1956 (8) TMI 54 - HC - Income Tax

Summary

Issues:
Assessment validity based on notice under section 43 of the Income-tax Act.

Detailed Analysis:

The judgment addressed the issue of whether an assessment made on the assessee as an agent of a nonresident principal was valid without serving a notice under section 43 of the Income-tax Act. The assessee submitted a return as the agent, and although a notice under section 22(2) was directed to be issued, the assessee contended that it was not served with the notice. The Appellate Assistant Commissioner found that the notice under section 22(2) was not served. However, the assessee raised the issue of non-service of a notice under section 43 only during the appeal before the Appellate Assistant Commissioner. The Tribunal upheld the decision of the Appellate Assistant Commissioner, leading to the current reference.

The main contention raised by the assessee's counsel was that the return made as an agent without being called upon under section 22(2) should not be considered voluntary, and therefore, the absence of a notice under section 43 should render the assessment invalid. However, the court did not allow this argument as the assessee had previously admitted before the Appellate Assistant Commissioner that the notice under section 22(2) was not served. The court emphasized that the notice under section 43 is procedural and not a condition precedent for the Income-tax Officer to assess an agent for the liability of the non-resident principal.

The judgment highlighted the distinction between section 34 and section 43 of the Income-tax Act. While section 34 mandates the service of a notice as a condition precedent for assessing escaped income, section 43 is procedural and does not serve as a jurisdictional requirement. The court cited precedents to support the view that the notice under section 43 can be waived if the liability is admitted by the assessee, as it is not a condition precedent for assuming jurisdiction.

The court referred to previous judgments to distinguish the nature of sections 34 and 43, emphasizing that section 43 is procedural and not a condition precedent like section 34. The court concluded that the notice under section 43 can be waived and is not necessary when the liability is admitted by the assessee. Therefore, the court answered the reference in the negative, indicating that the assessment was valid, and directed the assessee to pay the costs.