Khanna, J. - (1.) These three appeals by certificate are directed against the judgment of the Madras High Court whereby the High Court answered the following question referred to it under Section 66 (1) of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act) in respect of assessment years 1955-56, 1956-57 and 1957-58 against the assessee-appellant and in favour of the revenue: "Whether the declaration filed by the assessee under Section 17 (1) in respect of the assessment year 1958-59 was operative in relation to the re-assessments in respect of the previous years ending on 31-12-1954, 31-12-1955 and 31-12-1956 corresponding to the assessment years 1955-56, 1956-57 and 1957-58 -
(2.) The assessee during the relevant period was studying abroad. He derived income during that period by way of dividend on shares and interest from deposits. The original assessments for the relevant years were completed on January 31, 1956, December 27, 1956 and February 28, 1958. The residential status adopted in those years was "resident and ordinarily resident person". Income-tax and super tax were calculated at the rates applicable on the total income. In the course of the assessment proceedings for the assessment year 1958-59, corresponding to the year ending on December 31, 1957, the assessee filed a declaration under Section 17 (1) of the Act on March 24, 1959 claiming to be assessed at rates appropriate to the total world income. This assessment was completed on March 23, 1960 in the status of a "non-resident". The application under Section 17 (1) was rejected. As the income-tax officer found that the assessee was a non-resident in the three previous years ending on December 31, 1954 to December 31, 1956 and his total income has been assessed to income-tax at the normal rates and further as he had failed to make the requisite declaration under Section 17 (1) within the requisite time, the income-tax officer formed the view that the earlier assessments had been made at a lower rate. Action under Section 34 of the Act was accordingly taken by the income-tax officer and assessments for the abovementioned three years were reopened and completed under Section 23 (3) read with Section 34 of the Act. The status of the assessee was treated as that of a non-resident. The assessee's declaration under Section 17 (1), which he had made in the course of assessment proceedings for the assessment year 1958-59, was rejected and ignored and his total income was brought to tax at the maximum rates. The assessee in the course of the proceedings for reassessment requested that the income during the three years in question should be taxed at rates appropriate to his world income. According to the assessee, the omission on his part to make the declaration earlier under Section 17 (1) was due to inadvertence and ignorance. It was also contended that as the assessments were being reopened and were thus deemed to be pending for the earlier years, the assessee's declaration made during the assessment proceedings for the year 1958-59 should be taken into account for the purpose of reassessments. The income-tax officer rejected all the submissions. According to the income-tax officer, option had been exercised by the assessee after the prescribed date and it could not have effect on the assessments for the three years in question. The income-tax officer also referred to the first proviso to Section 17 (1) of the Act and said that the declaration could be entertained only on the first occasion on which the assessee became assessable. The second proviso, it was observed, would also not avail the assessee.
(3.) The assessee went up in appeal to the Appellate Assistant Commissioner. It was contended inter alia on his behalf that the income-tax officer was wrong in holding that the declaration under Section 17 (1) could be entertained only on the first occasion when the person became assessable. According to the assessee, the declaration could be accepted even later provided sufficient cause was shown for not filing the declaration earlier. The assessee further submitted that the assessment as non-resident was made for the first time in respect of assessment year 1958-59 and as Section 34 proceedings were fresh proceedings the declaration made in 1958-59 ought to be accepted. The Appellate Assistant Commissioner held that the income-tax officer's reasoning for not accepting the declaration under Section 17 (1) was not correct. In this connection the Appellate Assistant Commissioner referred to his order in the appeal by the assessee for the assessment year 1958-59 wherein he had held that the assessee had sufficient cause for not filing the declaration under Section 17 (1) when the assessee became first assessable. It was also held that the failure to the file the declaration had not resulted in a reduction of tax liability. The declaration filed on March 24, 1959 by the assessee, in the opinion of the Appellate Assistant Commissioner, could be availed of for the assessments for the three years in question as the assessment orders consequent upon the reopening of assessment were being made subsequent to that date.;