1976 (2) TMI 28
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....ments were first made under the Income-tax Act, 1922, in the ordinary way. Afterwards, taking advantage of the Voluntary and Quasi-Voluntary Disclosure Scheme announced by the Government of India in May, 1951, the assessee made disclosures in respect of those assessment years, Therefore, reassessments were made for those years under section 34 of the said Act by separate orders all dated 31st December, 1951. Assessments for the years 1949-50, 1950-51 and 1951-52 were made on 23rd March, 1954, some date in February, 1955, and 28th February, 1956, respectively. Thus, assessments for the ten years between 1st April, 1941, and 31st March, 1952, were finally completed, and that is how matters rested until the events to which I will now refer. On 26th September, 1963, the Income-tax Officer issued ten notices to the assessee, one in respect of each of the said ten assessment years. The notices alleged that one Harparshad Bhatnagar had been employed by the assessee during the years 1941 to 1951, and had been paid income chargeable under the head " Salary ", but income-tax had neither been deducted at source nor paid to the Government as required by section 18 of the Indian Income-tax Ac....
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.... the orders made by the Income-tax Officer cancelled. In these petitions it was admitted that the amounts alleged to have been paid as commission were in fact " withdrawn" by Harparshad Bhatnagar from the assessee, but it was explained somewhat euphemistically that " the nature of these payments is entirely different and amounts to sharing of benefits for transactions outside the records ". It was still denied that the payments were in the nature of salary or commission and that there was any obligation to deduct tax at source. Later, in a statement filed before the Commissioner by the authorised representative of the assessee, further elucidation was offered as follows : These huge amounts were obviously not in the nature of salary or commission for services rendered, but these were payments made to keep his mouth shut about under-statement of income by the assessee. Those facts were made clear to the department at the time of voluntary disclosure and accordingly these amounts were not taken as part of the income of the assessee but that of Harparshad Bhatnagar. " By a common order dated 4th August, 1967, the Commissioner dismissed all the petitions for revision. He held that ....
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....ondents. In the petitions the petitioner is described as " M/s. Bal Kishan Dass & Sons (H.U.F.) ". It appears that the Hindu undivided family carrying on business in this name disrupted in September, 1950, and its business was then taken over and continued by a firm. In those circumstances, it was contended that the Hindu undivided family having ceased to exist when the petitions were filed could not possibly be the petitioner, and hence the petitions were not maintainable. However, it appears clearly from paragraph 1 of the petitions, and of the affidavits in support thereof, that Bal Kishan Dass, the karta, was intended, and, indeed, thought to be, the petitioners, notwithstanding the description in the cause title. After I indicated that I would be prepared to grant leave to amend the petition so as to show that the karta was in fact the petitioner, counsel for the respondents decided, in order to save time, not to insist on a formal amendment. The case was then heard as if the karta and not the Hindu undivided family was the petitioner. The point, which I regard as decisive, is the one relating to the time within which proceedings for recovery of tax must be commenced. To dea....
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....ecovery of any sum payable under this Act shall be commenced after the expiration of one year from the last day of the financial year in which any demand is made under this Act :........ Once again, I omit the provisos which are of no importance. At this stage I pause to make to observations. First, it is to be noticed that section 46 does not specifically refer to an assessee " deemed " to be in default. So, it can be argued, and, indeed, was argued, that under the Act of 1922 there was no machinery provided for effecting recovery of tax from an assessee " deemed " to be in default. Secondly, the time limit provided by section 46(7) for commencing proceedings for recovery is dependent on when " any demand " were intended to mean " notice of demand " or were used in a more comprehensive sense. On this occasion it is unnecessary to dwell on any of these points. I will assume, for the purpose of the reasoning which follows, that if proceedings for recovery were governed in the present case by section 46, and could be taken thereunder, they were within time. The Income-tax Act of 1961 came into force on 1st April, 1962. This is expressly stated in section 1(3) of that Act. By se....
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.... was paid to Harparshad Bhatnagar, the assessee must, in the light of the rule, be " deemed " to have been in default recurrently on the eighth day after each such payment was made between 1st April, 1941, to 31st March, 1952. Applying the second mode of reckoning time prescribed by section 231 of the new Act (the mode for an assessee " deemed " to be in default), it is manifest that proceedings for recovery taken against this assessee in 1967 in respect of those defaults were hopelessly barred by time. It was not contended, and I do not think that it could possibly be contended, that even though section 231 itself provided a specific and different method of reckoning time in respect of an assessee " deemed " to be in default, yet the general method provided by it, based on the making of a demand, could be applied to such a case. Such an argument would make the specific provision utterly futile. So, the conclusion emerges, subject of course to the assumptions made en route, that if time for commencing proceedings for recovery against the assessee was controlled by section 46(7) of the old Act they were within time, but if by section 231 of the new Act, they were barred. The criti....
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.... v. Commissioner of Income-tax the case on which counsel for the respondents relied, it was recognised, in a passage occurring on page 687, that the meaning of " assessment " has to be discerned from the context. There the court was actually concerned with the meaning of that word in section 297(2)(a) of the Act of 1961. In summing up, it was said : " It is quite clear from the authorities cited above that the word 'assessment' can bear a very comprehensive meaning ; it can comprehend the whole procedure for ascertaining and imposing liability upon the taxpayer. " This does not show that the word " assessment " includes proceedings for recovery. It establishes only that the word encompasses the " procedure for ascertaining and imposing liability ", and no more. Incidentally, I should mention, that in this case the Supreme Court also held, that resort could not be had to section 6 of the General Clauses Act, 1897, as section 297 of the Act of 1961 evinced a contrary intention. What was relied on most of all by counsel for the respondents was the passage in C. A. Abraham v. Income-tax Officer, Kottayam, where it was said : " The expression 'assessment' used in these sections ....