Representative assessee liability and reassessment limitation were upheld for non-resident income deemed to arise in India.

The commentary explains that reassessment under section 148 remained within limitation because the notice was issued in time and the assessment was completed within the statutory period under section 153. It also states that representative liability can arise from actual agency conduct under the law of agency, so a person who purchased land in the non-resident's name was treated as a representative assessee from the date of that agency, even though a formal appointment under section 163 came later. It further notes that income of a non-resident, including income from undisclosed sources, may be taxed where it accrues, arises, or is deemed to accrue or arise in India, even without a business connection.

---

---

Issues: (i) Whether the assessment was completed within the statutory period of limitation after service of notice under section 148; (ii) Whether the assessee, though appointed as agent later under section 163, was liable as a representative assessee for obligations arising before that appointment; (iii) Whether income of a non-resident from undisclosed sources could be assessed where there was no business connection in India.

Issue (i): Whether the assessment was completed within the statutory period of limitation after service of notice under section 148.

Analysis: The relevant assessment year was 1967-68. Notice under section 148 was issued within the prescribed time and the subsequent assessment was completed within four years from the end of the assessment year in which the notice was served. The statutory time limit under section 153 was therefore satisfied.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (ii): Whether the assessee, though appointed as agent later under section 163, was liable as a representative assessee for obligations arising before that appointment.

Analysis: Section 163 is inclusive and does not exhaustively define agency. The Court applied the law of agency under section 182 of the Indian Contract Act, 1872, and held that the assessee had acted as agent when he purchased the land in the name of the non-resident. On that footing, he was a representative assessee under section 160 from the date of such agency and was obliged to comply with return-filing requirements.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Issue (iii): Whether income of a non-resident from undisclosed sources could be assessed where there was no business connection in India.

Analysis: The Court held that section 5(2)(b) brings within the taxable total income of a non-resident income that accrues, arises, or is deemed to accrue or arise in India. Income from undisclosed sources, when found in the hands of the representative assessee, can still be brought to tax. Section 9(1)(i) was treated as wide enough to cover such income, and the position was supported by the Supreme Court authority relied upon in the judgment.

Conclusion: The issue was decided against the assessee and in favour of the Revenue.

Final Conclusion: All the referred questions were answered in favour of the Revenue, and the reference was disposed of accordingly.

Ratio Decidendi: A non-resident's representative assessee is liable to tax on income deemed to accrue or arise in India, including income from undisclosed sources, and agency for this purpose may arise from the actual conduct creating the relationship, not merely from a later formal order under section 163.

---