SHIVRAM PODDAR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is an application for a certificate under Art. 133 of the Constitution in respect of a Division Bench decision whereby an order dismissing a writ application for quashing a notice under s. 34 of the Indian IT Act, 1922, was affirmed.

(2.) THE facts requiring to be stated for the limited purpose of this application are these : The petitioner was a partner of a firm called Balmukund Radheshyam which carried on the business of commission agency in sale and purchase of cotton and cotton piece-goods at Ratlam and Indore. The firm commenced business some time in December, 1947, but was dissolved in February, 1950. In August, 1952, one of the partners made a return of income of the said firm showing Rs. 18,700 and odd as net profits of the firm's first year of business, that is, the asst. yr. 1949-50. An assessment was made on that basis and the tax assessed was duly paid. In October, 1955, the ITO, Central Circle II, Calcutta, called upon the ex- partners of the said firm to produce certain books and accounts. This requisition was followed up by a notice on 22nd Oct., issued under s. 34 of the IT Act addressed to the petitioner informing him that the officer had reason to believe that his income assessable to tax for the year ending 31st March, 1950, had been underassessed and, therefore, it was proposed to reassess the income. The petitioner objected to the ITO's jurisdiction to proceed in the matter. The objection having been overruled, an application under Art. 226 of the Constitution was filed upon which a rule nisi was issued by this Court. In due course, it came to be heard by Sinha J. who made the rule absolute on 3rd Jan., 1957. The Department took an appeal against the decision but the appeal failed and was dismissed. Meanwhile, on 28th March, 1958, the ITO had issued another notice under s. 34 r/w s. 22 (2) of the Act to the petitioner addressed as

(3.) UPON hearing the parties on the provisions of s. 44 of the Act as it stood before and after its amendment and upon a consideration of the decision rendered by the Supreme Court in the case of C. A. Abraham vs. ITO (1961) 41 ITR 425 (SC) : TC56R.955, as well as decision of the Bombay High Court in the case of Ramniwas Hanumanbux vs. S. Venkataraman ITO (1961) 43 ITR 152 (Bom) : TC51R.1918 this Bench held that the amendment of 1958 of s. 44 of the Act merely made explicit what was already implicit in the unamended section. The Bench also took into account an earlier decision of a Division Bench of this Court in the case of R. N. Bose vs. Manindralal Goswami (1958) 33 ITR 435 (Cal) : TC51R.1917, but reached the conclusion that in view of the latter decision of the Supreme Court in Abraham's case (supra), it would be right to hold that the discontinuance of business of a partnership firm as a result of dissolution attracted the provisions of s. 44 of the Act. The Bench recorded its agreement with the Bombay view that the amendment of s. 44 did not add much to the section in its unamended state but had merely the effect of making explicit what was implicit in the section before the amendment was introduced. In this view, this Bench held that the notice was a valid notice and that the ITO had jurisdiction to proceed under s. 34 of the Act. The present application asks for leave to appeal to the Supreme Court from this judgment and the main ground of the proposed appeal seems to be that this Bench wrongly construed the provisions of s. 44 and erred in holding that an assessment could be made of the income of a dissolved firm and if a dissolved firm could not be assessed in respect of its pre- dissolution income, the present petitioner could not be proceeded against by the issue of a notice under s. 34 of the Act. On behalf of the Department, a preliminary objection has been taken as to the maintainability of this application for a certificate. The objection is two-fold. First, that a certificate under Art. 133 cannot be granted even if substantial questions of law are involved since they relate to a proceeding which is not a civil proceeding; secondly, the order of this Bench dismissing the writ appeal is not a final order within the meaning of that Article.