Vildirect: IncomeTax-caselaws-1974-VIL-340-PAT-DT

1974-VIL-340-PAT-DT

Equivalent Citation: [1975] 98 ITR 486

PATNA HIGH COURT

Date: 23.04.1974

CM RAJGHARIA AND ANOTHER

INCOME-TAX OFFICER AND OTHERS

BENCH

Judge(s) : S. K. JHA., S. N. P. SINGH., A. A. DAVE

JUDGMENT

S. K. JHA J.-These twelve writ applications arise out of common facts and inter-related questions of law. They have, therefore, been heard together, but for the sake of convenience and clarity it is advisable to divide them into three groups. Before setting out the relevant facts at their proper places, I shall broadly specify the cases falling under each group and the relief claimed in respect of each of them.

C W.J.Cs. Nos. 642, 644, 646 and 650 of 1971 involve identical questions of law. In these four writ applications the petitioner, M/s. C. M. Rajgharia, is a firm registered under the Indian Partnership Act and the prayer made is to quash by a writ of certiorari a notice dated March 16, 1971, purported to be issued under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the 1961 Act"), in each case. While the notice aforesaid is marked annexure "2" in C.W.J.C. No. 642 of 1971, it is marked as annexure "5" in the other three writ applications. A further prayer has been made for the issuance of a writ in the nature of prohibition restraining the respondents, the Income-tax Officer, the Commissioner of Income-tax and the Union of India, from taking any steps in pursuance of the said impugned notices.

The second group of cases comprises C.W.J.Cs. Nos. 640, 643, 645 and 647 of 1971. In these cases the petitioner is the same as in the previous group, namely, M/s. C. M. Rajgharia, a registered, firm and the petitions are directed against a notice dated April 21, 1971, in each case purporting to have been issued by the respondent No. 1 under section 23(2) of the Income-tax Act, 1922 (hereinafter referred to as "the 1922 Act"), a copy of each of which has been marked annexure "1" in the respective petitions. The prayers made are similar to those made in the earlier group of cases.

In the third group of cases fall C.W.J.Cs. Nos. 641, 648, 649 and 651 of 1971. In these cases the petitioner is Chand Mull Rajgharia, an individual against whom a notice dated March 6, 1971, has been purported to be issued under section 148 of the 1961 Act as a member of an association of persons. The notice in each of the cases has been marked annexure "1" and the relief sought for is for issuance of a writ of certiorari quashing annexure "1" and for a writ of prohibition restraining the respondents from taking any steps in pursuance thereof.

I shall now deal with the facts of and the points arising in respect of each of the three groups of cases mentioned above.

Group I.

The facts are not much in controversy. In these four writ applications the petitioner-firm consists of Ramratan Lal Rajgharia and Nanik Lal Rajgharia as major partners, when it was constituted and five minors were admitted to the benefits of the firm. This firm was also registered under the Income-tax Act from the assessment year 1962-63 onwards. The petitioner-firm deals in mica business. The facts and the circumstances leading to the constitution of the petitioner-firm may here be set out. In February, 1951, Ramratan Lal Rajgharia and Manik Lal Rajgharia, the two adult sons of Chand Mull Rajgharia filed a partition suit against the father for partition of the properties allegedly belonging to the Hindu undivided family consisting of Chand Mull Rajgharia, his wife, the two adult sons named above, and five minor sons. This suit was registered as Partition Suit No. 15 of 1951 in the Court of the Subordinate Judge at Hazaribagh. The subject-matter of the suit, inter alia, was also the mica dealing business. During the pendency of the suit the dispute was referred for arbitration to one Shri Ishwar Das Jalan. The suit was disposed of ultimately in terms of an award given by the arbitrator. The preliminary award was made on November 30, 1953, under which the dispute relating to the mica dealing business was disposed of giving the same to the aforesaid seven sons of Chand Mull Rajgharia with all the assets and liabilities of the mica dealing business. Subsequently, a decree in terms of the award was drawn up by the court on March 8, 1954. By virtue of the said decree each of the parties to the suit got 1/9th share in other immovable properties and one of the items involved in the suit, namely, the mica mining business, was allotted jointly to Chand Mull Rajgharia and his wife, Shrimati Chandramani Devi, each having an equal share in the mining business. In pursuance of the interim award dated November 30, 1953, the mica dealing business was started by the petitioner-firm from December 1, 1953, and later on a partnership deed was formally drawn up on March 10, 1954. The business of the firm was carried on in the name and style of M/s. C. M. Rajgharia and a licence for dealing in mica under the Bihar Mica Control Act was also granted to it in 1954. It is an admitted fact that Chand Mull Rajgharia was at no point of time a partner of the petitioner-firm. The petitioner-firm filed the returns of its income from its inception on December 1, 1953, and went on filing the same regularly from year to year since the assessment year 1954-55. The accounting year being the financial year, the return for the assessment year 1954-55 was filed in respect of the period from Decemher 1, 1953, to March 31, 1954, on February 24, 1955. For the assessment year 1955-56 the return was filed on March 31, 1956. For the assessment year 1956-57 it was filed on March 13, 1957, and in respect of the assessment year 1957-58, the return was filed on April 24, 1958. These four years are respectively the subject-matter of C.W.J.Cs. Nos. 642, 650, 644 and 646 of 1971. The petitioner also received for several assessment years beginning from 1954-55 to 1956-57, notices under section 23(2) of the 1922 Act and the accounts of the petitioner were also examined for these years, but no assessment order was passed on the returns filed by the petitioner. Chand Mull Rajgharia, aforesaid, was being assessed for a long time as an "individual" in respect of his income from the following sources:

