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TMI Blog1982 (8) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Hungerford Investment Trust Ltd., for the assessment years 1949-50, 1950-51 and 1951-52. The Hungerford Investment Trust Ltd. filed a return. It appears that the ITO obtained approval of the Commissioner on 24th March, 1954, and thereafter issued the notice u/s. 34 in the name of M/s. Turner Morrison and Co. Ltd., agents of M/s. Hungerford Investment Trust Ltd., for the year 1949-50. Though the approval was made as aforesaid the notice u/s. 34 was issued against Hungerford Investment Trust Ltd. Return was filed by Turner Morrison Co. Ltd., as agents of Hungerford Investment Trust Ltd., and the status was shown as non-resident. For the year 1950-51 the notices were issued on Hungerford Investment Trust Ltd. for the income in respect of dividend deemed to have been declared u/s. 23A; similarly for 1951-52 also notice was served on Hungerford Investment Trust Ltd. M/s. Turner .Morrison and Co. Ltd., as agents of the appellant, filed return mentioning the name of the assessee as M/s. Hungerford Investment Trust Ltd. and the address given was of Singapore. Thereafter, it appears, that the appellant was not finally assessed but M/s. Turner Morrison and Co. Ltd. was, however, assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessments for the years 1950-51 and 1951-52, the ITO initiated proceedings for direct reassessment on the non-resident company, but inadvertently in the assessment order the assessee was shown as the resident company as agents of the non-resident company and, therefore, in my opinion, the AAC is justified in giving a direction to make fresh direct assessment on the non-resident company as the assessee all throughout remains the non-resident company and the direction visualises only a change in the machinery for the assessment. Similarly, in connection with the assessment of 1949-50, though the ITO sought to adopt the machinery of assessment on the non-resident company through the resident agent, the AAC is justified in giving direction to make a direct assessment on the non-resident company as the assessee remains the non-resident company and only machinery of assessment is sought to be changed. Thereafter, the respondent by letter dated 26th October, 1961, issued notices on the Hungerford Investment Trust Ltd. (in liquidation), u/s. 34 of the Indian I.T. Act, and under s. 23(2) thereof for the assessment years 1949-50, 1950-51 and 1951-52. The notices were said to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 29th October, 1961, were maintainable and the notices were valid. The learned judge of the court of the first instance accepting the contention urged before him on behalf of the respondent by his judgment and order dated January 31, 1972, dismissed the said application and discharged the rule nisi. Learned judge of the court of the first instance was of the view that taking or continuation of the proceedings against the appellant pursuant to the direction of the AAC was not barred u/s. 34(3) because it could not be said that M/s. Hungerford Investment Trust Ltd. could come within the mischief of the word " any person " in the second proviso to s. 34(3) in its widest connotation. According to his Lordship he appellant would come within the mischief of the word " any person " meaning thereby a person intimately connected with the assessment for the year under appeal. His Lordship observed as follows : " The expression ' any person ', therefore, cannot be read to mean ' any person ' in its widest connotation. If it is so read then the case decided in S. C. Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 (SC), will come into play. But, otherwise, the expression 'any person' is nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals against the appellate order to the Tribunal as agent of Hungerford Investment Trust Ltd. which was subsequently withdrawn. In the premises I am of the opinion that the direction given by the Assistant Commissioner while setting aside the assessment against Turner Morrison Company cannot be said to be direction to any person in its widest connotation." It was submitted on behalf of the appellant that in view of the fact that the time-limit for completing the assessment u/s. 34(3) of the Indian I.T. Act, 1922, is four years from the end of the assessment year in which the income is first assessable, no reassessment for the said three years can be made after 31st of March, 1954, 31st of March, 1955, and 31st of March, 1956, for the assessment years 1949-50, 1950-51 and 1951-52, respectively. The impugned notices given long after the time for completing the assessment are bad in law. It was further submitted that the proceedings for reassessment having been initiated for including the deemed income u/s. 23A, such proceedings can only be u/s. 34(1)(b) of the Act. It was further submitted that in the instant case it cannot be said that the bar of limitation set out in s. 34(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee