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TMI Blog1961 (1) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... e right to the Department to make an assessment. Unable to agree that an assessment could be made under section 23A. That section does not provide for any assessment being made. It only talks of the fictional income being included in the total income of the shareholders 'for the purpose of assessing his total income'. The assessment, therefore, has to be made under the other provisions of the Act, including section 34, authorising assessments. Appeal dismissed. - - - - - Dated:- 10-1-1961 - Judge(s) : S. K. DAS., M. HIDAYATULLAH., J. C. SHAH JUDGMENT The judgment of the court was delivered by HIDAYATULLAH, J.---This is an appeal by the Commissioner of Income-tax, Bombay City, Bombay, on a certificate granted by the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,072 for the assessment year 1941-42 and Rs. 10,00,411 for the assessment year 1942-43 must be deemed to have been distributed as dividend to the shareholders of the company. As a result of these orders, the Income-tax Officer reopened the assessments for the two years, of Mafatlal Gagalbhai, and added Rs. 4,48,502 and Rs. 7,96,082 as amounts deemed to have been distributed to him on the ordinary shares. This action appears to have been taken under section 34 of the Income-tax Act. The company appealed against the order under section 23A to the Appellate Assistant Commissioner, who agreed with the Income-tax Officer. The legal representative of the assessee also appealed to the Appellate Assistant Commissioner against the demand for tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that this action was taken to give effect to the directions of the Tribunal and issued a notice of demand. The legal representative of Mafatlal Gagalbhai then appealed to the Appellate Assistant Commissioner ; but it was held that no appeal lay under section 30 of the Income-tax Act and the appeal was dismissed. This view of the Appellate Assistant Commissioner was confirmed by the Tribunal ; but the Tribunal at the instance of the legal representative of Mafatlal Gagalbhai stated a case and referred the following questions to the High Court under section 66(1) for its decision : " (1) Whether the orders of the Income-tax Officer dated January 23, 1950, are appealable ? (2) Whether it was incumbent upon the Income-tax Officer to ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction under section 34 of the Act has to be taken, if necessary ; for the purpose of revising the assessment made on a shareholder. The fact that action was taken under section 34 in the past does not mean that action under section 34 has to be taken under the law as it stands. The relevant part of section 23A(1) is as follows : ' ...and thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income'. The provision is mandatory and has nothing to do with the provisions of section 34 of the Act. " In dealing with this matter the High Court was of the opinion that action under section 34 was necessary, and that, since notice was a cond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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