HARICHARAN DIED Vs. INCOME TAX OFFICER NIZAMABAD

JUDGEMENT

(1.) .The petitioner asks for a writ of certiorari to quash the order dated 6th June, 1961, passed by the respondent, the Income-tax Officer, Nizamabad, in the following circumstances. The petitioner is a partner of the firm called Sriram Haricharan Das, Bombay He has a seven-anna share in the firm. For the assessment year 1951-52, the petitioner was assessed as a Hindu undivided family to income-tax under section 23 (3) on 11th September, 1954. On 29th March, 1956, the assessment of the firm, "Sriram Haricharan Das" was completed by the Income-tax Officer, and its income was computed at 16 lakhs of rupees. The firm thereupon preferred an appeal under section 30 (1) of the Income-tax Act, 1922 (hereinafter called the Act) to the Appellate Assistant Commissioner who, on 5th February, 1958, held that the income of the firm was only 11 lakhs of rupees. Thereafter, the share income of the petitioner was determined as Rs. 5,50,000. On 6th June, 1961, the impugned order was passed by the respondent including the share income in the petitioner's assessment and raising a demand of Rs. 4,08,927-69 nP. under section 35 of the Act. The case of the petitioner is that, under section 35 (5), the Income-tax Officer could pass the impugned order of assessment only within four years from the date of the original assessment order passed by him and not within four years from the date of the order passed by the Appellate Assistant Commissioner on appeal. If the Income-tax Officer's original order of assessment is to be the basis, the starting point of limitation of four years prescribed under section 35 (1) must commence from 29th March, 1956. On the other hand, if the expression " final order " occurring in sub-section (5) of section 35 is to be understood as the order under section 31 passed by the Appellate Assistant Commissioner of Income-tax, the period of four years will start only from 5th February, 1958. The petitioner's case is that, the crucial date for computation of the period of limitation is 29th March, 1956. As the impugned order was passed on 6th June, 1961, that is, after the expiry of four years from 29th March, 1956, the petitioner asks that it should be quashed by a writ of certiorari as beyond the jurisdiction and authority of the Income-tax Officer. The respondent-Income-tax Officer opposes this writ petition on the ground that the period of limitation is to be computed not from his original order, but from the order passed in appeal under section 31 of the Act. The question is which of these two rival contentions has to prevail. The significant words used in section 35 (5) are : "the period of four years referred to in that sub-section (sub-section (1)) being computed from the date of the final order passed in the case of the firm".

(2.) ALTHOUGH the Income-tax Officer passed his original order of assessment oa 29th March, 1956, the firm carried the matter in appeal to the Appellate Assistant Commissioner who held on 5th February, 1958, that the income of the firm was not Rs. 16 lakhs as stated by the Income-tax Officer but was only Rs. 11 lakhs. It was on the basis of this appellate order dated 5th February, 1958, that the share income of the petitioner was calculated and the impugned order' passed. I think the proper basis is the appellate order passed by the Appellate Assistant Commissioner on 5th February, 1958. The words " final order passed in the case of the firm " should, I think, reasonably refer only to the last order passed in appeal, revision, etc., in the case of the assessment of the firm and not the initial order passed by the Income-tax Officer. It is significant that sub-section (5) of section 35 itself refers to appeals and revision and even reference by which the original assessment of the Income-tax Officer could be challenged. The section also expressly refers to the reduction or enhancement made in the income of the firm under sections 31, 33, 33-A, 33-B, 66 and 66-A. Therefore it does not seem to admit of any doubt that the crucial date in the instant case is 5th February, 1958, when the Appellate Assistant Commissioner passed his order in appeal under section 30 (1) of the Act and not 29th March, 1956, which is the date of the order of initial assessment made by the Income-tax Officer on the firm. This means that the writ petition fails and has to be dismissed. The petitioner will pay a sum of Rs. 100 as costs to the respondent. A.B.K. ------------ Petition dismissed.