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TMI Blog1962 (11) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of a private limited company, A. C. E. C. Private (India) Limited, which was carrying on business in India and made profits during the calendar year 1947. The accounting year is the calendar year ending December 31, 1948, and the relevant assessment year 1949-50. Although the company had earned large profits during the year 1947, it did not declare any dividend at the shareholders' meeting held on December 4, 1948. On March 29, 1954, the Income tax Officer passed an order under section 23A(1) of the Income-tax Act, hereinafter termed the "Act", whereby the income of the company was, in accordance with that provision, deemed to have been divided amongst the shareholders. By that order the following dividends were deemed to have been distr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax Bombay City 1 ( (1955) 27 I.T.R. 245 the notice served on 1st April, 1954, was out of time?" The second question was reframed by the High Court as follows : "If the answer to question No. 1 is in the affirmative whether the notice served on 1st April, 1954, was out of time ?" Both the questions were answered in the affirmative and against the Commissioner of Income-tax. Against the judgment and order he has come in appeal to this court by special leave. In view of the decision of this court in Sardar Baldev Singh v. Commissioner of Income-tax ) [1960] 40 I. T. R. 605 ; [1961] 1 S.C.R. 482 and Commissioner of Income-tax v. Navinchandra Mafatlal 1961] 42 I.T.R. 53 in which it was held that an assessment cannot be made under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted to it and it reframed the question in order to bring out the question which arises from the order of the Tribunal. We did not allow the question of the applicability of proviso (1) to section 34(3) to be raised as the question does not make in the point raised about the proviso to sub-section (3) of section 34. The question as framed by the High court is whether the service of notice under section 34(1)(b) was out of time. The proviso of sub-section (3) of section 34 relates to completion of assessment within a particular period when the notice is issued before the period of limitation referred to in section 34(1)(b). The two are different questions and one not include the other. At the relevant date section 23A which empowered the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under this section determining the amount of undistributed balance out of the profits of a company where the company has distributed by way of dividends out of the income of the previous year less than 60% of the assessable income; and if it has distributed less than 60% up to the sixth month after the holding of the general meeting then the undistributed assessable income shall be deemed to have been distributed as dividend amongst the shareholders as at the date of the general meeting. Thereafter, the proportionate share of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income. It comes to this that if at the end of the sixth month after the general meeting of a company to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A (1) the order could be passed at any time, the assessment would still have to be made under section 34(1)(b) of the Act and if a notice is not served in accordance with that provision the Income-tax Officer will have no jurisdiction to take any action against the shareholder. The notice under section 34(1) is to be served within four years from the end of the assessment year. It was held by this court in First Additional income-tax Officer, Mysore v. H. N. S. Iyengar [1962] 44 I. T. R. 437 that the period of eight or four years under section 34(1)(a) or (b) begins from the end of the assessment year. Besides, we cannot see why section 23A(1) should become unworkable merely because the notice under section 34(1) which is the assessment sec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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