P. V. GODBOLE versus JAGANNATH FAKIRCHAND

19'1

.fl.C. Pr""4r, fn.tom1· 'f"a.t Offiur, M•klt Word, Oomboy >. ~ ~-fttl n•U(lr.'""'41

130 SUPREME COURT REPORTS [1964] VOL.

Court in C. A. No. 5~5 of 1960 and C. As. Nos. 214 and 215 of 1958 but in view of the undertaking given in the High Court by the Department the appellants in C. A. No. 705 of 1957 shall bear the costs of the first and second respondents in this Court and also in C. A. No. Ci09 of 1958 we would make a similar order in view of the order of the High Court granting the certificate.

BY CouRT :

In accordance with the opinion of the majority, the appeal is allowed. The appell· ants will pay costs of respondents l and 2 a, per consent of the parties referred to in the certificate, ~rantrd by the High Court.

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A pptal allowtd.

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P. V. GODBOLE v. JAG.<\NNATH FAKIRCHAND

(S. K. DAS, J. L. KAPUR, A. K. SARKAR, \.f. HmAYATUJ.LAH and RA<lllUBAR DAYAL, JJ.)

1"cot11•·1'a.c--E•~wd income-Limillllion

for aaau.. nacnt-81111i11g prooi.ion-A pplirJJbilil11 and r,,,..titutionality of J..dian 1"cm11<-W.:t Ar.t 1922 (II of 19:!2), •· 34-lndian J11rmnt·"'-' (,ti.1<11dmr11l) Acl, /.953 (25 of 1953), 88. 18, 31- Ct>t1t1:111tio11 of fo,(iu, Ari. 14.

In p11rsua11rc of the dir.ctions given by the Appellate connection with the appeal of Aldstaut Couuni~sioncr in another asscssce, the Income·la< Officer on February 18, 1957, •~•ued a notice urnler s. 34 ( l) of the Indian Income·tax Act, J9Z2, to the 1-..po1u.lcnt in rc•pect of the assessment years 1944- 45 \945-46 anrl 1946·47. The re•pondent contended that the ln~mC•W 0ffiCcr had no jur isdirtion to assess him after four years of the expiry of the year of assessment. The appellant

1 S.C.R.

SUPREME COURT REPORTS

131

contended that the serond proviso to s. 34 (3) introduced by the Amending Act of 1953 saved the proceedings.

Held (per Das, Kapur and Sarkar, J ]., Hidayatullah and Dayal,lJ., dissenting), that the proceedings were barred and were not saved by the second proviso to s. 34 (3).

1962

P. V. Godbolt v. Jqannath Fal<irchand

Per Das and Kapur,.JJ.-The second proviso to s. 34 (3) did not revive the power to asse" which h•d already become barred by s. 34 (3).

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S. C. Prashar, Income-ta.< Officer v. Vasantsen Dwarkadaa,

[1964] Vol. 1 S. C.R. 29 followed.

Per Sarkar, J .-The second proviso to s. 34 (3) was unconstitutional as it offended Art, 14 of the Constitution.

The Commi88ioner of Income-tax, Bihar & Orissa v.

Saraar Lakhmir Singh, [1964] Vol. 1 S.C.R. 148, followed.

Per HidayatuUah

and Dayal, JJ.-The notice and proceedings were valid. The asses.men! was governed by the in 1953 and bys. 31 secnnd proviso to s. 34 (3) as amended of the Amending Act of 1953. The notice was further saved by the provisions of the Amending Act of 1959.

CIVIL APPl!LLATE JURISDICTION : Civil Appeal

No. 585 of 1960.

Appeal from the judgment and order dated September 4, 1957 of the Bombay High Court in Special Civil Application No. 1400of1957.

K. N. Rajagopal Sastri and P. D. Menoo for

thr Appellants.

J. B. D.idaclv.mji, O. C. Mathur

and

Ravinder Narain for the Rrspondent.

1962. December 12. The following separate Judgments were delivered by Das, J ., Kapur, J., and Sarkar, f. The Judgment of Hidayatullah and Ra~hubar Dayal, JJ., was delivered by Hidaya~ tullah, J.

