BANARSI DASS Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) WHETHER re-assessment proceedings under Section 34 of the Income-tax Act have been validly initiated is the question which falls for determination in the present case and in order to appreciate the point in issue it is essential to have a clear picture of the factual background.

(2.) A firm consisting of the petitioners Banarsi Dass and his brother Phool Chand started business on 23rd of May 1940 under the name and style of Jankidass Banarsidass. The business was carried on at Kucha Natwan, Delhi, and there was also a Branch of the firm at Pilkhuwa in Uttar Pradesh. The dispute is in respect of the assessment year of 1946-47 relating to the accounting period between 16th of October, 1944 and 4th of November 1945. The firm used to be assessed yearly on its profits based on there returns filed by it. Banarsi Chand had 4 annas share, the remaining I anna share being kept apart for charity. The firm was assessed on 5th of August, 1946 for the assessment year 1946-47 on an income of Rs. 6,644/-. On 8th of August, 1946, the partners were assessed separately under clause (a) of sub-section (5) of Section 23 of the Indian Income-tax Act (hereinafter called the Act). Banarsi Dass on an income of Rs. 9,352/- which comprised his share in the profits of the firm while his brother Phool Chand on Rs. 18,105/-, which also included his share of 4 annas in the firm.

(3.) ACCORDING to the contention of the petitioners the Income-tax Officer had no authority to initiate re-assessment proceedings under S. 34, there being a patent illegality in the notice of 29th of March, 1955, and this error of law entitled them to seek the remedy by way of a writ to have the entire reassessment proceedings quashed. It is urged that the authorities, in their anxiety to effect service somehow on the petitioners before 31st of March, 1955, ignored the requirements of law and acted with undue haste. The firm having dissolved, the notice should have been sent to all the partners of the firm which had discontinued business as under the provisions of Section 44 of the Act that: