TMI Blog1967 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... accordingly. In the first instance, the Income-tax Officer rejected the contentions of the assessee that section 34(1)(a) could not be invoked, when no orders were made on his voluntary returns. The appeals that the assessee filed before the Appellate Assistant Commissioner and the Tribunal having failed, a reference was made by the Tribunal to this court under section 66(1) of the Act and the question referred was whether the reassessment under section 34 for all the assessment years 1950-51 to 1954-55 was invalid. Rajagopalan and Srinivasan JJ. held on such a reference in T.C.No. 150 of 1960 , that the purported re-assessment for 1950-51, 1951-52 and 1952-53 under section 34 of the Act was invalid. As regards the second proviso to section 34(3) of the Act, the learned judges felt that it was not necessary for them to pronounce on its constitutional validity or otherwise. The question whether the revenue had jurisdiction to complete the assessments for the years 1950-51, 1951-52 and 1952-23 based on the voluntary returns filed by the assessee, was also left open. With due deference to the decision of this court, the Tribunal cancelled the assessment for the years in question. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er contended as follows : (i) The assessment proceedings now initiated for the assessment years 1950-51, 1951-52 and 1952-53 are time-barred in law and the respondent has now no jurisdiction to complete the same. (ii) The respondent's purported attempt to justify the same with reference to the provisions of the 2nd proviso to section 34(3) is also illegal and without jurisdiction, in asmuch as the said provisions of the 2nd proviso to section 34(3) have been held to be ultra vires and void by the Supreme Court, in circumstances and facts similar to the petitioner's case. (iii) The provisions of section 34(3), second proviso, cannot apply to the facts and circumstances of the petitioner's case, inasmuch as the purported finding or direction were only given in the appellate orders on the Hindu undivided family of Meyyappa Chettiar in which the petitioner was not a party to the proceedings. The respondent on the other hand states that : (i) the assessments are not time-barred since they are saved by the second proviso to section 34(3) of the Indian Income-tax Act, 1922. (ii) It is not necessary for the application of the said second proviso that the petitioners should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the Hindu undivided family created a sufficient nexus resulting in the assessee being deemed as a person who shall be bound by any finding in such proceedings. It cannot be said that the uncle's action at the earlier stages did not have anything to do with the assessee or his rights. There is therefore sufficient nexus between the earlier proceedings in which the uncle of the assessee was representing the Hindu undivided family and the assessee himself. In those proceedings which of course ultimately went against the assessee certain findings were given. But the finding given is such that it was apposite in the circumstances then confronting the parties. As pointed out by the Supreme Court in Income-tax Officer v. Murlidhar Bhagwan Das, " The expression 'direction' in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other Tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the expression 'finding' as well as the expression 'direction' can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... theory of reasonable classification. It is, however, to be remembered that in Prashar v. Vasantsen Dwarkadas the majority were mainly concerned in applying the principle and text of the proviso to any person, meaning thereby an utter stranger to the earlier appeal or revisional proceedings. In that context it was held that the provisions of the second proviso to section 34(3) in so far as they authorised the assessment or reassessment of any person other than the assessee beyond the period of limitation specified in section 34 in consequence of or to give effect to a finding or direction given in an appeal, revision or reference arising out of proceedings in relation to the assessee, violated the provisions of article 14 of the Constitution of India and were invalid to that extent. As already stated by us, the ratio in the series of cases reported in 49 I.T.R. concerned itself to the consideration of the question whether an utter stranger in the sense an assessee who had no connection whatsoever with the earlier appeal or revisional proceedings, could be got in the net of taxation on the only ground that the expression used in the proviso is " any person ". As will be seen hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saged in the proviso is rational and permissible. The learned judges also referred to the earlier decisions of that court in A. Thangal Kunju Musaliar v. M. Venkatachalam Potti and Balaji v. Income-tax Officer, Special Investigation Circle, Akola, and expressed positively their view that the proviso cannot in toto be struck down as offending article 14. Though, no doubt, this view was expressed by the minority in Income-tax Officer v. Murlidhar Bhagwan. Das , yet it has a special signification in that the learned judges of the Supreme Court were indeed interpreting what was the purport and scope of the decision in Prashar v. Vasantsen Dwarkadas. That there has not been a striking down of the proviso unreservedly and without any limitation is also seen from the judgments of this court which had occasion to consider the effect of the ratio in Prashar v. Vasantsen. A reconciliation has been made and there are now clear pronouncements of this court, which we will advert to presently, to the effect that the proviso is applicable to a case where the assessee is intimately connected with the " finding " or " direction " given in the earlier proceedings. If, however, the assessee is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion that, having regard to the decisions of this court and the view expressed by the Supreme Court itself in the later decisions, it cannot be said that the proviso has been struck down by the Supreme Court without any reservation or limitation whatsoever. On the other hand, the dicta referred to by us earlier and the interpretation placed upon the decisions in the series of cases reported in 49 I.T.R. lends support to the view that the application of the proviso is linked only to persons who are not intimately connected with the proceedings. We have already held that the petitioner in this case is a person who cannot be characterised as an utter stranger to the earlier proceedings prosecuted by his uncle Meyappa ; on the other hand, his uncle did have the capacity at that time to represent him and therefore, such proceedings do have a nexus to the affairs of the assessee and such intimate connection thus established would enable the revenue to exercise jurisdiction under the proviso. We are, therefore, unable to accept the contention of the learned counsel for the petitioner that the proviso is violative of article 14 and that this is the law as laid down by the Supreme Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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