COMMISSIONER OF INCOME TAX Vs. D R NAIK

JUDGEMENT

(1.) THIS is a reference by the Commissioner of Income-tax under Section 66(2) of the Indian Income-tax Act, raising two questions :

(2.) SO far as the first question is concerned, the facts are that the assessee was assessed for the year 1936-37 on July 1, 1936, the assessment being based on the income of the preceding year, which expired on March 31, 1936. Then, in February, 1937, there was a supplementary assessment, because it was found that the income of a house had been omitted from the original assessment, and the final assessment was at a sum of Rs. 1,67,260, which was duly paid. That assessment was based on the view that the assessee was the last surviving coparcener of a Hindu joint family, which still existed and was assessable as such. On September 27, 1937, the assessee was served with a notice under Section 34, alleging that he had been assessed at too low a rate for the purposes of super-tax, because in assessing the super-tax the assessee had been allowed a deduction of Rs. 75,000 as a member of a Hindu joint family, whereas as an individual he would only have been allowed a deduction of Rs. 30,000. The object, therefore, of the notice under Section 34 was to assess to super-tax the sum of Rs. 45,000. Section 34 provides, so far as material, that if for any reason income, profits or gains chargeable to income-tax has been assessed at too low a rate, the Income-tax Officer may, at any times within one year of the end of that year, serve a notice and proceed to correct the mistake. Super-tax is chargeable under Section 55, and, by virtue of the provisions of Section 58, Section 34 is applicable to assessments to super-tax. The reason why the assessee was assessed as a member of a Hindu joint family, although he was the sole surviving coparcener, was because this Court had held that in such a case he was entitled to be so assessed, but subsequently, the Privy Council took a different view. SO that the mistake, which resulted in the original assessment, was a mistake of law, for which the learned Commissioner of Income-tax had some justification. The words of Section 34 are very wide and say that " if for any reason the assessment is too low." I think those words are wide enough to cover such a mistake as existed in the present case, and I see no reason, therefore, why a fresh assessment should not be made under Section 34.

(3.) IN my judgment, therefore, the learned Commissioner was right in answering the first question in the affirmative.