(a) Share income consisting of house property of M/s. Madanlal and Brothers;

(b) Share income from M/s. J. S. Mull and Company;

(d) Income from mica dealing business under the same name and style of "Chand Mull Rajgharia"; and

(e) Income from other sources, namely, dividend income.

A return was filed by the individual, Chand Mull Rajgharia, for the assessment year 1954-55, showing the income from the above sources in his return as "individual". But, later on, for the assessment year 1954-55 he filed a revised return claiming the status of a Hindu undivided family in respect of the income derived by him from the above sources on the assertion that his status as individual was shown wrongly and the real status should have been that of a Hindu undivided family consisting of himself, his wife and a subsequently born son. The aforesaid claim of Chand Mull Rajgharia was not accepted by the department for the assessment year 1954-55 and the assessment was completed by the Income-tax Officer in his status as "individual". On appeal, the Appellate Assistant Commissioner, Ranchi, by his order dated February 14, 1959, allowed the appeal in part and accepted his claim for the assessment in the status of Hindu undivided family with respect to all the sources of income mentioned above excepting in respect of the mica mining and the mica dealing business with regard to which his assessment in the status of an "individual" was affirmed. The order of the Appellate Assistant Commissioner was confirmed by the Income-tax Appellate Tribunal on appeal as also by this court on a reference under section 66(2) of the 1922 Act by a judgment dated February 3, 1966 (the case has since been reported in Chandmul Rajgarhia v. Commissioner of Income-tax.) It also subsequently transpired that in the assessment proceedings of Chand Mull Rajgharia, an individual, the department assessed him for the mica dealing business of the petitioner every year from the assessment year 1955-56 till the assessment year 1964-65 as his individual income. With respect to the assessment year 1955-56 onwards up to 1957-58 the Appellate Assistant Commissioner dismissed the appeals of Chand Mull Rajgharia and confirmed the assessment made by the Income-tax Officer on Chand Mull Rajgharia as an individual in respect of the mica dealing business of the petitioner-firm. Chand Mull Rajgharia then appealed to the Income-tax Appellate Tribunal. A Special Bench of the Tribunal at Calcutta, which finally heard the appeals of Chand Mull Rajgharia, after examining all the facts and circumstances, accepted the claim of Chand Mull and by a consolidated order dated March 5, 1968, for three assessment years, namely, 1955-56, 1956-57 and 1957-58, held that the mica dealing business belonged exclusively to the petitioner-firm and not to Chand Mull Rajgharia. The Tribunal, accordingly, directed the Income-tax Officer to effect necessary modifications in the assessment of Chand Mull Rajgharia made in the status of an individual. The department's application for reference under section 66(1) of the 1922 Act having been rejected, it filed Tax Cases Nos. 24, 25 and 26 of 1969 under section 66(2) of that Act. These references were rejected by a Bench of this court by an order dated August 19, 1969. The department then moved the Supreme Court for special leave to appeal in Special Leave Applications Nos. 2148, 2149 and 2150 of 1969, which were dismissed by the Supreme Court by an order dated December 8, 1969.

As already stated the petitioner-firm had filed its returns for the assessment years from 1954-55 to 1957-58, but apart from issuing notices under section 23(2) of the 1922 Act, nothing further was done by the Income-tax Officer and on the returns filed by the petitioner no assessment was ever made. By the impugned notice dated March 16, 1971, purporting to be issued under section 148 of the 1961 Act, the Income-tax Officer, respondent No. 1, has called upon the petitioner to deliver within thirty days from the date of the service of the notice a return in the prescribed form on the ground that income chargeable to tax for all these years had escaped assessment within the meaning of section 147 of the 1961 Act. It has further been stated in the notice that the same had been issued after obtaining the necessary satisfaction of the Central Board of Direct Taxes, Delhi. The notice regarding each of these four assessment years has been annexed respectively to each of the writ applications.

