1961 (2) TMI 83 - HC - Income Tax

Court upholds validity of assessments for 1945-46, 1947-48, invalidates 1946-47 assessment due to limitation. Writs issued.

S. Santosha Nadar Versus First Additional Income-Tax Officer, Tuticorin, And Another.

S. Santosha Nadar Versus First Additional Income-Tax Officer, Tuticorin, And Another. - [1961] 42 ITR 715 (Mad) Issues Involved:1. Validity of assessments for the years 1945-46, 1946-47, and 1947-48.2. Bar of limitation for the assessments.3. Validity of recovery proceedings under the Revenue Recovery Act.4. Issuance of writs of prohibition and certiorari.Issue-wise Detailed Analysis:1. Validity of Assessments for the Years 1945-46, 1946-47, and 1947-48:The petitioner, a resident of Tirunelveli District, carried on business in Ceylon and did not file returns for the assessment years 1945-46, 1946-47, and 1947-48 in response to the general notice under section 22(1) of the Income-tax Act. He voluntarily filed returns on March 20, 1954. For the assessment year 1945-46, the Income-tax Officer initiated proceedings under section 34 with a notice dated March 25, 1954, served on March 29, 1954, and completed the assessment on March 5, 1955, under section 34 read with section 23(4). The assessments for 1946-47 and 1947-48 were completed without recourse to section 34, on March 5, 1955, and March 26, 1956, respectively.2. Bar of Limitation for the Assessments:The petitioner challenged the validity of the assessments on the ground of limitation. For 1945-46, the assessment was initiated under section 34 within the eight-year period allowed by section 34(3), and thus was not barred by limitation. For 1946-47, the assessment was completed under section 23(3) without recourse to section 34, and since it did not attract section 28(1)(c) or fall within section 34(1)(a), the four-year limitation applied, rendering the assessment invalid. For 1947-48, the assessment recorded an express finding of concealment of income, attracting section 28(1)(c), and thus was not barred by limitation.3. Validity of Recovery Proceedings under the Revenue Recovery Act:The Income-tax Officer issued certificates under section 46(2) to the Collector to recover arrears of assessed tax, showing a total of Rs. 1,01,081, while the actual amount due was Rs. 64,994. The Collector took proceedings under the Revenue Recovery Act and proclaimed the sale of the petitioner's land. The sale, fetching Rs. 24,495, was not confirmed, and the petitioner's objections were pending disposal. The court held that the Collector had jurisdiction to recover only the actual amount due, and specifying a higher sum in the Gazette notification vitiated the subsequent sale.4. Issuance of Writs of Prohibition and Certiorari:The petitioner filed W.P. No. 1011 of 1958 for a writ of prohibition to restrain the recovery proceedings and obtained a rule nisi. He also filed W.P. Nos. 1268 to 1270 of 1960 for writs of certiorari to set aside the assessment orders. The court allowed the further grounds raised in C.M.P. No. 4306 of 1960. The court held that the initiation and completion of the assessment for 1945-46 under section 34 were valid. The assessment for 1946-47 was without jurisdiction and invalid due to the four-year limitation. The assessment for 1947-48 was valid as it attracted section 28(1)(c). The court issued a writ of prohibition restraining further proceedings under the Revenue Recovery Act and a writ of certiorari to set aside the assessment order for 1946-47.Conclusion:The court upheld the validity of the assessments for 1945-46 and 1947-48 but invalidated the assessment for 1946-47. It issued a writ of prohibition against further recovery proceedings and a writ of certiorari to set aside the assessment order for 1946-47. The parties were directed to bear their respective costs. The court clarified that the disposal of the petitioner's applications under section 66(2) did not affect the reasoning and conclusions of the judgment.