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TMI Blog1974 (4) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... "the 1961 Act"), in each case. While the notice aforesaid is marked annexure "2" in C.W.J.C. No. 642 of 1971, it is marked as annexure "5" in the other three writ applications. A further prayer has been made for the issuance of a writ in the nature of prohibition restraining the respondents, the Income-tax Officer, the Commissioner of Income-tax and the Union of India, from taking any steps in pursuance of the said impugned notices. The second group of cases comprises C.W.J.Cs. Nos. 640, 643, 645 and 647 of 1971. In these cases the petitioner is the same as in the previous group, namely, M/s. C. M. Rajgharia, a registered, firm and the petitions are directed against a notice dated April 21, 1971, in each case purporting to have been issued by the respondent No. 1 under section 23(2) of the Income-tax Act, 1922 (hereinafter referred to as "the 1922 Act"), a copy of each of which has been marked annexure "1" in the respective petitions. The prayers made are similar to those made in the earlier group of cases. In the third group of cases fall C.W.J.Cs. Nos. 641, 648, 649 and 651 of 1971. In these cases the petitioner is Chand Mull Rajgharia, an individual against whom a notice d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In pursuance of the interim award dated November 30, 1953, the mica dealing business was started by the petitioner-firm from December 1, 1953, and later on a partnership deed was formally drawn up on March 10, 1954. The business of the firm was carried on in the name and style of M/s. C. M. Rajgharia and a licence for dealing in mica under the Bihar Mica Control Act was also granted to it in 1954. It is an admitted fact that Chand Mull Rajgharia was at no point of time a partner of the petitioner-firm. The petitioner-firm filed the returns of its income from its inception on December 1, 1953, and went on filing the same regularly from year to year since the assessment year 1954-55. The accounting year being the financial year, the return for the assessment year 1954-55 was filed in respect of the period from Decemher 1, 1953, to March 31, 1954, on February 24, 1955. For the assessment year 1955-56 the return was filed on March 31, 1956. For the assessment year 1956-57 it was filed on March 13, 1957, and in respect of the assessment year 1957-58, the return was filed on April 24, 1958. These four years are respectively the subject-matter of C.W.J.Cs. Nos. 642, 650, 644 and 646 of 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department assessed him for the mica dealing business of the petitioner every year from the assessment year 1955-56 till the assessment year 1964-65 as his individual income. With respect to the assessment year 1955-56 onwards up to 1957-58 the Appellate Assistant Commissioner dismissed the appeals of Chand Mull Rajgharia and confirmed the assessment made by the Income-tax Officer on Chand Mull Rajgharia as an individual in respect of the mica dealing business of the petitioner-firm. Chand Mull Rajgharia then appealed to the Income-tax Appellate Tribunal. A Special Bench of the Tribunal at Calcutta, which finally heard the appeals of Chand Mull Rajgharia, after examining all the facts and circumstances, accepted the claim of Chand Mull and by a consolidated order dated March 5, 1968, for three assessment years, namely, 1955-56, 1956-57 and 1957-58, held that the mica dealing business belonged exclusively to the petitioner-firm and not to Chand Mull Rajgharia. The Tribunal, accordingly, directed the Income-tax Officer to effect necessary modifications in the assessment of Chand Mull Rajgharia made in the status of an individual. The department's application for reference under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. The sanction of the Central Board of Direct Taxes obtained, if any, was merely mechanical in nature without there being anything to suggest that before recording its satisfaction it had applied its mind to the facts and circumstances of each case. Apart from these common questions of law, a further ground of attack has been put forth in so far as the assessment year 1954-55 is concerned. This additional ground is that since the assessment for this year relating to the period from December 1, 1953, to March 31, 1954, had already been made in respect of the same business against Chand Mull Rajgharia, an individual, and tax recovered from him, the proposed assessment under section 148 of the 1961 Act in respect of this year would lead to double assessment of the same income on which taxes had already been paid. I shall now examine the validity of the aforesaid grounds of attack. It may be recapitulated that in respect of the four assessment years 1954-55 to 1957-58, the petitioner filed a return respectively on February 24, 1955, March 31, 1956, March 13, 1957, and April 24, 1958. For the first three years in question, notice under section 23(2) of the 1922 Act was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. Muthuraman v. Commissioner of Income-tax, N. Naganatha Iyer v. Commissioner of Income-tax and Commissioner of Income-tax v. Onkarmal Meghraj. Learned counsel further urged that, in any event, the original assessments having been barred under the 1922 Act in respect of assessment years for which returns had been filed under that Act before the 