Mr. A. K. Sen, learned counsel for the petitioner, urged the following grounds attacking the jurisdiction of the Income-tax Officer, respondent No. 1, in issuing such a notice. The assessment for the assessment years 1954-55 to 1957-58 became respectively barred on March 31, 1959, March 31, 1960, March 31, 1961 and March 31, 1962. The right of the department to make an assessment for these assessment years in question having been extinguished under section 34(3) of the 1922 Act, it could not be revived by section 297(2)(d)(ii) of the 1961 Act. The Income-tax Officer further had no jurisdiction to issue a notice under section 148 of the 1961 Act, as no income of the petitioner chargeable to tax could be said to have escaped assessment within the meaning of section 147 of that Act. The Income-tax Officer further had no "reason to believe" within the meaning of section 147 that any income assessable for the assessment years in question had escaped assessment. The sanction of the Central Board of Direct Taxes obtained, if any, was merely mechanical in nature without there being anything to suggest that before recording its satisfaction it had applied its mind to the facts and circumstances of each case. Apart from these common questions of law, a further ground of attack has been put forth in so far as the assessment year 1954-55 is concerned. This additional ground is that since the assessment for this year relating to the period from December 1, 1953, to March 31, 1954, had already been made in respect of the same business against Chand Mull Rajgharia, an individual, and tax recovered from him, the proposed assessment under section 148 of the 1961 Act in respect of this year would lead to double assessment of the same income on which taxes had already been paid.

I shall now examine the validity of the aforesaid grounds of attack. It may be recapitulated that in respect of the four assessment years 1954-55 to 1957-58, the petitioner filed a return respectively on February 24, 1955, March 31, 1956, March 13, 1957, and April 24, 1958. For the first three years in question, notice under section 23(2) of the 1922 Act was issued by the Income-tax Officer on April 15, 1957, while for the assessment year 1957-58, no such notice was either issued or served on the petitioner. All the same, no regular assessment was made for the years 1954-55, 1955-56 and 1957-58 while for the year 1956-57 a provisional assessment under section 23B of the 1922 Act was made on March 13, 1957, and a tax of Rs. 5,201 and odd was collected on the same date. In all these cases the stand taken by the department in the counter-affidavit filed by the respondents is that the returns filed by the petitioner-assessee were disposed of by recording an order in the order-sheet purporting to mean as follows :

" Since the claim for partition of the dealing business of Shri C. M. Rajgharia is not accepted, the income from dealing department is included in the individual assessment of Shri C. M. Rajgharia. No assessment is called for from this file."

It has further been contended by the department that even if it be held that the returns were not disposed of by the above order, the right of the department to assess the petitioner is not totally extinguished because the assessment could still be made under section 34(3) of the 1922 Act. The further case of the department is that the assessment did not become time-barred in view of the provisions contained in section 297(2)(d)(ii) read with sections 147, 148, 150 and 153 of the 1961 Act. In this view of the matter, it has to be seen as to whether the income of the petitioner-firm can be said to have escaped assessment within the meaning of either sub-section (a) or sub-section (b) of section 147 of the 1961 Act.

