V RAMASWAMY AYYANGAR Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) O.P. No. 2 of 1941. As directed by the High Court in the order quoted above, I have the honor to state the following case and refer the question set out in para. 5 below for the decision of the Honourable Judges, of the High Court Under Section 66(3), Income-tax Act, 11 of 1922 (hereinafter referred to as the Act).

(2.) The petitioners are the receivers to the estate of the late Arunachalam Chettiar who was an assessee on the file of the Income-tax Officer, Devakottah. Their objection is to the supplemental assessment to super-tax made on them Under Section 34 for the year 1936-37 for the purpose of which the status of the assessee was taken to be that of an "individual." The facts are as follows: Upto and including the assessment year 1933-34 Arunachalam Chettiar and his son were assessed as constituting a Hindu undivided family. On the death of the son on 9 July 1934, the family consisted of Arunachalam Chettiar, his widowed step mother and the widowed daughter-in-law. As he was the sole surviving male member of the family, the assessment for 1934-85 was made on him as an individual and super-tax levied on that basis. On the matter coming up before the Commissioner, it was held that the status of the assessee for the assessment year 1934-35 should be taken to be that of a Hindu undivided family. Since then assessments were made on the basis that Arunachalam Chettiar represented a Hindu joint family. This continued up to 1937-38 assessment. Subsequently, however, in view of the decision of the Privy Council in the cases in Kalyani Vithaldas v. Commr. of Income-tax. Bengal and Commr. of Income-tax, Bombay Presidency & Aden V/s. A.P. Swami Gomadalli the Income-tax Officer considered it necessary to make a supplemental assessment Under Section 84 of the Act for 1936-37 by treating the assessee as an "individual" and recovering the extra super-tax due. A notice Under Section 34(copy annexed marked Ex. A) was accordingly, issued to Arunachalam Chettiar, but be died on 23rd. February 1938, without making a return of income. A return of income was, however, submitted later by certain executors appointed by him under a will. The administration of the estate of the deceased passed subsequently into the hands of the receivers appointed by the Devakottah Sub-Court and further proceedings were continued in their names. They are the present petitioners. The receivers objected to the proposed; assessment on the ground that the notice Under Section 34 did not specifically state that the proceedings started were in respect of super-tax assessment, that the Privy Council decisions referred to above had no application to the case, that the proceedings started against Arunachalam Chettiar as an individual were irregular as the previous proceedings in his name had been in his capacity as manager of a Hindu undivided family and that as the Commissioner had decided in connexion with the assessment for 1934-3S that the status was that of a joint family and as circumstances had not changed since then the Income-tax Officer had no jurisdiction to change the status at that stage. The Income-tax Officer overruled these contentions holding that there was nothing illegal in the issue of the notice as Section 58 made Section 34 applicable to super-tax assessments, that there was no need to specify that the re-assessment was in respect of super-tax, that the Privy Council decisions applied to this case, that the assessments were against the same person though the present description was different in view of the subsequent interpretation of the law on the subject and that the Commissioner's decision in regard to 1934-38 assessment applied to that year alone. He accordingly made the supplemental assessment for 1936-37 treating the assessee as an individual. A copy of the assessment order in question is enclosed, marked Ex. B.

(3.) The petitioners appealed against the assessment and contended that Section 84 contemplated taxation of income that had escaped income-tax only and did not apply to super-tax, that the Income-tax Officer had no jurisdiction to take action Under Section 34, and that the notice Under Section 34 did not state that it was in respect of super-tax, that the proceedings had been started, that Section 34 could not be used to assess a person different from the one who had been assessed in the first instance and that for purpose of the supplemental assessment the status should be taken to be that of a Hindu undivided family. It was also pointed out that the provisions of Hindu Women's Eights to Property Act of 1937 had not been considered by the Income-tax Officer in deciding the status of the assessee. The Appellate Assistant Commissioner dismissed the appeal agreeing with the conclusions of the Income-tax Officer and holding that the case was covered by the decisions in Chotay Lal v. Commissioner of Income-tax and Commissioner of Income-tax Bombay V/s. D.R. Naik ( 39) 26 A.I.R. 1939 Bom. 362. A copy of the Appellate Assistant Commissioner report is enclosed, marked Ex. C.