1961 Act came into force (i.e., April 1, 1962), section 297(2)(d)(ii) of the latter Act can have no application so as to attract the provisions of section 147, nor, for that matter, could a barred assessment be treated as one of escaped assessment of income within the meaning of section 147(a) of the 1961 Act. Reference in this connection was made to the cases of N. Naganatha Iyer, J. P. Jani, Income-tax Officer v. Indu Prasad Devshanker Bhatt and Commissioner of Income-tax v. Ranchhoddas Karsondas. I must state here that it is now well-established that a time-barred assessment under the 1922 Act does not partake of the nature of an escaped assessment within the meaning of section 147(a) and it cannot, therefore, be availed of by virtue of the provisions contained in section 297(2)(d)(ii) of the 1961 Act. The Income-tax Officer cannot issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years were closed by the Income-tax Officer as cases of "no assessment" or "not assessed" which has in law the effect of a awful termination of the assessment proceedings as has been held in the cases of M. CT. Muthuraman and Commissioner of Income-tax v. Onkarmal Meghraj. Thus, section 147(a) cannot apply and the notices must be treated as being in respect of alleged escapement of assessment of income within the meaning of section 147(b) of the 1961 Act. This then brings us to the question as to whether the impugned notices under section 148 of the 1961 Act can be held to be without jurisdiction. Before the jurisdiction of the Income-tax Officer can be invoked and power exercised under this provision, two pre-requisite conditions must be satisfied. The Income-tax Officer, firstly, must have reason to believe that income has escaped assessment and, secondly, such belief must be in consequence of the information received after the original assessment. I shall, therefore, examine as to whether these conditions necessary to confer jurisdiction on the Income-tax Officer had been satisfied in the cases on hand. It is well settled that the existence of the belief can be challenged b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been said in the counter-affidavits filed on behalf of the respondents to justify any reason to believe. Nor was anything shown to us from the original records of the department which could justify the existence of any such reasonable belief. It is true that the communication of any such reasons to hold a belief to the assessee is not necessary, but they have to be disclosed to this court and the Income-tax Officer may be confined to those recorded reasons to support the assumption of jurisdiction. The question whether the Income-tax Officer had reason to believe was not a mere question of limitation only but was a question of jurisdiction which could be investigated by this court in an application under article 226 of the Constitution of India. Reference in this connection may be made to the cases of Daulatram Rawatmal v. Income-tax Officer, Jamnalal Kabra v. Income-tax Officer and Calcutta Discount Co., Ltd. v. Income-tax Officer. It may, however, be pointed out, as contended on behalf of the respondents, that the decision of the Tribunal may be treated as information within the meaning of section 147(b), as laid down by the Supreme Court in the case of Maharaj Kumar Kamal S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Murlidhar Bhagwan Das, the exception to the rule of limitation engrafted in the aforesaid proviso only lifted the bar of limitation and did not enlarge the jurisdiction of the Tribunal. The expression "any person" in the aforesaid proviso must inevitably refer to one, who would be liable to be assessed for the whole or a part of the income that went into the assessment year under appeal or revision. Two well-settled principles under the 1922 Act with regard to the removal of this bar of limitation can be culled out from the various decisions of the Supreme Court. The "finding" or "direction" must be necessary for giving relief in respect of the assessment of the year in question and the direction must be a direction which the appellate or revisional authority, as the case may be, is empowered to give under the various sections conferring their respective jurisdictions. The words "in consequence of" or "to give effect to any finding or direction" have to be collated with and cannot enlarge the scope of the finding or direction under the proviso mentioned above. Secondly, the words "or any person" occurring after the words "to assessment or reassessment made on the assessee" in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee or any person intimately connected with the assessee, who has gone up in appeal or revision and in the original assessment proceedings of whom any finding or direction was recorded by the appellate or the revisional tribunal, as the case may be. This being the position in law, as I consider the law to be even after the change in the language of the 1961 Act, I shall now examine as to whether the petitioner-firm was the assessee or in any way intimately connected with the assessee, who went up in appeal to the Income-tax Appellate Tribunal, Special Bench, Calcutta, for the assessment years 1955-56, 1956-57 and 1957-58, on the basis of which the department had initiated the proceedings under section 148 of the 1961 Act. Those appeals were filed before the Tribunal by an individual, Chand Mull