Mr. Sen took great pains to establish that if it be held that the impugned notices were sought to be issued with regard to an escapement of income being assessed within the meaning of section 147(a) of the 1961 Act, then they must be struck down for these reasons. The returns had been filed by the petitioner in due time and the assessment proceedings having been pending, it could not be a case of income having escaped assessment within the meaning of section 147(a). If the original assessment proceedings are factually treated as pending or must be deemed to be pending, then the provisions of section 147(a) could not be attracted. Reliance in this connection was placed on numerous decisions, to wit, Rajendra Nath Mukherjee v. Commissioner of Income-tax, M. CT. Muthuraman v. Commissioner of Income-tax, N. Naganatha Iyer v. Commissioner of Income-tax and Commissioner of Income-tax v. Onkarmal Meghraj. Learned counsel further urged that, in any event, the original assessments having been barred under the 1922 Act in respect of assessment years for which returns had been filed under that Act before the 1961 Act came into force (i.e., April 1, 1962), section 297(2)(d)(ii) of the latter Act can have no application so as to attract the provisions of section 147, nor, for that matter, could a barred assessment be treated as one of escaped assessment of income within the meaning of section 147(a) of the 1961 Act. Reference in this connection was made to the cases of N. Naganatha Iyer, J. P. Jani, Income-tax Officer v. Indu Prasad Devshanker Bhatt and Commissioner of Income-tax v. Ranchhoddas Karsondas. I must state here that it is now well-established that a time-barred assessment under the 1922 Act does not partake of the nature of an escaped assessment within the meaning of section 147(a) and it cannot, therefore, be availed of by virtue of the provisions contained in section 297(2)(d)(ii) of the 1961 Act. The Income-tax Officer cannot issue a notice under section 148 of the 1961 Act in order to reopen the assessment of an assessee in a case where the right to reopen the assessment was already barred under the 1922 Act when the new Act came into force. It is not permissible to construe section 297(2)(d)(ii) as reviving the right of the assessing authority to reopen the assessment already barred under the earlier Act. Unless the terms of a statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter, or destroy any right already acquired or to revive any remedy already lost by the efflux of time. Section 297(2)(a) of the 1961 Act further lays down that where the return of income has been filed before the commencement of this Act for any assessment year by any assessee, proceedings for the assessment may be taken and continued as if this Act had not been passed. Thus, a continuation of any pending proceeding for assessment before the 1961 Act came into force has been enjoined to be continued as if this Act had not come into force at all. As such, section 297(2)(d) must be read harmoniously with the provisions of section 297(2)(a) and, adopting the harmonious rule of construction, it must be held that the legislature had expressly intended to exclude either pending or barred assessment proceedings under the 1922 Act from the purview of the 1961 Act. Nonetheless, for the reasons hereinafter given, it is not necessary to dwell upon this aspect of the case at any length. It is true that the impugned notices are silent giving no indication as to under which sub-section of section 147, the escapement of assessment has been treated to have occurred. But the admitted fact is that there has been no omission or failure on the part of the petitioner to make returns for these years or to disclose fully and truly all material facts necessary for the assessment. All that the law required of the assessee was to have stated and placed before the assessing authority all the primary facts fully and truly to be saved from the mischief of section 147(a) of the 1961 Act. This the assessee (petitioner) had admittedly complied with. Furthermore, according to the respondents, an order was passed on the assessment files of the petitioner, that no assessment was called for. This really amounted to saying that the returns for these years were closed by the Income-tax Officer as cases of "no assessment" or "not assessed" which has in law the effect of a awful termination of the assessment proceedings as has been held in the cases of M. CT. Muthuraman and Commissioner of Income-tax v. Onkarmal Meghraj. Thus, section 147(a) cannot apply and the notices must be treated as being in respect of alleged escapement of assessment of income within the meaning of section 147(b) of the 1961 Act.

This then brings us to the question as to whether the impugned notices under section 148 of the 1961 Act can be held to be without jurisdiction. Before the jurisdiction of the Income-tax Officer can be invoked and power exercised under this provision, two pre-requisite conditions must be satisfied. The Income-tax Officer, firstly, must have reason to believe that income has escaped assessment and, secondly, such belief must be in consequence of the information received after the original assessment. I shall, therefore, examine as to whether these conditions necessary to confer jurisdiction on the Income-tax Officer had been satisfied in the cases on hand. It is well settled that the existence of the belief can be challenged by the assessee, but not the sufficiency of the reasons for the belief. The belief must not be merely a pretence and it is open to this court to examine whether the belief has been held in good faith or whether it has a rational connection or a relevant bearing to the formation of a belief and is neither extraneous nor irrelevant for the purpose. To this limited extent only the action of the Income-tax Officer in initiating proceedings under section 147 of the 1961 Act is open to challenge. But the attempt at reassessment in the present cases, as was contended by learned standing counsel for the income-tax department appearing on behalf of the respondents, was the result of the order of the Income-tax Appellate Tribunal, Calcutta Bench, dated the 5th of March, 1968, in the case of Chand Mull Rajgharia, who had been assessed as an individual in respect of the mica dealing business in question for the assessment years 1955-56, 1956-57 and 1957-58 by the Income-tax Officer whose order had been upheld by the Appellate Assistant Commissioner. This consolidated order of the Tribunal in respect of these three years was passed by the Tribunal in Income-tax Appeals Nos. 2584 to 2586 of 1961-62 as is apparent from the order under section 66(1) of the 1922 Act rejecting the reference application of the Commissioner of Income-tax, Bihar and Orissa, a true copy of which has been marked as annexure "2" to C. W. J. Cs. Nos. 644, 646 and 650 of 1971. A true copy of the Tribunal's appellate order was also furnished to us by the counsel for the parties in the course of the hearing of these applications. Before adverting to the relevant facts regarding those appeals before the Tribunal, I must point out that although the impugned notices in the present cases stated that they were being issued after obtaining the necessary satisfaction of the Central Board of Direct Taxes, Delhi, it was yet the admitted position that the notices were not purported to have been issued under section 147(a) of the 1961 Act. As in these cases the petitioner had given all the primary facts and there was no failure to disclose fully and truly any material fact for the purpose of assessment, section 147(a) could not at all be resorted to, as already held earlier. Be that as it may, the existence of the belief itself being challenged either for the purpose of section 147(a) or section 147(b), nothing has been said in the counter-affidavits filed on behalf of the respondents to justify any reason to believe. Nor was anything shown to us from the original records of the department which could justify the existence of any such reasonable belief. It is true that the communication of any such reasons to hold a belief to the assessee is not necessary, but they have to be disclosed to this court and the Income-tax Officer may be confined to those recorded reasons to support the assumption of jurisdiction. The question whether the Income-tax Officer had reason to believe was not a mere question of limitation only but was a question of jurisdiction which could be investigated by this court in an application under article 226 of the Constitution of India. Reference in this connection may be made to the cases of Daulatram Rawatmal v. Income-tax Officer, Jamnalal Kabra v. Income-tax Officer and Calcutta Discount Co., Ltd. v. Income-tax Officer.

