M RAMIZA BI SAHEBA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) AHMED Batcha, the husband of the petitioner, and his son Abdul Rahman traded in partnership. The name of the firm was Malang Trading Company. After the death of these two, the petitioner and Quamarunnissa, the widow of Abdul Rahman, entered into a partnership, evidenced by the partnership deed dated 6th March, 1952, and continued the business under the same name. The petitioner's minor son, Hayat, and Quamarunnissa's minor son, AHMED Batcha, were admitted to the benefits of the partnership : each of the minors was allotted a four annas share. The petitioner had a seven annas share, and Quamarunnissa, a one anna share For the assessment years 1953-54, 1954-55 and 1955-56 the Income-tax Officer refused to grant registration under section 26A to Malang Trading Company, and he treated it as an association of persons for purposes of assessment to tax. The assessees appealed to the Assistant Commissioner. He granted registration and directed the Income-tax Officer to make the consequential revisions of the assessments he had already completed. Meanwhile, the Income-tax Officer had completed the proceedings to assess the petitioner, and in each of the three years 1953-54, 1954-55 and 1955-56 the petitioner was assessed in the status of an individual. The assessment proceedings for 1953-54, 1954-55 and 1955-56 were completed respectively on 21st July, 1953, 28th July, 1955, and 28th October, 1955. In those proceedings the share income of her minor son Hayat from Malang Trading Company was taken into account for the purpose of determining the rate at which the tax had to be assessed on the petitioner's income.

(2.) IN the assessment years 1954-55 and 1955-56 the petitioner was treated as having no assessable income. The main source of income was the profits of the Malang Trading Company, and that, it should be remembered, was separately assessed as constituting an association of persons. Against these orders of assessment the petitioner did not prefer any appeals but, then it should be remembered there was no demand, at least for 1954-55 and 1955-56It was the partners of Malang Trading Company that appealed to the Assistant Commissioner against the orders of the INcome-tax Officer treating them as an association of persons and refusing the registration they had sought under section 26A of the Act. The appeals in respect of the assessment for the years 1953-54 and 1954-55 were disposed of by the Assistant Commissioner on 9th January, 1956, and the appeal in relation to the 1955-56 assessment was disposed of on 28th April, 1956. The result was that Malang Trading Company had to be assessed as a registered firm. That necessitated the revision of the assessment of the petitioner's income in the three years in question, taking into account the share of the profits of the registered firm

(3.) IN my opinion, in the circumstances of this case, the failure to give an opportunity to the petitioner to be heard before the assessments were revised vitiated the exercise of the jurisdiction the INcome-tax Officer had to revise the assessments. The INcome-tax Officer had jurisdiction to revise the assessments in the case of the petitioner. IN fact he was bound to do so under section 31(4) of the Act, to comply with the directions given by the appellate authority in the appeals preferred by the Malang Trading Company. No doubt no specific provision is made in section 31(4) for the issue of a notice to the assessee before the assessments are revised. But by about the middle of 1956, when the INcome-tax Officer undertook the revision of assessments, the question had been raised whether section 16(3)(a) authorised the inclusion in the mother's income, for the purposes of assessment, the share income of the partnership profits of her minor child. That question was finally concluded by the decision of the Supreme Court rendered on 17th May, 1957, in Commissioner of INcome-tax v. Sodra Devi. Whether the INcome-tax Officer, who certainly could not have had the benefit of the ruling of the Supreme Court given in 1957 when he completed the revision in 1956, would have taken the same view is not the question. The petitioner should, I think, in the circumstances of this case have been given an opportunity to show cause against the inclusion of her minor son's income in hers for the purpose of assessmentIt is true, as the learned counsel for the Department pointed out, that the petitioner had a statutory remedy open to her.