132 SUPREME COURT REPORTS [1964] VOL'.

1962

P. v. Godlou v. J,,.,,..u. Fakirchond

S. K. DAs, J.-The facts· of this appeal have been stated by my learned brother Kapur, J. As I am in agreement with him, I need not re·state the facts.

The assessment years were 1944-1945, 1945- 1946 and 1946-4 7. The notice was issued by the Income-tax Officer on February 18, 19.57, pursuant to a direction given by the Appellate Assistant Commissioner in an appeal of another assessee. The the second proviso · to only question sub-s (3) of s. 34, as amended in 1953 saves the pro ceedings impugned.

is whether

For the reasons given by me in S. C. Prashar, Income-tax Officer v. Vasantsen Dwarkridas ('), in which judgment has been delivered to-day, I would dismiss the appeal with costs.

r. """'· J.

KAPUR, J.-Thi~ is an appeal brought on behalf of Revenue against the judgment and order of the High Court of Bombay on a certificate granted by that Court.

In W. P. No. H00/57 the present respondent challenged .the jurisdiction of the Income-tax Officer to issue notice under s. !H(I) of the Indian Incomc tax Act, hereinafter called the "Act". The assess ment years arc 19~4.45, 19,15-46 and 1946--!7 and the notice was issued by the Income· tax Officer on February 18, 1957, pursuant to a direction given by the Appellate Assistant Commissioner in an appeal of another assessce that the income was the income of a partnership of which the respondent and the other assessee were partners. The High Court held that the.respondent was a stranger to the proceedings before the Appellate Assistant Commissioner and that the second proviso to s. !H(3) of the Act under which the notice was given was unconstitutional as it offended Art. 14 of the Constitution.

(I) [1964] Vol. I s.c.R. 29.

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1962

P.V. Got/bole v. Jagannzth Fakirehantl

Kapu,, J

l S.C.R. SUPREME COURT REPORTS

l3a

The facts of the appeal are these : The res pondent was the karta of a Hindu Undivided Family which carried on business as merchants and commis sion agents in cotton, grains and other commodities. That Hindu· Undivided Family was assessed for the assessment years 1944-45, 1945-46 and 1946-47. The assessment for· the year 1944-45 wa~ completed by the Income-tax Officer on March 14, 1949, and an appeal was taken against that assessment to the Appellate Assistant Commissioner and was decided on February 9, 1956, and then an appeal was taken to the Income-tax Appellate Tribunal which has not been shown to have been decided. For the assess ment years 1945·46 and 1946-47 the assessment was completed in March aud May, 1950, respectively. Appeals were taken against these assessments to the . Appellate Assistant Commissioner who remanded the cases to the Income-tax Officer and they have not regards the assessment year yet been decided. As 1946-47 a notice under s. 34(1) was issued and the order in that case was passed on March 6, 1956 . . Against that order an appeal was taken to the Appel late ·Assistant Commissioner which is still pending. It appears that for the year of assessment 1945-46 no notice under s. 34(1) of the Act was issued .

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In 1946 the respondent on behalf of the Hindu Undivided Family filed a suit against one J agannath Ramkishan for rendition of accounts as the Munim of the respondent .. His defence was that he was a . partner and not a Munim which was accepted and the suit was dismissed. An appeal against that decree was dismissed by Jagannath Ramkishan died during the pendency of the appeal and his widow Kalavati was In the meantime proceedings under s. 34(1) (a) of the Act were started against Kalavatibai for the assessment years 1944-45, 1945-46 and 1946-47 in respect of the business which her husband Jagannath Ramkishan had claimed to be a partnership business of the

the High Court.

impleaded.

1962

..

f. V. G.dbol•

. 'o,att1th Foiircluwl

134 SUPREME COURT REPORTS [1964] VOL.

respondent's Hindu Undivided Family and himself. Two orders were passed by the Income-tax Officer for those years. Kalavatibai took appeals against those orders and the Appellate Assistant Commis· sioner on October 10, 1956, in allowing those appeals to the gave a finding that the business belonged partnership as claimed by Jagannath Ramkishan and the Income-tax Officer was authorised to make assessments under the provisions of s. 34 on the said partnership as also on the respondent for the assess ment years l!J-U-4fi, 19!5-46 and 1946-4 7. There· upon a notice was issued with regard to the three assessment years on February 18, 1957, against M/s jagannath Fa~irchand Ramkishan. These notices were challenged and were held to be illegal. Against that order of the High Court this appeal is brought on a certificate of the High Court under Art. 132(1) and Art. l33(l)(b) of the Constitution.

