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TMI Blog1933 (12) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... ent appeal, in which the individual partners of Burn & Company are the appellants, is whether it was competent to make this assessment on the firm after the expiry on the 31st March, 1928, of the year in respect of which the assessment was made. The explanation of the delay in making the assessment is as follows. It appears that towards the end of the year 1926-27 the partners of the registered firm of Martin & Company, which also carried on business in Calcutta, purchased the business and assets of Burn & Company. The purchase was effected not by or on behalf of the firm of Martin & Company. but by the partners of that firm as individuals who contributed funds for the purpose proportionally to their shares in Martin & Company and became p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of Martin & Company. Martin & Company appealed against this assessment, and after sundry procedure, which need not be detailed, the High Court, on the 16th May, 1930, held that the income of a registered firm cannot for the purposes of the Act be aggregated with the income of an unregistered firm, but that the income of each must be separately assessed, irrespective of the fact that the persons interested in the profits of both concerns are the same. Before pronouncing this decision, the High Court had, by a reference back to the Commissioner, ascertained that the business of Burn & Company had been bought, not with any funds belonging to Martin & Co., but with other funds belonging to the individuals who were the partners in Mart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court answered the first and second questions in the affirmative and the third question in the negative whereupon the present appeal was taken. The argument of the appellants was that on a sound construction of the provisions of the Income-tax Act it is incompetent to make any assessment to tax after the expiry of the year for which the tax is charged except in the cases provided for in Section 34. That section played so important a part in the debate that it may be well to quote it in full:- "34. If for any reason income, profits or gains chargeable to income-tax has escaped assessment in any year, or has been assessed at too low a rate, the Income-tax Officer may, at any time within one year of the end of that year, serve o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants' contention. That section applies to two cases, viz., (1) the case where income has escaped assessment in any year, and (2) the case where income has been assessed at too low a rate in any year. In either of these cases a notice calling for a return may be issued and an assessment or re-assessment may be made of such income as has escaped assessment or has been assessed at too low a rate in the tax year, but such notice may be served only within one year after the expiry of the tax year. The inferences which the appellants asked their Lordships to draw from those provisions were: (1) that it is only in the cases to which Section 34 applies that an assessment can be made after the expiry of the tax year, and (2) that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment within the meaning of Section 34. Assessment, they argue, is a definite act, indeed the most critical act in the process of taxation. If an assessment is not made on income within the tax year then that income, they submit, has escaped assessment within that year, and can be subsequently assessed only under Section 34 with its time limitation. This involves reading the expression "has escaped assessment" as equivalent to "has not been assessed." Their Lordships cannot assent to this reading. It gives too narrow a meaning to the word "assessment" and too wide a meaning to the word "escaped". That the word "assessment" is not confined in the statute to the definite act of making an or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that consequently the serving of a notice within the year 1928-29 was not an essential prerequisite of a valid assessment of that income. As there is no other time limit prescribed, or necessarily implied, in the Act, the assessment of 8th November, 1930, was therefore not out of time, and the first question was correctly answered by the High Court in the affirmative and the third question in the negative. The appellants had another argument against the validity of the assessment. Their Lordships share the difficulty experienced by the learned Chief Justice in appreciating it. It was directed to the second question stated by the Commissioner and appears to turn on the fact that after the judgment of the High Court on Martin & Company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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