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TMI Blog1973 (1) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the two units in the hands of the bigger Hindu undivided family. The partition was not recognised even by the Appellate Assistant Commissioner of Income-tax on appeal. Finally, the bigger Hindu undivided family appealed to the Income-tax Appellate Tribunal. The Tribunal by its order dated October 28, 1954, accepted the claim and held that a partition in the family had taken place with effect from May 19, 1945. The Tribunal directed that assessments should be made on the component units of the bigger Hindu undivided family, namely, the assessee and Jawahar Lal Mani Ram. The Income-tax Officer instead of proceeding on the basis of the voluntary returns already filed by the assessee proceeded to take action under section 34(1)(b) and completed the assessment for all the four years on September 8, 1955. The assessee appealed against these assessments to the Appellate Assistant Commissioner of Income-tax, but before the appeals were taken up for hearing, the assessee moved this court under article 226 of the Constitution. On March 30, 1960, the High Court quashed the assessment orders on the ground that, as voluntary returns filed by the assessee were pending, no proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts of the present case and it fully supports the case of the department. However, the correctness of that decision was doubted by the Bench and accordingly it referred the case to a larger Bench. That is how this reference has come before this Full Bench. The first question that we have to decide is as to whether assessments could be made under section 23(3) on the basis of voluntary returns filed, or action should have been taken under section 34 with the help of the second proviso to sub-section (3) of section 34. Now, it is not disputed that when a return of income is filed by a person voluntarily under section 22(1), assessment proceedings commence against him and section 34 does not come into play at all so long as the assessment proceedings remain pending. But it is contended that a return exhausts itself after the expiry of four years from the end of the assessment year to which it relates. After the expiry of that period, no assessment is possible on the basis of the voluntary return. In such a case assessment is possible only under section 34, if the case is also covered by the second proviso to section 34(3). It is not possible to accept this contention. Sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income-tax v. M.K.K.R. Muthukaruppan Chettiar . Thus it is clear that, in the instant case, section 34 was not applicable and the assessments could be made on the basis of the voluntary return already filed by the assessee. The next question that arises is as to whether it was open to the Tribunal to give a finding or direction in respect of the assessee. Now, a finding or a direction can be given in the case of an assessee or " any person " according to the second proviso to section 34(3). The contention of the learned counsel for the assessee, however, is that the expression "any" includes only such persons as are intimately connected with the assessment of the bigger Hindu undivided family, the appealing assessee. The contention is that the assessee is not a person so intimately connected, but is a stranger. The answer to this contention is to be found in the decision of the Supreme Court in Income-tax Officer v. Murlidhar Bhagwan Das . While dealing with the scope of the words "any person", their Lordships observed at page 346 : " That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e given while disposing of an appeal and the only requirement, therefore, is that the finding or the direction should be relevant to the assessment year under appeal. In the instant case the question as to whether there was a partition and consequently as to whether the income assessed in the hands of the Hindu undivided family belonged to it or not directly arose in the assessment years 1948-49 and 1949-50 in respect of which the appeals came up before the Tribunal. It thus became necessary for the Tribunal to give a finding with regard to the partition of the family and the ownership of the income in both the appeals. The Tribunal was thus competent to give a direction that it did in each of the two appeals. In our opinion the case of Sool Chand Ram Sewak v. Commissioner of Income-tax has been correctly decided. For the reasons stated above, we answer the question in the affirmative, in favour of the department and against the assessee. The department is entitled to the costs which we assess at Rs. 200. H. N. SETH J.--I have carefully gone through the judgment prepared by Hon. Gulati J. but regret my inability to concur in the answer proposed by him. Facts leading to thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Income-tax Officer v. Murlidhar Bhagwan Das, wherein the learned judge observed as follows : " It is important to remember that the proviso does not confer any fresh power upon the Income-tax Officer to make assessments in respect of escaped incomes without any time limit. It only lifts the bar of limitation in respect of certain assessments made under certain provisions of the Act and the lifting of the bar cannot be so construed as to increase the jurisdiction of the tribunals under the relevant section. The lifting of the bar was only to give effect to the orders that may be made by the appellate, revisional or reviewing tribunal within the scope of its jurisdiction." This observation further makes it clear that in the opinion of the Supreme Court the proviso contemplated only such directions or findings contained in the order under section 31, etc., that are within the scope and ambit of the respective authority. Next question that arises for consideration is as to which persons are covered by the expression any person and whose assessment or reassessment is contemplated by the second proviso to section 34(3) of the Act. In my opinion, on this question als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtner depends upon the assessment of the firm in which he is a partner. Similarly, section 34(4) provides for a case in which, while altering the assessment of a firm or of an association of persons, the Assistant Commissioner may authorize an alteration in the assessment of a partner or the individuals constituting the association. Section 25A of the Act provides for a contingency in which assessment of an individual member of a family depends upon the assessment of the Hindu undivided family. When the Supreme Court observed that the examples of persons so connected with the assessee given by it are merely illustrative and not exhaustive, it merely meant that in the case of a firm, joint Hindu family, and association of persons, there are provisions in the Income-tax Act according to which the assessment of a partner, member of the Hindu undivided family or an individual depends upon the assessment of the firm, Hindu undivided family or the association of persons. There may still be other provisions in the Act according to which assessment of a class of persons may depend upon the assessment of some other class of persons. This decision neither lays down that it is only in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression in Murlidhar Bhagwan Das's case. Moreover, no provision has been brought to my notice which enabled the authorities to issue a direction in respect of the present assessee while passing orders under section 31, etc. I am accordingly of opinion that, for these two years, it cannot be said that the assessee was connected with the firm, Nathu Ram Jawahar Lal, and that its assessment could be altered in consequence of or in order to give effect to any finding contained in the assessment proceedings of Nathu Ram Jawahar Lal. There is no provision in the Income-tax Act which authorizes the Income-tax Officer to proceed with the present assessment proceedings initiated on the basis of voluntary returns filed by the assessee, in consequence of, or to give effect to, the findings of the Appellate Tribunal dated October 23, 1954. That order of the Tribunal, therefore, does not have the effect of lifting the bar of limitation imposed by section 34(3) of the Act. The assessment under section 23, therefore, could not be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable. The assessment orders made in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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