Jagannath

and

s.u., J.

For the reasons given in S. C. Prashar, lncom.e tax Officer v. Va8antsen Dwarkadas (1 judgment in which has been delivered today, this appeal is dis missed with costs.

),

is

concerned with SARKAR, J.-This case the three assessment years WH-45 1945-46 and Hl46-4 7. The assessee is the respondent J agannath Fakirchand, the /(aria of a Hindu undivided family who had been ::ssessed as such for the years 1944· 45 to 1946-48, and appeals from the a<sessment orders in respect of these years were pending.

The assessee had filed in 1946 a suit against an ex-employee, Jagannath Ramkishan for accounts of certain transactions. J agann11 th Ramkishan cont en· ded that he was not an employee but the transactions were the transactions of a business carried on in partnership between him and the assessee. The trial court upheld the contention of Jagannath Ramkishan.

(I) (1964] Vol. I s.c.R. 29.

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"41

196"2

P P'.Gud0.11 v. Jagllflflath .F<kir •. hond

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-Sarkgr,

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1 S.C.R. SUPREME COURT REPORTS

135

The assessee appealed to the High Court of Bombay against the decision of the trial court but in the meantime Jagannath :Ramkishan had died and his wife, Kalavatibai, had been substituted in his place in that appeal. The High Court dismissed the appeal but said nothing as to whether Jagannath Ramkishan was a partner.

In view of the decision in the appeal mentioned in the preceding paragraph, the revenue authorities started proceedings against Kalavatibai under s. 34 (1) (a) of the Income-tax Act and assessed her on the entire income in the aforesaid three years, realised from the said transactions. Kalavatiba1 then appealed from this assessment and in the appeal she contended that her husband's estate was not liable for the tax on the entire income as the income belonged to a firm of which her husband was only one of the partners. The appellate Assistant Com· missioner accepted this contention of Kalavatibai and observed : "In view of my finding : .... ~ ...... that the business belonged to the partnership .. .... .. . .. .. . the Income-tax Officer ·is hereby authorised to make assessments under the provisions of s. 34 on the said partnership as also on the other partner, Shri Jagan· nath Fakirchand for the assessment years 1944·45, '1945-46 and 1946-47."

In pursuance bf this o~der the Income-tax Officer started proceeding under s. 34 (3) ol' the Income-tax Act, 1922, against the assessee by issuing a notice on February 18, 1947, calling on him to file a return in respect of the aforesaid three assessment years as that income had escaped assessment. There upon the assessee moved the High Court of Bombay under Art. 226 of the Constitution for a writ to quash to _prohibit proceed· the aforesaid notice and The High Court taken thereunder. ings being allowed the writ. Hence this appeal.

...... -,·--;-,: .... ----;···"':' :.\

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Smlar~ J.

-.P. V. Godbolt

.136 '"SUPREME COURT REPORTS (1964] VOL, .

. The only question in this appeal is whether the second proviso to s. 34 (3) of the Income· tax Act, 1922 l•gannathvFakirehand as amended in 1953, could save the proceedings impu gned. ·For. the reasons mentioned in my judgment in The Commissioner of Income-tax, ·:Bihar & Orissa v. Bardar Lakhmir Singh (1), I think that that proviso is invalid as offending Art. 14 of the Constitution and It may be added that the impugned notice was issued in consequence of an order under s. 31 in a proceeding to which the assessee was not a party.

___ affords no protection to the revenue authorities.

In the result the appeal is dismissed with costs.

For

the Judgment - of Hidayatullah and Raghubar Dayal, JJ., see 8. 0. Prashar, Income-tax Officer v. Vasantsen Dwarkadas, ante p. 29.

. - ··-- BY COURT : · the majority, this appeal is dismissed with costs.

In accordance with the opinion of

__ Appeal dismissed.

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(I) ]196i] Vol. I S.C.R. 148.

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