. For the assessment year 1945-46 Sardar Lakhmir Singh and Sardar Nehchal Singh filed two separate returns and reiterated their previous claim under Sec.25A. The claim was rejected by the Income-tax Department and the Income of Sardar Lakhmir Singh and Sardar Nehchal Singh was assessed as the income of the Hindu undivided family, but there was a protective assessment made upon Sardar Lakhmir Singh as an individual for the income he had returned. There was an appeal taken against the assessment of 1945-46, and on the 15th of October, 1952 the Appellate Tribunal held that the income of the two individuals, namely, Sardar Nehchal Singh and Sardar Lakhmir Singh, was not the income of the Hindu undivided family but their individual income. The Appellate Tribunal, therefore, set aside the assessment of the Hindu undivided family. For the assessment year 1946-47 three returns were filed. The first return was filed by Sardar Lakhmir Singh on the 15th March, 1951, in respect of his separate income. The second return; was filed by Sardar Nehchal Singh in his individual capacity with regard to his separate income. The third return was filed under protest by Sardar Nehchal Singh as the Karta of the Hindu undivided family. This return was dated 20-6-1950 and the total income in the return was declared as nil. There is an endorsement on the return to the following effect:
"In view of the submission made in the attached application under Sec.25A, the so called Hindu family did not exist during the previous year for 1946-47 assessment. Hence its income stands at nil. Returns of the disrupted members are being filed separately."
On the 15th March, 1951, the Income-tax Officer amalgamated the income of the two individuals and assessed the total income as the income of a Hindu undivided family. The Income-tax Officer, however, did not make a protective assessment with regard to the separate income shown in the return of Sardar Lakhmir Singh. On the 20th March, 1953, there was an appeal taken against the assessment of 1946-47. The appeal was allowed by the Appellate Assistant Commissioner and the assessment of the Hindu undivided family was set aside in view of the order of the Appellate Tribunal dated the 15th October, 1952, in the appeal against the assessment of the year 1945-46. On the 27th November, 1953, the Income-tax Officer made an Assessment upon Sardar Lakhmir Singh in his individual capacity on the basis of the return filed by him on the 15th March, 1951. The assessee preferred an appeal against the order of the Income-tax Officer to the Appellate Assistant Commissioner and contended that the assessment made on the 27th November, 1953, was time-barred under the provisions of Sec.34 (3) of the Indian Income-tax Act. This contention was rejected by the Appellate Assistant Commissioner and the order of assessment made by the Income-tax Officer was upheld. The assess
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