It may, however, be pointed out, as contended on behalf of the respondents, that the decision of the Tribunal may be treated as information within the meaning of section 147(b), as laid down by the Supreme Court in the case of Maharaj Kumar Kamal Singh v. Commissioner of Income-tax, and the department would have been perfectly justified in initiating proceedings under that sub-section within four years of the end of the relevant assessment year. But that not having been done, they were sought to be justified by learned standing counsel for the department only on the ground that these cases should be held to be covered by the provisions of section 150 of the 1961 Act which corresponds to the second proviso to section 34(3) of the 1922 Act. Learned standing counsel for the respondents submitted that the provisions of section 150 removed not only the bar of limitation imposed by section 149(1)(b), but also that imposed by section 153 of the 1961 Act. It was contended that if the case of the petitioner-assessee for any of the assessment years fell within the scope of section 150, the resultant position would be that there was no time bar on the assessment or reassessment. Reliance in this connection was sought to be placed on the decision of M. CT. Muthuraman, on a passage at page 661. This principle of law, baldly stated, is unexceptionable. It would, therefore, be necessary to find out as to whether the impugned notices can be saved by resorting to the provisions of section 150 of the 1961 Act which in substance incorporates the same principles which govern the second proviso to section 34(3) of the 1922 Act. As a matter of fact, in order to find out as to whether either of the sections 147, 148 and 150 of the 1961 Act can be resorted to legally, it must be examined as to whether these proceedings were saved by the second proviso to section 34(3) of the 1922 Act. For this purpose it will have to be examined as to whether the attempt at reassessment has been made in consequence of or to give effect to any finding or direction contained in the appellate order of the Tribunal in relation to the three years in question.

It is now well-settled that the expressions "finding" and "direction" in the second proviso to section 34(3) of the 1922 Act mean respectively a finding necessary for giving relief in respect of the assessment for the year in question and the direction which the appellate and revisional authority are empowered to give under their appropriate jurisdiction. The expression "finding" or "direction" cannot be treated as in vacuum. As held by the Supreme Court in the case of Income-tax Officer v. Murlidhar Bhagwan Das, the exception to the rule of limitation engrafted in the aforesaid proviso only lifted the bar of limitation and did not enlarge the jurisdiction of the Tribunal. The expression "any person" in the aforesaid proviso must inevitably refer to one, who would be liable to be assessed for the whole or a part of the income that went into the assessment year under appeal or revision. Two well-settled principles under the 1922 Act with regard to the removal of this bar of limitation can be culled out from the various decisions of the Supreme Court. The "finding" or "direction" must be necessary for giving relief in respect of the assessment of the year in question and the direction must be a direction which the appellate or revisional authority, as the case may be, is empowered to give under the various sections conferring their respective jurisdictions. The words "in consequence of" or "to give effect to any finding or direction" have to be collated with and cannot enlarge the scope of the finding or direction under the proviso mentioned above. Secondly, the words "or any person" occurring after the words "to assessment or reassessment made on the assessee" in the second proviso were necessarily circumscribed by the scope of the subject-matter of the appeal or revision, as the case may be, i.e., the person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision. In order to get over the constitutional invalidity of the provisions of the second proviso to section 34(3) of the 1922 Act, on the construction put by the Supreme Court in the case of S. C. Prashar v. Vasantsen Dwarkadas, the Supreme Court itself confined the applicability of the provisions of the aforesaid proviso to a person intimately connected with the assessee for the assessment relating to the year under appeal by its subsequent decisions in cases of Murlidhar Bhagwan Das and Daffadar Bhagat Singh and Sons v. Income-tax Officer. As a matter of fact, the Supreme Court itself has thus crystallised the law in this respect in a recent decision in the case of Onkarmal Meghraj:

"The words 'any person' in the second proviso to section 34(3) has been interpreted by this court in Income-tax Officer v. Murlidhar Bhagwan Das, as any person intimately connected like members of a Hindu undivided family, partners of a firm or individuals forming an association of persons because in such cases though they are not eo nomine parties they could be deemed to be represented by the Hindu undivided family, partnership or association before the relevant income-tax authority."

