RAM BHAGAT Vs. COMMISSIONER INCOME-TAX

JUDGEMENT

(1.) THIS case has been referred to the Full Bench at the instance of my learned brother D. K. Mahajan, J. the reason being certain conflict of authorities bearing on the point involved in the case.

(2.) BRIEFLY the facts are that Messrs. Fateh Chand-Jai Ram Das of Kaithal, a joint Hindu family firm (to be referred to as the Kaithal firm) was a partner in the firm Messrs. Ambala Flour Mills, Ambala City, the former's share being four annas in the rupee. For the assessment year 1948-49 the aforesaid share of the Kaithal firm was assessed at Rs. 7,499 and this assessment was finalised on the 15th September 1950.

(3.) HOWEVER, the assessment of Messrs. Ambala Flour Mills was reopened under Section 34 of the Indian Income-tax Act, 1922 (Act No. XI of 1922), hereinafter to be referred to as the Act, by an order, dated the 31st March 1958, and for the aforesaid assessment year the income of the share of the Kaithal firm was determined at Rs. 53,843. Thereafter, on the 6th August 1958, the Income-tax Officer issued a notice under Sub-section (5) of Section 35 of the Act to the Kaithal firm why its assessment should not be reopened. The assessee objected that Sub-section (5) of Section 35 was not applicable as the assessment for the year 1948-49 was completed on the 15th September 1950, but this objection was overruled by the Income-tax Officer by his order, dated the 16th October 1958, and he further issued demand notice against the assessee for the assessment year 1948-49 for Rs. 46,345, the difference in the share income (copy of order being Annexure 'd' to the petition ). The assessee's revision petition to the Commissioner of Income-tax, Punjab, was dismissed by the order, dated the 7th May 1962 (copy Annexure F) without giving hearing to him. The assessee then filed a writ petition under Article 226 of the Constitution to which the Commissioner, Income-tax, Punjab, as well as the Income-tax Officer, B Ward, Karnal, were parties and in essence the submissions made are that in the order of assessment of the Kaithal firm made on the 15th September 1950. there is no such error apparent on the face of the record which would attract the provisions of Sub-section (1) of Section 35 of the Act and inasmuch as the notice for rectification, dated the 6th August 1958, issued by the Income-tax Officer, was beyond the period of four years from the date of the finalisation of the assessment, the order could not be touched under Sub-section (1) of Section 35. As regards the deeming clause in Sub-section (5) of Section 35 of the Act, it is pointed out that it was enacted in the year 1953 and not being retrospective in its effect, it cannot be applicable to the assessment of a partner completed before the 1st April 1952.