TMI Blog1954 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... with at its various stages by the Income-tax authorities and further by reason of the fact that certain papers, which we would have liked to examine, were not available. On some date in the year 1935 or 1936 a notice, for the assessment year 1936-37, was served on Mohd. Hanif under section 22 of the Indian Income-tax Act to file a return of his income up to 31st March, 1936. The notice is not available and it is not known in what status Mohd. Hanif was required to submit his return. He, however, submitted his return in the status of an individual and claimed that he had suffered a loss of ₹ 1,364. Mohd. Hanif was a resident of village Kotwari, District Ballia, where money-lending business was carried on by members of his family. The family tree given in the statement of the case is as follows:- Sh. Rahim Bux H. Mohd. Husain H. Mohd Jan Mohd. Hanif Mohd. Zahir Anwar Ali Abul Hasan The family had also some income from interest received from a private limited company known as Sugauli Sugar Works. The loan had been made to the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 1938-39 filed at Ballia and that income had thus escaped assessment at least partially and issued a notice under section 34 of the Income-tax Act on the 5th of March, 1940. This notice was sent to Mohammad Hanif, son of Chhote Mohd. Husain, village Kotwari, at present at Sugauli and was as follows:- Whereas I have reason to believe that your income from business which arose, accrued or was received in the previous year ending 31st March, 1938, and which should have been assessed for the financial year ending the 31st March, 1939:- (a) has partially escaped assessment, (b) has been assessed at too low a rate, and I therefore propose- (a) to assess the said income that has escaped assessment, (b) to re-assess your said income at the correct rate. I hereby require you to deliver to me, not later than 10th April, 1940, or within 30 days of the receipt of this notice, a return in the attached form of your income from all sources which was assessable in the said year ending the 31st March, 1939. Two things are here noticeable: The notice was to Mohd. Hanif and it was not indicated that the notice to him was as principal officer of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it was held that no question of law arose and the application was dismissed on the 22nd of July, 1944. Mohammad Hanif then moved this Court under section 66(2) of the Income-tax Act and on the 12th of September, 1949, a Bench of this Court directed the Appellate Tribunal to state a case and formulate the points of law for decision by this Court, and it was as a result of that order that the present reference has been made and the two questions mentioned above have been referred to us for decision. Learned counsel for Mohammad Hanif has urged that the original notice issued under section 22 of the Income-tax Act directing Mohammad Hanif to file his return for the assessment year 1936-37 with reference to the year ending 31st March, 1936, being addressed to Mohammad Hanif as an individuals and he having submitted his return on an individual, the Income-tax Officer could not in the assessment order change the status to an association of individuals treating Mohammad Hanif as its principal officer. Apart from the fact that this question has not been referred to us for decision, we have the further difficulty that the facts relating to it are not mentioned in the statement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Any person connected with the authority, company, body or association upon whom the Income-tax Officer has served a notice of his intention for treating him as the principal officer thereof. Rejecting the request made that a question of law be referred on that point, a Bench of this Court said on the 12th of September, 1949:- The second question is that Mohammad Hanif could not be treated as the principal officer of the association of individuals without a notice under section 2(12)(b) of the Indian Income-tax Act. Notice under section 2(12)(b) is only necessary if an Income-tax Officer wants to treat a person as the principal officer of a local authority or a company or any other body or association, a person, who is not the secretary, treasurer, manager or agent. In the cases of secretaries, treasurers, managers or agents no such notice is needed. The question, therefore, was not whether the Income-tax Officer should have issued notice under section 2(12)(b), but whether Mohammad Hanif was the manager or agent of this association of individuals. A point in that form was not raised before the Tribunal, but we have it from the judgment of Income-tax Officer and from the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to the effect that an assessment order made before the amendment of the Income-tax Act in the year 1939 depended for its validity on the notice under section 22 of the Income-tax Act and, if the notice was defective, the entire proceedings must be deemed to be illegal and the Income-tax Officer could not depend on the illegal assessment for the purpose of making a reassessment under section 34 of the Income-tax Act. He has relied on a passage in the judgment in In re L. Pitamber Prasad [1942] 10 I.T.R. 370 where the learned judges pointed out at page 378 that: The Act is a highly technical one, and Income-tax Officers would be well advised in future when they send a notice under section 34 read with section 22 of the Act, to emphasise the fact that a return duly setting forth the total income is required and a mere reference to the former return would not be treated as valid. The decision in the case is not relevant for our purposes. Reliance is placed merely on the observation that the Act was a highly technical one which fact cannot be disputed or denied. In the matter of Kajori Mal Kalyan Mal of Generalganj, Cawnpore [1930] A.I.R. 1930 All. 209, where a notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9] I.L.R. 53 Mad. 420, Sirdar Bahadur Indra Singh v. Commissioner of Income-tax, Bihar and Orissa [1943] 11 I.T.R. 16, and Kamlapat Motilal v. Commissioner of Income-tax, U.P. [1950] 18 I.T.R. 812, was hardly necessary. The question, however, in this case is not whether the assessment order passed on the 19th of October, 1938, operates as res judicata but, whether in view of the fact that on the 19th of October, 1938, the Income-tax Officer had made an assessment on Mohammad Hanif as the principal officer of an association of individuals consisting of himself and three others the Income-tax Officer could serve him in his individual capacity with a notice under section 34 of the Income- tax Act. It would have been better if the Income-tax Officer had indicated in that notice that it was being served on Mohd. Hanif as the principal officer of an association of individuals consisting of himself and three others but the fact of the previous assessment having been mentioned Mohammad Hanif could have in his mind no doubt as to the status in which the notice was being served on him. Notice under section 34 of the Act on the ground that a part of the income had escaped assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mad Jan, Mohammad Hanif, Mohammad Zahir, Anwar Ali and Abul Hasan in their status as an association of individuals treating Mohammad Hanif as the principal officer of that association of individuals. On a further appeal to the Tribunal the Tribunal tried to regularise the proceedings by omitting the name of Mohammad Jan and omitting the income of the house property in Calcutta. The association of individuals was held by the Tribunal to consist of four persons, Mohammad Hanif, Mohammad Zahir, Anwar Ali and Abul Hasan. The Appellate Tribunal could not assess to income-tax persons who had not been assessed to income-tax by the Income-tax Officer. In the appeal before them the Tribunal could no doubt pass such order as it thought fit. [Section 33(4)]. The case should have been sent back to the Income-tax Officer to make a fresh assessment. Because Mohammad Hanif was treated all along as the principal officer he could not be assessed by the Income-tax Officer as the principal officer of say A and B, by the Appellate Assistant Commissioner as the principal officer of an association of Individuals consisting of B, C, D, E and F, and by the Appellate Tribunal as the principal offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art the proceedings against them and pass a suitable assessment order. Merely because the same person was treated as the principal officer of different groups of persons it was not open to the Income-tax authorities from one stage to another to go on changing that group. As has been pointed out in most cases this Act being a fiscal Act of a highly technical nature it must be strictly construed and no laxity should be encouraged which would jeopardise the rights of the assessee given to him under the law. If the Income- tax Officer had passed the order against Mohammad Hanif as the principal officer of the association of individuals consisting of C, D, E and F, these four persons had a right to have it challenged before the Assistant Commissioner and the Commissioner of Income-tax. They might have liked to be personally present. They might have liked to place further facts and circumstances before the Income-tax authorities. By the procedure followed by the Appellate Tribunal the final order was passed against them without giving them an opportunity of making a proper representation. We are of the opinion that the answer to the second question must be in the negative, that is, on ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
