HAZOORA SINGH Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) HAZOORA Singh was treated as the agent of Mohinder Singh, a non-resident, under Section 163 of the Income-tax Act, vide order dated March 21, 1970. He had purchased agricultural land in the name of Mohinder Singh on September 15, 1966, at a total expense of Rs. 96,000. Hazoora Singh, his agent, was issued a notice under Section 148 as representative assessee and he filed the return showing nil income on behalf of the non-resident. However, in the statement recorded by the Income-tax Officer, he detailed the source of the sale consideration as under : Rs. (i) 6,300 Income from land of non-resident. which is in possession of the assessee. (ii) 25,000 Loan advanced by the wife of thenon-resident. (iii) 20,000 Loan taken from one Joginder Singh. (iv) 20,000 Loan taken from Shri Mohinder Singh. (v) 15,000 Loan from Shri Homojit Singh. (vi) 10,000 Contribution by the assessee fromhis own funds.

(2.) BEFORE the assessment proceedings were completed, the sale in favour of the non-resident was pre-empted and the assessee got back the consideration of Rs. 96,000. The Income-tax Officer did not accept the version of the assessee and included in his assessment, the entire amount as income of the non-resident from undisclosed sources. On appeal, the Appellate Assistant Commissioner upheld the genuineness of the loan raised from Mohinder Singh and deleted the amount of Rs. 20,000 from the assessed income. The finding of the Income-tax Officer regarding the remaining amount was affirmed. The appeal filed before the Tribunal also failed. The assessee then moved an application under Section 256 (1) of the Income-tax Act and the following three questions have been referred for our opinion : " (i) Whether the Tribunal was right in holding that the assessment had been made on the applicant as agent of the non-resident within the statutory period of limitation ? (ii) Whether the Tribunal was right in holding that liability of the agent appointed under Section 163 is retrospective and the agent is liable for all omissions of the non-resident prior to the period of his appointment as agent ? (iii) Whether, in view of the finding of the Income-tax Appellate Tribunal, that the agent had no business connection with the non-resident, the agent is liable to be assessed in respect of all the income of the nonresident which was not earned by the non-resident through the agent ? "

(3.) QUESTION No. (i ).--A notice under Section 148 of the Income-tax Act, in the case of a person treated as non-resident under Section 163, is required to be issued before the expiry of a period of two years from the end of the relevant assessment year. The relevant assessment year in the present case is 1967-68 and a notice was issued before the end of March, 1970. The limitation for assessment as provided in Sub-section (2) (a) of Section 153 is four years from the end of the assessment year in which the notice under Section 148 was served. The notice, as stated above, was served within the period of limitation before the end of March in the year 1970. Therefore, the assessment completed on March 30, 1974, was rightly held to have been completed within the statutory period of four years from the end of the assessment year in which the notice under Section 148 was served. Question No. (i) is accordingly answered against the assessee and in favour of the Revenue.