Indeed, the Gujarat High Court has gone a step further in the case of Commissioner of Income-tax v. Shantilal Punjabhai, in holding that the assessee might fall within the scope of the expression "any person" under the second proviso, but not as an assessee but as a person other than the assessee, who might be affected by the order of the Tribunal ; and that being so, the assessee was not an assessee but a stranger to the proceedings before the Tribunal and consequently the second proviso to section 34(3) of the 1922 Act could not be invoked by the revenue in his case. This construction, in my view, is rather very narrow and to the extent that it militates against the construction put by the Supreme Court in the case of Onkarmal Meghraj, its correctness may be open to serious doubt. I would prefer to confine the application of the provisions incorporated therein to the assessment or reassessment of only the assessee or any person intimately connected with the assessee, who has gone up in appeal or revision and in the original assessment proceedings of whom any finding or direction was recorded by the appellate or the revisional tribunal, as the case may be. This being the position in law, as I consider the law to be even after the change in the language of the 1961 Act, I shall now examine as to whether the petitioner-firm was the assessee or in any way intimately connected with the assessee, who went up in appeal to the Income-tax Appellate Tribunal, Special Bench, Calcutta, for the assessment years 1955-56, 1956-57 and 1957-58, on the basis of which the department had initiated the proceedings under section 148 of the 1961 Act. Those appeals were filed before the Tribunal by an individual, Chand Mull Rajgharia, in whose assessable income the income from the mica dealing business of the petitioner-firm had also been added by the Income-tax Officer which was upheld by the Appellate Assistant Commissioner and the Tribunal held that "the income from the mica dealing business will have to be excluded from the present assessment". None of the members of the petitioner-firm was an assessee in so far as the appeals before the Tribunal were concerned. Nor, for that matter, was the assessee who went up to the Tribunal in those appeals and who was an individual, a member of the petitioner-firm, who is sought to be reassessed in pursuance of the impugned notices. The petitioner-firm, therefore, must be treated as being neither the assessee nor any person intimately connected with the assessee regarding the assessment of Chand Mull Rajgharia, an individual for those assessment years. The partners of the firm must be held to be total strangers to the proceedings before the Tribunal. The second proviso to section 34(3) of the 1922 Act cannot, therefore, be invoked by the revenue. So far as the assessment year 1954-55 which is the subject-matter of C.W.J.C. No. 642 of 1971 is concerned, the position is not different-rather worse-in so far as there is not even any direction" in the appellate order. It must, therefore, be held that the impugned notices in these four writ applications were wholly without jurisdiction and they, therefore, must be struck down.

So far as the cases of group II are concerned, namely, C.W.J.Cs. Nos. 643, 647, 645 and 640 of 1971 relating to the assessment years 1958-59, 1959-60, 1960-61 and 1961-62, respectively, the facts are identical with the facts of the cases of group I. The only difference is that for the years up to 1957-58 individual, Chand Mull Rajgharia, had been assessed whereas for the subsequent years covered by these four cases of the second group even he had not been assessed. The position, therefore, is that for these years the notices have been purported to be issued under section 23(2) of the 1922 Act. The petitioner-firm had filed its returns for these four years respectively on November 22, 1958, February 24, 1960, November 14, 1960, and December 16, 1961. The impugned notices could be held to be valid only if the assessments had not become barred. The assessments became barred under section 34(3) of the 1922 Act as no order of assessment could be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable. The assessments must be completed within the time prescribed. The only exception to the fetters of the assessing authority are the cases covered by the second proviso to section 34(3). For the reasons given with regard to the first group of cases, the impugned notices in these four applications must also be struck down as invalid. The contention put forward on behalf of the respondents that the petitioner-firm through its major partners and their agents had full knowledge of all the proceedings in the case of Chand Mull Rajgharia and that the returns filed in the status of the firm were relevant for the assessment of the individual, Chand Mull Rajgharia, does not make any difference in law.

Group III.

