1975 (1) TMI 14 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the scope of the third proviso to section 36 of the Karnataka Agricultural Income-tax Act, 1957 in relation to assessment proceedings for the years 1965-66 and 1966-67.

Assessment Proceedings for 1965-66 and 1966-67:
The respondent assessed P. C. Pai as the karta of a Hindu undivided family for the mentioned years, despite a division in the family. Subsequent writ petitions challenged this assessment, leading to a court order quashing the assessments and allowing for reassessment of P. C. Pai and his brothers as tenants-in-common.

Validity of Assessment Orders:
The respondent initiated proceedings against P. C. Pai's brothers, issuing notices beyond the five-year limitation period prescribed by section 36. The respondent argued that the assessment orders were saved by the third proviso to section 36, which excludes the time taken for assessment due to court orders or pending proceedings.

Interpretation of "Any Person" in the Proviso:
The judgment delves into the interpretation of the term "any person" in the proviso, citing precedents from the Indian Income-tax Act, 1922. It clarifies that "any person" includes those intimately connected with the assessments under appeal, such as partners in a firm or members of a Hindu undivided family.

Application of Proviso to the Case:
The court concludes that the petitioners, as tenants-in-common, do not fall within the scope of "any person" under the proviso. Since they were not connected to the previous assessment proceedings and were not represented by P. C. Pai, the assessment orders cannot bind them, and the period of limitation under section 36 must be adhered to.

Relevance of Second Proviso:
The respondent's attempt to rely on the second proviso to section 36, which excludes time due to stay orders or pending appeals, is dismissed as inapplicable to the present case where no such stay orders were issued by the court.

Final Decision:
The court rules in favor of the petitioners, quashing the impugned assessments for the years 1965-66 and 1966-67. The petitioners are awarded costs, and the assessment orders against them are deemed invalid due to being beyond the prescribed limitation period.