TMI Blog1968 (7) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... ame. The petitioner's father died on November 11, 1956, and the petitioner became entitled to the share in the above lands as was held by his father. All the five members, who were apparently interested in a joint venture, earlier leased out and later entered into an arrangement with one Joseph for plotting out and sale of the lands as house sites and the scheme was fully implemented in the year 1959. Indeed, the lay-out for the property was also approved by the Municipality. In the meantime, the petitioner conveyed his one-fifth share in the property to the above-said Joseph for Rs. 30,450. According to the petitioner, the excess gains made by him by the sale amounted to Rs. 10,800. For the year of assessment 1960-61, such gains were brought to tax by the Third Additional Income-tax Officer, Coimbatore. As the deeds evidencing the original purchase and the subsequent sale were not produced, the purchase price was estimated at Rs. 12,000 and the sale price, as spoken to by the petitioner, was accepted and the profits on re-sale by way of plots was reckoned by the revenue at Rs. 18,450 rejecting the contention of the assessee that no tax in the instant bargain was attracted because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the revenue has no jurisdiction to assess once over the said income as if the association of persons was being tackled for a second time. He would also state that once the income of the association was charged in the hands of the members individually and the assessments of the members remained as valid assessments, there could be no fresh assessment of the income in the hands of the association. Though at one time the petitioner asked for some time to file the return, he did not do so, but raised the above legal contention in answer to the notice issued by the respondent as above. He would state that the department can only seek to assess the income either in the hands of the members of the association or the association as such and, having once assessed the individual members of such an association, it is no more open to the department to go behind it and claim to assess the association. In the records filed before us, it is seen that certain particulars were also furnished by the petitioner through his counsel relating to the facts and circumstances under which the original assessments were made against him and others who were involved in the joint and concerted adventure. By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It only envisages relief from total taxation. The revenue proceeds that section 14(2)(b), to which section 3 is subordinate, postulates that, in the matter of assessments there can be no co-existence of an assessment on the association along with assessments on the members. In any event, their specific case is that action under section 148 is justified in case of escapement of assessment of income of an association and this need not be avoided because one of its members has already been assessed in respect of his share. On the facts, the department would maintain that the totality of the material and the figures were not before the officer when the original assessment was made and no return of income having been filed by the association as an entity, the present action of the respondent is justified. It would thus be seen that whilst the petitioner's case on the one hand is that the Income-tax Officer having elected to assess him having on his files sufficient material to call upon the so-called association of persons to furnish a return and make them consequentially liable thereon, he cannot, by invoking section 148 of the present Act, vest himself with jurisdiction to re-ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamination of the relevant provisions as above indicates that at the time when the revenue intends to charge income-tax on an association of persons, it has obviously the option to proceed in one of two ways. The assessing authority can either assess the association as such or the members of the association individually. If the Income-tax Officer, at the time when he makes up his mind to charge the income of the association for income-tax, has information that the assessee before him is a member of an association of persons, then under section 2(12) of the Act, he has the right to treat such member who is being assessed by him individually as the principal officer of the association. In fact, he has also the right to give such a notice to the individual before him as the principal officer of an association which has been discontinued by reason of the fact that the concerted action in which the members of the association were involved was completed by then. No doubt, a specific exemption is granted to a member who has been assessed on the income derived by him from the joint adventure in case the association is again or presumably simultaneously tackled for purposes of assessment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a pointer to the fact that, even at the time when the original assessment was made, the Income-tax Officer had knowledge that the petitioner had one-fifth share in the lands sold by the association of persons. No doubt the purchase deed and the sale deeds which followed were not placed before the Income-tax Officer. The fact, however, remains that the officer was aware that there was a concerted action by more than one person and such joint adventure related to the sale of lands which were sub-divided into housing sites and such an adventure in the nature of trade was with an intention to gain profits. In the instant case one other factual detail, which touches on the enquiry, is that while making the original assessment the Income-tax Officer made no reservation whatsoever that the assessment was being provisionally made on the assessee so as to give him an exemption under section 14 of the Indian Income-tax Act. On the other hand, whilst knowing the joint adventure of persons including the petitioner, the Income-tax Officer provisionally accepted the figures furnished by the petitioner as regards the purchase and sale of the lands and assessed him accordingly. It cannot be den ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Legislature by amending section 34(1) in 1948 to enable the Income-tax Officer to re-open final decisions made against the revenue in respect of questions that directly arose for decision in earlier proceedings. If that were not the legal position it would result in placing an unrestricted power of review in the hands of the Income-tax Officer to go behind the findings given by the hierarchy of Tribunals and even those of the High Court and the Supreme Court with his changing moods." Mr. Balasubrahmanyan, for the revenue, however, contends that strictly there is default since the association of persons has not filed a return. This would be, however, begging the question. When all particulars were before the Income-tax Officer, and the Income-tax Officer himself did not choose to call upon the assessee as a member or principal officer of the association of persons to file a return, but was satisfied in exercising his jurisdiction to assess the petitioner as an individual instead of as a member of association of persons, then such an option or election exercised by him cannot be lightly given up only for the purpose of reopening a closed assessment. This would be, to adop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons to assess either the association of persons or the members of the association individually. The view expressed by us gains support also from the ratio in the case of Joti Prasad Agarwal v. Income-tax Officer, where again the principle was that, once the income of the association was charged to income-tax in the hands of the members individually and the assessments of the members remained as valid assessments, there could be no fresh assessment of the income in the hands of the association. The impact of the above judicial precedents on the facts of the case may then be considered. The rule asked for by the petitioner is in the nature of a writ of prohibition. It postulates a patent want of jurisdiction on the part of the respondent. The jurisdictional fact, which is essential to vest jurisdiction in the respondent to re-open a final assessment, appears to us to be that, at the original stage, no primary facts or material information was available to the respondent to consider the adventure of the petitioner as one by an association of persons. We are unable to be persuaded to accept the contention of the revenue that there was such a paucity of material at the first stage re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asmuch as the petitioner has filed a return pursuant to the notice, the present request of his to interdict the proceedings through article 226 of the Constitution of India is premature and not legitimate. This argument, however, overlooks the main and only contention of the petitioner that the proposed action of the respondent is without jurisdiction and, therefore, illegal. The question raised goes into the root of the matter and, in our view, it would not make any difference if the petitioner seemingly participated in the proceedings up to a certain point and thereafter rightly raised the question whether the respondent had the power and the right to initiate such proceedings under section 148 of the Indian Income-tax Act. In matters like the one under consideration, if the question to be decided is whether the impugned order or notice is passed by the officer concerned in exercise of his lawful jurisdiction under any statute, then such incidental matters as has been referred to by the revenue cannot prevent the court from issuing a rule if the facts and circumstances justify it. It is thus seen that the impugned notice was sought to be issued by the respondent without jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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