The only further relevant facts relating to the four cases falling under this group, namely, C.W.J.Cs. Nos. 649, 641, 651 and 648 of 1971 corresponding to the assessment years 1955-56, 1956-57, 1957-58 and 1958-59 are these. These cases relate to mica mining business of, according to the petitioner, a Hindu undivided family, consisting of the petitioner, Chand Mull Rajgharia, his wife, Shrimati Chandramani Devi, and a minor son born on January 27, 1954. This mica mining business had been allotted jointly to Chand Mull Rajgharia and his wife, Shrimati Chandramani Devi, each having an equal share in the same under the award of the arbitrator aforesaid followed by a decree of the court. Excepting the mica mining business and the mica dealing business which were allotted in the manner hereinbefore mentioned, all other immovable properties were distributed under the award and the decree amongst Chand Mull Rajgharia, his wife and each of the then existing seven sons, each getting 1/9th share in the properties. The return of the Hindu undivided family for the four years in question was filed respectively on February 20, 1959, March 20, 1959, March 28, 1958, and November 22, 1958. With regard to the first two years, the original returns were filed on December 22,1955, and September 21, 1956 but revised returns in respect of these two years were filed on February 20, 1959, and March 20, 1959, as mentioned above. The returns though filed by and on behalf of the Hindu undivided family, the income of these years was assessed in the hands of Chand Mull Rajgharia, an individual. In the three appeals relating to the years 1955-56, 1956-57 and 1957-58, already mentioned above, the Special Bench of the Tribunal rejected the plea of the department and held :

"In the result, we have come to the conclusion that the suit, award and decree must be given their full and lawful effect. The income from the mica dealing business will have to be excluded from the present assessment."

and again:

"We have now to consider the position of the mica mining business. This was also partitioned by the award, the assessee getting an 1/9th share thereof, but, it is not clear why the income was returned as that of the Hindu undivided family. The Hindu undivided family has not been previously assessed and the division of the mining business, whether it was by metes and bounds within the meaning of section 25A or not, has to be accepted. The result will, therefore, be that the assessee will be liable to be assessed in respect of his share of the income from this business. We may also mention that, in the view he took that the partition was bogus, the Income-tax Officer did not include any part of the share income of the assessee from the firms and the dividends in the present assessment. Presumably they were left for assessment, or have been assessed, in the hands of the family. But, in consequence of our finding, the assessee's share in these incomes on the basis of the partition will become includible in the present assessment. The Income-tax Officer will effect modifications necessary to the assessment consequent on our findings regarding the award and the partition."

In regard to the assessment year 1958-59, the appeal was taken to the Tribunal by Chand Mull Rajgharia, Chandramani Devi and the subsequently born minor son of Chand Mull Rajgharia which was numbered as Income-tax Appeal No. 1636 of 1964-65 and the Tribunal by its judgment and order dated April 26, 1968, held as follows:

" The learned counsel submitted that after the Special Bench decision there was no Hindu undivided family at all. Since the Income-tax Officer had not the benefit of this Special Bench decision, we consider that the Income-tax Officer should have an opportunity to apply his mind afresh and decide what items of income, if any, would be assessable in the status of Hindu undivided family and what items of income would be assessable in the hands of Sri Chand Mull Rajgharia, individual, keeping in view the findings of the Special Bench.

We accordingly set aside the assessment and direct the Income-tax Officer to make the assessment de novo as indicated above."

