S SEETHAI ACHI Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE petitioner was a shareholder in Somasundaram Mills (Private) Ltd., a company which admittedly fell within the scope of section 23A of the Income Tax Act, 1922For the assessment year 1950-51, the previous accounting year for which ended on April 1, 1950, the assessee was assessed to tax, and that assessment was completed on May 31, 1953. Subsequently, on March 31, 1957, an order was passed against Somasundaram Mills Ltd. under section 23A of the Act. THE date of the general meeting, with reference to which the assessee's dividend income must be deemed to have accrued under section 23A, was September 22, 1949, which fell within the year of account, for which the assessee was liable to be assessed in the assessment year 1950-51. After an order had been passed on March 31, 1957, under section 23A of the Act, proceedings were taken to reopen the assessment of the assessee for the assessment year 1950-51. A notice was issued by the Income-tax Officer under section 34(1)(b) of the Act, and it was served on the assessee on September 14, 1957

(2.) THE assessee applied under article 226 of the Constitution for the issue of a writ of prohibition to restrain the Income-tax Officer from proceeding further with any reassessment under colour of the notice served on the assessee on September 14, 1957. During the pendency of these proceedings, however, the Department was allowed, without any interim order of stay, to complete the assessment, so that the position now is, that an assessment has been completed under section 34. Though it was a writ of prohibition that was asked for, if it is found that the issue of notice under section 34(1)(b) did not confer any jurisdiction on the Income-tax Officer to reopen the assessment of the assessee, the appropriate remedy would be the issue of a writ of certiorari to set aside the notice issued under section 34(1)(b) and the assessment that followed itTHE period of limitation prescribed for the initiation of the proceedings under section 34(1)(b) is four years. THE question is, what is the date from which that four year period has to be computed. THE contention of the learned counsel for the assessee was that that period should be computed from the expiry of the assessment year in question, 1950-51, and that, therefore, the four year period came to an end on March 31, 1955.

(3.) IT was construed as the assessment year, rejecting the contention of the assessee in that case that it was the accounting year. The further question, whether the decision in Navinchandra Mafatlal v. Commissioner of Income-tax was correct, was left open In Navinchandra's case the Bombay High Court expressed the view that the period of limitation would have to be computed only after an order under section 23A was passed. That question, however, was reconsidered by the Bombay High Court in Commissioner of Income-tax v. Robert J. Sas. Chagla, C.J., explained the scope of his earlier decision in Navinchandra's case, and he said that the period of limitation to be computed under section 34(1) was to be computed only with reference to the assessment year of the assessee or shareholder, and that the date on which an order under section 23A was passed as against the company would not be relevant in computing the period of limitation, either for the assessment or for reassessment of the assessee, that is, the shareholderIf we may say so with respect, we find ourselves in entire agreement with the reasoning and conclusion of Chagla, C.J., in Commissioner of Income-tax v. Robert J. Sas. Section 34(1) refers only to the assessee, and the year with which the assessee is concerned, the assessment year of that assessee. There is no scope for importing, into section 34(1) any further consideration. IT should be remembered that a necessity to reopen assessment under section 34 may arise under various circumstances, one of which is an order under section 23A.