Rajgharia, in whose assessable income the income from the mica dealing business of the petitioner-firm had also been added by the Income-tax Officer which was upheld by the Appellate Assistant Commissioner and the Tribunal held that "the income from the mica dealing business will have to be excluded from the present assessment". None of the members of the petitioner-firm was an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up of cases, the impugned notices in these four applications must also be struck down as invalid. The contention put forward on behalf of the respondents that the petitioner-firm through its major partners and their agents had full knowledge of all the proceedings in the case of Chand Mull Rajgharia and that the returns filed in the status of the firm were relevant for the assessment of the individual, Chand Mull Rajgharia, does not make any difference in law. Group III. The only further relevant facts relating to the four cases falling under this group, namely, C.W.J.Cs. Nos. 649, 641, 651 and 648 of 1971 corresponding to the assessment years 1955-56, 1956-57, 1957-58 and 1958-59 are these. These cases relate to mica mining business of, according to the petitioner, a Hindu undivided family, consisting of the petitioner, Chand Mull Rajgharia, his wife, Shrimati Chandramani Devi, and a minor son born on January 27, 1954. This mica mining business had been allotted jointly to Chand Mull Rajgharia and his wife, Shrimati Chandramani Devi, each having an equal share in the same under the award of the arbitrator aforesaid followed by a decree of the court. Excepting the mica mining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment consequent on our findings regarding the award and the partition." In regard to the assessment year 1958-59, the appeal was taken to the Tribunal by Chand Mull Rajgharia, Chandramani Devi and the subsequently born minor son of Chand Mull Rajgharia which was numbered as Income-tax Appeal No. 1636 of 1964-65 and the Tribunal by its judgment and order dated April 26, 1968, held as follows: " The learned counsel submitted that after the Special Bench decision there was no Hindu undivided family at all. Since the Income-tax Officer had not the benefit of this Special Bench decision, we consider that the Income-tax Officer should have an opportunity to apply his mind afresh and decide what items of income, if any, would be assessable in the status of Hindu undivided family and what items of income would be assessable in the hands of Sri Chand Mull Rajgharia, individual, keeping in view the findings of the Special Bench. We accordingly set aside the assessment and direct the Income-tax Officer to make the assessment de novo as indicated above." It was, thereafter, that the Income-tax Officer issued a notice under section 148 of the 1961 Act in respect of each of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Shakoor Mohd. Bashir, the principle enunciated by the Supreme Court is that in the absence of any finding that during the relevant assessment years certain persons were continuing a business as an association of persons and that the income earned by them from that business was in that capacity, they could not be taxed as an association of persons. It is well-settled that where the shares were defined even amongst the members of a family, there could not be any presumption that they formed an association of persons, for in such cases they are tenants-in-common and not joint tenants. In the case of Commissioner of Gift-tax v. R. Valsala Amma, the assessee and her sister received under the will of their mother one-half share in the properties bequeathed. Both of them, however, under one deed of gift made in favour of their brother gifted away their entire property. The question was whether the gift was by individuals or by an association of persons and it was held that in law each one of them had half the right in the properties that they gifted to their brother. They had been holding the properties in question as tenants-in-common and the question whether they divided the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is argument in so far as the present writ applications are concerned has to be stated merely to be rejected. Instances are legion where writs under article 226 of the Constitution of India have issued in such cases and it is now too late in the day to suggest any such reason against the maintainability of a writ application, for evidently it does go to the root of the jurisdiction of the assessing authority. The cases of, inter alia, Murlidhar Bhagwan Das, Sheo Nath Singh v. Appellate Assistant Commissioner of Income-tax, Chhugamal Rajpal v. S. P. Chaliha, Union of India v. Rai Saheb Deb Singh Bist, Calcutta Discount Co. Ltd., Indra Co. Ltd. v. Income-tax Officer, and Madhya Pradesh Industries Ltd. v. Income-tax Officer, were all cases of writs under article 226 of the Constitution of India wherein the power of the High Court to interfere under article 226 in cases of initial lack of jurisdiction or illegal assumption of jurisdiction was always upheld. For the foregoing reasons, the impugned notices dated March 16, 1971, under section 148 of the 1961 Act against the firm, M/s. C. M. Rajgharia in C W.J Cs. Nos. 642, 644, 646 and 650 of 1971 and those dated April 21, 1971, against ..... X X X X Extracts X X X X X X X X Extracts X X X X
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