It was, thereafter, that the Income-tax Officer issued a notice under section 148 of the 1961 Act in respect of each of the four years in question on March 16, 1971. The impugned notice in each case has been marked annexure "1" to each of the applications. These notices have been purported to be issued to "Shri Chand Mull Rajgharia, Giridih, A.O.P." Mr. Sen submitted that the returns having already been filed by the Hindu undivided family in due time setting out all the primary facts and disclosing fully and truly all the material facts, there could not be a case of income having escaped assessment within the meaning of section 147(a) of the 1961 Act. Nor is there anything in the aforesaid two appellate orders of the Tribunal relating to these four years in question which could be said to be information giving rise to any reasonable belief that income had escaped assessment within the meaning of section 147(b) of the 1961 Act. The stand taken by the learned standing counsel of the income-tax department was to the effect that these assessments or reassessments are being sought to be made in pursuance of the findings and directions of the income-tax Appellate Tribunal in the appeal referred to above. The submission, therefore, on behalf of the respondents was that the assessments or reassessments must be held to be saved by the provisions of the second proviso to section 34(3) of the 1922 Act or section 150(1) of the 1961 Act. I have already quoted above the relevant finding or direction of the Tribunal in those appeals. There is nothing in the appellate orders of the Tribunal with regard to there being any association of persons being the true assessee. As held by the Supreme Court in the case of Commissioner of Income-tax v. Rameshwarlal Sanwarmal, the same person can be taxed both as an individual as well as the karta of his family. The two capacities are totally different units of taxation, and they are two different assessees. Chand Mull Rajgharia either as an individual or as a member of a Hindu undivided family cannot be treated as the same assessee in the capacity of a member of an association of persons. No association of persons was the subject-matter of assessment for these years which had gone up in appeal. There is neither any finding or a direction nor, for that matter, is there anything in the appellate order of the Tribunal to suggest even remotely that Chand Mull Rajgharia was a member of an association of persons. In the case of Commissioner of Income-tax v. Mohd. Shakoor Mohd. Bashir, the principle enunciated by the Supreme Court is that in the absence of any finding that during the relevant assessment years certain persons were continuing a business as an association of persons and that the income earned by them from that business was in that capacity, they could not be taxed as an association of persons. It is well-settled that where the shares were defined even amongst the members of a family, there could not be any presumption that they formed an association of persons, for in such cases they are tenants-in-common and not joint tenants. In the case of Commissioner of Gift-tax v. R. Valsala Amma, the assessee and her sister received under the will of their mother one-half share in the properties bequeathed. Both of them, however, under one deed of gift made in favour of their brother gifted away their entire property. The question was whether the gift was by individuals or by an association of persons and it was held that in law each one of them had half the right in the properties that they gifted to their brother. They had been holding the properties in question as tenants-in-common and the question whether they divided the property or not was wholly immaterial. The assessee or her sister could not be assessed as an association of persons, but only as individuals. It is also well-settled that the word "association" includes the voluntary combination for a common endeavour and not a mere legal status resulting from operation of law. Co-owners, co. heirs or co-legatees do not constitute such association in respect of the income of the joint or common asset by reason only of their jural relationship. It is only if they unite themselves with the object of earning income that they constitute an association of persons for assessment purposes (Estate of A. Mohamed Rowther v. Commissioner of Income-tax). In the present case, even if there be no evidence of separate enjoyment, as there was no finding by any of the taxing authorities including the appellate orders of the Tribunal that the petitioner, Chand Mull Rajgharia, had combined in a joint enterprise with any other person including his wife and minor son to produce income and as they had on the admitted facts done no act which had helped to produce the income, it could not be held that either the petitioner or any other person had the status of an association of persons in so far as the assessments of income relating to the years in question were concerned. Reliance in this connection may be placed on a decision of the Supreme Court in the case of Commissioner of Income-tax v. Indira Balkrishna. Indeed, there was, on the materials on record, no A.O.P. at any time. It is thus clear that the stand taken by the respondents for justifying the issuance of the notices as incorporated in annexure "1" dated March 16, 1971, purporting to have been issued under section 148 of the 1961 Act cannot be held to be tenable in law. Nor are the provisions of the second proviso to section 34(3) of the 1922 Act and section 150(1) of the 1961 Act attracted so as to lift the bar of limitation. In the result, therefore, these notices also must be held to be without jurisdiction and fit to be quashed.

I may also state here that a half-hearted attempt was made by the learned standing counsel on behalf of the respondents objecting to the maintainability of these writ applications on the ground that since the Income-tax Act contained an exhaustive procedure and a self-contained machinery for the disposal of such matters, no application for any writ should lie. This argument in so far as the present writ applications are concerned has to be stated merely to be rejected. Instances are legion where writs under article 226 of the Constitution of India have issued in such cases and it is now too late in the day to suggest any such reason against the maintainability of a writ application, for evidently it does go to the root of the jurisdiction of the assessing authority. The cases of, inter alia, Murlidhar Bhagwan Das, Sheo Nath Singh v. Appellate Assistant Commissioner of Income-tax, Chhugamal Rajpal v. S. P. Chaliha, Union of India v. Rai Saheb Deb Singh Bist, Calcutta Discount Co. Ltd., Indra Co. Ltd. v. Income-tax Officer, and Madhya Pradesh Industries Ltd. v. Income-tax Officer, were all cases of writs under article 226 of the Constitution of India wherein the power of the High Court to interfere under article 226 in cases of initial lack of jurisdiction or illegal assumption of jurisdiction was always upheld.

For the foregoing reasons, the impugned notices dated March 16, 1971, under section 148 of the 1961 Act against the firm, M/s. C. M. Rajgharia in C W.J Cs. Nos. 642, 644, 646 and 650 of 1971 and those dated April 21, 1971, against the same petitioner under section 23(2) of the 1922 Act in C.W.J.Cs. Nos. 640, 643, 645 and 647 of 1971 and the notices dated March 16, 1971, issued against Chand Mull Rajgharia, A.O.P. under section 148 of the 1961 Act in C.W.J.Cs. Nos. 641, 648,649 and 651 of 1971 must be held to be wholly without jurisdiction and they are accordingly quashed. The respondents are further restrained by writ of prohibition from in any manner taking any action in pursuance of the aforesaid notices. All the writ applications, therefore, succeed. In the circumstances of the case, however, I shall make no order as to costs.

S. N. P. SINGH, Actg. C.J.-I agree.

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