COMMISSIONER OF INCOME-TAX, MADRAS Vs. NACHAL ACHI

JUDGEMENT

(1.) Three questions have been referred to us by the Commissioner of Income-tax, Madras. Question (1) is : When income has escaped assessment, can an assessment be made under Section 34 on the successor of the person who, if no succession had taken place, would have been liable to the tax ? Question (2) is : If such assessment is otherwise valid, is it invalidated be made fact that the succession took place after the close of the year in which the income escaped assessment, (in this case the year 1929-30) ? Question (3) is : When a notice under Section 34 has been served on a person and he had made a return in response thereto can the proceedings be continued by the issued of notices under Secs.22 (4) and 23 (2) to the successor of such person, or should proceedings against the successor be started de novo ?

(2.) The facts of the case are that 1928-29 was the year of account and that an original assessment was made on the profits of the business carried on by the petitioners husband (deceased) on the 18 July 1929. The assessment was upon Rs. 8,148. After this assessment had been made, the Income-tax Officer thought that the assessment was incorrect and that a large part of the income of the assess, that is to say, the petitioners now deceased husband, had escaped assessment. He accordingly gave notice to him under Section 34 of the Act. This notice was dated 29 October 1930. In response to this notice on the 27 November 1930 the then assessee denied that his previous return had been incorrect and he repeated it. On 27 August 1931 he died and in November of the same year in ignorance of the fact that he was dead, notices under Secs.22 (4) and 23 (2) of the Act were issued, but, of course, could not be served upon him on account of his previous death. The Income-tax Officer, having discovered that he was dead, on the 14 December 1931 issued the same notices upon his widow, the petitioner here, and on the 15 April, 1932 he made an assessment upon her as the successor to the business carried on by her husband under Section 26 (2) upon Rs. 1.08,592.

(3.) The petitioner raises three points here in support of the contention that this assessment was illegal.