in respect of whom a finding or a direction is given is ultra vires the Constitution offending art. 14. The Supreme Court has not held that such a direction or a finding, if given in respect of any person other than the assessee, will not violate art. 14 of the Constitution, if such other person is intimately connected with the assessee. It was submitted that the above position has not been changed by the subsequent decisions of the Supreme Court in the else of ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335 (SC) and CIT v. Ambala Flour Mills [1970] 78 ITR 256. The Supreme Court further pointed out that the precise question which it was called upon to decide in Murlidhar's case, did not appear to have been the subject of decision in Prashar's case [1963] 49 ITR 1 (SC). According to the counsel, the two cases referred to by the learned trial judge in his judgment, viz., [1964] 52 ITR 335 and [1970] 78 ITR 256 (SC) do not in any way touch or affect the law laid down by the Supreme Court in [1963] 49 ITR 1 (SC) and [1963] 49 ITR 70 (SC). The two cases relied upon by the learned trial judge are distinguishable in view of the peculiar facts and issues involved in those cases. It wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant, being the deemed dividend under s. 23A of the Indian I.T. Act, 1922, before its amendment in 1955. (c) The said incomes was assessable for the assessment years 1949-50, 1950-51 and 1951-52. For the assessment years 1950-51 and 1951-52 proceedings for direct reassessment on the appellant (non-resident company) were initiated by the ITO but inadvertently the assessment order was passed in the name of Turner Morrison and Co., as agent of the non-resident company .For the assessment year 1949-50 notice u/s. 34 of the said Act was issued in the name of Turner Morrison and Co. as agent for the appellant-company on April 5, 1954, which was beyond the period of limitation. Thus, the appellant company was the assessee in the proceedings for all the three assessment years. But the ITO committed an irregularity at the last stage of the reassessment proceedings for the assessment years 1950-51 and 1951-52 and at the initial stage of the proceedings for the assessment year 1949-50. Therefore, the AAC was quite competent to give necessary directions to the ITO u/s. 31(3)(b) of the Indian I.T. Act, 1922, for a proper assessment of the assessee. Relying on the case of CIT v. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion whether the direction of the AAC was given in ail appeal filed by the assessee concerned. Reference was made to the decisions of the Supreme Court in the cases of Daffadar Bhagat Singh and Sons v. ITO [1969] 71 ITR 417 (SC), pp. 420 to 422, CIT v. Ambala Flour Mills [1970] 78 ITR 256 (SC) at pp. 260-261, Rangalal Jajodia v. CIT [1971] 79 ITR 505 (SC) at pp. 512-513 and CIT v. Vadde Pullaiah and Co. [1973] 89 ITR 240 (SC) pp. 244 and 245. The main point that falls for determination is whether the reassessments against the appellant were barred by limitation. According to the Revenue, the reassessments are not barred by limitation because of the second proviso to s. 34(3) of the Act. According to the appellant the second proviso has no application in view of the fact that the Turner Morrison and Co. Ltd. and the Hungerford Investment Trust Ltd. are two separate legal entities. In the case of S. C. Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 (SC), it has been held by the Supreme Court that the provisions of the second proviso to s. 34(3) of the Indian I.T. Act, 1922, is ultra vires of art. 14 of the Constitution of India in so far as they authorise the assessment or reass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son " ill the, proviso is read in the widest sense then it will be hit by the decision of the Supreme, Court in S.C. Prashar v. Vasantsen Dwarkadas [1963] 49 ITR 1 (SC). On the contrary if the expression " any person " means a person intimately connected with the assessee then it will not be hit by the decision of the Supreme Court in S. C. Prashar's case [1963] 49 ITR 1 (SC). In our view the learned judge of the court of the first instance rightly came to the finding that Hungerford Investment Trust Ltd. came within the mischief of the words " any person " meaning thereby a person intimately connected with the assessment under appeal. We respectfully agree with the finding of the learned judge of the court of the first instance as also with his reasonings for such finding. As M/s. Hungerford Investment Trust Ltd. being a non-resident company is liable to be assessed through its agent, Turner Morrison and Co. Ltd., it cannot but be said that Hungerford Investment Trust comes within the expression " any person " in the sense of a person being intimately connected with the assessee. III the facts and circumstances of this case as stated hereinbefore we are of the opinion that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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