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TMI Blog1933 (8) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... of that objection the matter eventually came before this Court on an application under Section 66 (2) when it was held that the firm of Messrs. Burn Company had been purchased not with any funds belonging to the firm of Messrs. Martin Company but with other funds which were the private property of the individual persons who happened to be the partners of Messrs. Martin Company and further that the acquisitive of the firm of Messrs. Burn Company by these individuals was a separate venture which should have no connection with Messrs. Martin Company for the purpose of assessment to income-tax. The order of this Court was dated the 16th May, 1930, and in accordance with that order the assessment on Messrs. Martin Company as a registered firm was modified and the profits of Messrs. Burn Company which had been added to the income of Messrs. Martin Company in that year by the Income Tax Officer for assessment purposes were deducted. In view of the fact that Messrs. Burn Company had filed a return of income in pursuance to a notice issued under Section 22 (2) in respect of their own income for the previous year, that is, the year 1927-28, the Income Tax Officer on receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessments under Section 34 of the Income Tax Act. on the income with should have been assessed in the years 1928-29 and 1929-30. On the 31st March notices under Section 34 were duly served on Messrs. Burn Company and assessments were duly made. Appeals against those assessments were preferred and finally the Commissioner of Income Tax was asked in an application under Section 66 (2) to refer certain questions of law arising out of those assessments to this Court and these are the questions we are now concerned. The Commissioner of Income Tax in his statement of the case has set out certain dates in connection with the assessments of the two years out of which these questions arise and it may perhaps be desirable that we should here reproduce them. The material dates and events are as follows :- 17th January, 1929. - Assessment for the year 1928-29 made on Messrs. Martin Company on income including the income of Messrs. Burn Company. 16th May, 1930. - Order of the High Court cancelling the assessment for the year 1927-28 made on Messrs. Martin Company on the joint income from the two firms. 4th June, 1930. - Order of the Commissioner directing the assessment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 34 of the Indian Income Tax Act, 1922, constitute a valid notice under the said section? The Commissioner points out in his statement of the case that this was an assessment which should have been ordinarily have been made in the year 1929-30 and he says that even in accordance with the contention advanced by the assessees with regard to the correct interpretation of Section 34 of the Act the notice under Section 34 was in fact served in due time, for it was served before the end of the year following the year 1929-30. It is not necessary that we should say very much with regard to the questions put forward in connection with the assessment of the year 1929-30, because Mr. Pugh who appeared on behalf of the applicants quite early in his argument admitted that the notice dated 31st March, 1931, in respect of the year 1929-30 was served within the time limited under Section 34 of the Act and he abandoned the contention that by reason of the actual form of the notice it was not a valid notice under that section. What we are really now concerned with, therefore, is the question whether or not the notice dated 31st March, 1931, requiring Messrs. Burn Company to deliver to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such income, profits or gains, or in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of Section 22, and may proceed to assess or reassess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section : Provided that the tax shall be charged at the rate at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be. The argument advanced on behalf of the applicants Messrs. Burn Company is that Section 34 ought not to have been invoked in this case at all because the income concerned had in fact not escaped assessment. It is to be observed that Section 34 can only be brought into operation if for any reason income chargeable to income-tax has escaped assessment in any year. Mr. Pugh has argued with great cogency that the income of Messrs. Burn Company for the year 1928-29 did not escape assessment though the liability for the income-tax may have been placed on the wrong shoulders. It is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary that we should express a definite opinion on this point in view of the conclusion we have arrived at with regard to the further point taken on behalf of the assessees in respect of the assessment of the year 1929-30. This point relates to the interpretation to be put upon the expression in any year for the purposes of Section 34. The argument put forward on behalf of the assessees is that no assessment could lawfully be made under Section 34 because notice purporting to have been given under that section was served more than one year after the year in which the assessment should normally have been made and that, if the income of Messrs. Burn Company escaped assessment at all it escaped assessment in the year 1928-29 and therefore proceedings under Section 34 could only have been opened before the end of the year 1929-30. The view of the Income-tax authorities seems to have been this that there was an assessment of income for the year 1928-29 on the income of Messrs. Martin Company and that assessment must be presumed to have been valid until it was declared to be invalid and it was only held to be invalid as a result of the order of this Court dated 16th May 1930, or b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice of the 31st March, 1931, was given too late and so the income-tax authorities would be relegated to the remedies, if any, they might still have consequent on the original assessment. Mr. Pugh in support of his argument as to the meaning of the expression in any year as used in Section 34 referred to a number of other sections of the Income Tax Act, 1922, notably Section 2, sub section 11, sections 3, 6, 12 and 23 and he invited us to come to the opinion that the language and tenor of those sections as well as the language of Section 34 itself indicate that in the expression in any year the word year can only refer to the actual twelve months in which an assessment would normally and properly be made. It is obvious that to hold otherwise would bring it about that if an assessment had been duly made, and if for any reason the assessment was subsequently cancelled even after a considerable lapse of time, the right of the Income-tax authorities to demand a fresh return by virtue of the provisions of Section 34 might be prolonged indefinitely. Having carefully considered the matter and having given due weight to the arguments of the learned Advocate-General we think we ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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