TMI Blog1968 (5) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim under section 25A and assessed the entire income in the hands of the parent family. The parent family appealed unsuccessfully to the Appellate Assistant Commissioner against the rejection of the claim under section 25A and thereafter took the case in second appeal to the Income-tax Appellate Tribunal. The Tribunal by its order of August 31, 1954, accepted the claim under section 25A and directed the Income-tax Officer to recognise the complete partition of the parent Hindu undivided family with effect from May 19, 1945. Parallel appeals were filed against the assessments of the income in the hands of the parent Hindu undivided family and these assessments were set aside in second appeal by the Tribunal by its order dated October 28, 1954, with the direction : " Fresh assessments should be made, one for the period 1945 up to which the Hindu undivided family was in existence, and the other on the component units, namely, M/s. Jawaharlal Maniram and Bhagwandas Sitaram." Meanwhile, on November 18, 1950, the assessee Hindu undivided family filed returns of its total income for the assessment years 1946-47 to 1949-50. As the Income-tax Officer had rejected the claim under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made within limitation. At the instance of the assessee the Tribunal referred the following question to this court for its opinion : " Whether the assessments made under section 34 of the Income-tax Act for the assessment years 1946-47, 1947-48, 1948-49 and 1949-50 were bad in law, as they were made after the expiry of the period of four years from the date of filing of those returns on November 18, 1950 ? " The reference came on for hearing before a Bench of this court. The Bench considered it necessary to reframe the question as follows : " Whether the assessments made under section 34 of the Income-tax Act for the assessment years 1946-47, 1947-48, 1948-49 and 1949-50 were bad in law, as they were made after the expiry of the period of four years from the end of the assessment years in question instead of from the date of the filing of the returns on November 18, 1950 ? " The Bench answered the question in the negative and against the assessee, holding that the assessments were valid, even though made after the expiry of four years from the end of the assessment years in question. The assessee proceeded in appeal to the Supreme Court. On April 19,1967, the Supreme Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee had filed its returns for the relevant assessment years on November 18, 1950. The Income-tax Officer took no action on those returns. That was apparently because he had already taken the view that the income was assessable in the hands of the parent Hindu undivided family. Now the period of limitation for making an assessment is four years from the end of the relevant assessment year. That period had expired in respect of all the four assessment years before March 4, 1955. The Income-tax Officer was now precluded from assessing the income by the exercise of his powers under section 23. It was no longer open to him to make assessment in the exercise of what we may describe as his ordinary jurisdiction for the four assessment years. Now, income may escape assessment for any of several reasons. The assessee may have omitted or failed to file a return of his income ; or he may have omitted or failed to disclose fully and truly all material facts necessary for his assessment. Those are cases contemplated by section 34(1)(a). There may also be cases where, without any default on the part of the assessee, income may escape assessment. Such cases fall within the contemplation of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer under section 34 as well as the assessment orders made in pursuance of those notices were made within limitation. Proceeding on the basis affirmed by the learned counsel for the Commissioner that the proceedings fall to be considered under section 34(1)(b), it is plain that the notices which should have been served upon the assessee within four years from the end of the relevant assessment years were in fact served beyond that period. It has been urged on behalf of the Commissioner that, inasmuch as the proceedings under section 34 were taken pursuant to the direction of the Tribunal in the appeals filed by the parent Hindu undivided family the matter must be examined by reference to the second proviso to section 34(3). On the basis of that provision it is contended that the bar of limitation stood removed. It is said that second proviso to section 34(3 removed the bar of limitation for the purpose of taking assessment proceedings against any person in consequence of or to give effect to the direction contained in the appellate order relating to the parent Hindu undivided family. In the instant case such person is the assessee Hindu undivided family. The contention on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laid down by this court in Suraj Mall Mohta Co. v. A. V. Visvanatha Sastri applies. In that case sub-section (4) of section 5 of the Taxation on Income (Investigation Commission) Act was challenged and this court pointed out that there was nothing uncommon either in properties or in characteristics between persons who were discovered as evaders of income-tax during an investigation conducted under section 5(1) and those who were discovered by the Income-tax Officer to have evaded payment of income-tax. Both these kinds of persons really belonged to the same category and therefore required equal treatment. This court pointed out that section 34 of the Indian Income-tax Act and sub-section (4) of section 5 of the impugned Act dealt with persons who had similar characteristics and properties and therefore a different treatment of some out of the same class offended the equal protection clause embodied in article 14 of the Constitution. It seems to me that the position is the same here. Whether, persons who evade tax are discovered by means of a finding given by a tribunal or they are discovered by any other method, they really belong to the same category and therefore require equa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s given and fall under section 34(1)(a). Both of them have common qualities, common characteristics and common peculiarities and traits...The submission of the respondents that there is no reasonable basis for classification between those who have escaped assessment under section 34(1)(a) and those third parties who have escaped income-tax but with regard to whom a direction or an order is made under proviso (ii) to section 34(3) is well founded and therefore the provision is unconstitutional and hit by article 14." And Sarkar J. was also in no doubt about it at all. He had held in Commissioner of Income-tax v. Sardar Lakhmir Singh : " I think, therefore, that the second proviso to sub-section (3) of section 34, as amended by the Amending Act of 1953, in so far as it affects persons other than assessees is void as violating article 14 of the Constitution." And he expressed the same opinion in Prashar's case. The three learned judges constituted the majority of the Bench hearing the appeal. We must, therefore, take it that the Supreme Court has declared that the second proviso to section 34(3) is ultra vires in so far as it authorises the assessment or reassessment of any pers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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