BOSE, C.J. - (1.) THIS is an appeal against an order of Sinha J. dt. the 27th April, 1959, dismissing a writ application for quashing a notice issued under s. 34 of the Indian IT Act.
(2.) A firm of the name of Balmukund Radheshyam carried on business as commission agents in cotton, sale and purchase of cotton and cotton piece goods and speculation in cotton and silver at Ratlam and Indore, since 22nd Dec., 1947, until it was dissolved on the 24th Feb., 1950. On 20th Aug., 1952, one of the ex-partners of the said firm filed a return of the income of the said firm before the ITO, Special Survey Circle III, Calcutta, showing a sum of Rs. 18,737-5-9 as net profits for the accounting period of the firm's first year of business, that is for the asst. yr. 1949-50. An order of the assessment was made on the 28th Oct., 1952, and the sum assessed to income-tax was duly paid. It is alleged that sometime in March, 1953, the notice of dissolution of the said firm was duly given to the ITO, Special Survey Circle III, Calcutta, though this fact is denied on behalf of the IT Department. By an order dt. the 3rd Aug., 1955, the Central Board of Revenue, in exercise of its powers under sub-s. (7A) of s. 5 of the Indian IT Act, transferred the income-tax cases of the said firm pending in the office of the Second ITO, Bombay to the ITO, Central Circle II, Calcutta. By a letter dt. the 29th Sept., 1955, the then ITO, Central Circle II, Calcutta, informed the said firm at 357, Kalbadevi Road, Bombay, that the case of the said firm has been assigned by the Central Board of Revenue to him. By a letter dt. the 13th Oct., 1955, the ITO, Central Circle II, Calcutta, called upon the ex-partners of the said firm to produce the books of the firm for the year 2004-05 and particularly all documents of speculation in cotton and silver on 10th Nov., 1955. On 22nd Oct., 1955, the said ITO issued a notice a notice under s. 34 addressed to Shivram Poddar (partner) for and on behalf of M/s Balmukund Radheshyam, 138, Cross Street, Calcutta. In this notice it was, inter alia, stated as follows : I have reason to believe that your income assessable to income- tax for the year ending 31st March, 1950, has been under- assessed. I, therefore, propose to re-assess the said income that has been under-assessed. I should request you to deliver to me within 35 days of the receipt of this notice, a return in the attached form of your total income and total world income assessable for the said year ending 31st March, 1950. This notice is being issued after obtaining the necessary satisfaction of the CIT, Central, Calcutta. (Sd.) A. BAKSI, ITO, Central Circle II, Calcutta. Thereafter, certain correspondence followed. An objection to the jurisdiction of the ITO was taken with regard to the proceedings proposed to be taken under s. 34 of the Indian IT Act. But as no heed was paid to it, an application was moved before this Court on or about 14th Dec., 1955, under Art. 226 of the Constitution of India and this Court was pleased to issue a rule nisi on 16th Dec., 1955. This rule was subsequently made absolute by Sinha J. by an order dt. the 3rd Jan., 1957. An appeal was preferred against the order of Sinha J. dt. the 3rd Jan., 1957, but the same was dismissed. In the meantime, on 28th March, 1958, the ITO issued another notice under s. 34 r/w s. 22(2) of the Act to the petitioner-appellant " as partner of the firm of M/s Balmukund Radheshyam at the time of its dissolution". The relevant portion of the notice may be set out hereunder : "To Shri Shivram Poddar, Partner of the firm of M/s Balmukund Radheshyam at the time of its dissolution, C/o M/s Anandram Gajadhar, 33, Netaji Subhas Road, Calcutta. Whereas I have reason to believe that M/s Balmukund Radheshyam (name of the firm) was dissolved on or about 24th Feb., 1950 ; And whereas the income of the said firm assessable to income-tax for the asst. yr. 1949-50 has been under-assessed ; And whereas I propose to re-assess the said income ; And whereas under s. 44 of the Indian IT Act, 1922, you the said Shivram Poddar and Ramnarain Ojha (decd.), 33, Netaji Subhas Road, Calcutta, who were partners of the said firm of M/s Balmukund Radheshyam at the time of its dissolution, are jointly and severally liable to assessment in respect of the income, profits and gains of the said firm before its dissolution and for the amount of tax payable thereon ; Now therefore under s. 34 r/w s. 22(2) of the said Act, I require you the said Shivram Poddar to deliver to me within 35 days of the receipt of this notice a return in the attached form, of the total income and the total world income of the said firm assessable for the year ending 31st March, 1950. This notice is issued after the CIT (Central), Calcutta, is satisfied that this is a fit case for the issue of this notice. ITO (Central) Circle II, Calcutta."
(3.) ON the 17th April, 1958, the appellant addressed a letter to the ITO challenging, inter alia, the jurisdiction of the ITO and the validity of the said notice issued under s. 34 and also asking for certain particulars specified therein. By a letter dt. the 23rd July, 1958, the ITO insisted on compliance with the notice issued under s. 34 and called upon the appellant to file a return by 7th Aug., 1958. By a letter dt. the 6th Aug., 1958, the petitioner again protested against the validity of the notice and proceedings and thereafter moved this Court under Art. 226 of the Constitution and a rule nisi was issued on the 18th Sept., 1958. This rule came up for hearing before Sinha J. and was discharged by a judgment and order dt. the 27th April, 1959. It is against this order that the present appeal has been preferred. The sole question which arises for determination in this appeal is whether under s. 44 of the Indian IT Act, as it stood before it was amended by the Finance Act (XI Of 1958), a partner of a dissolved firm could be assessed to income-tax and made liable for payment of such tax. It will be convenient at this stage to set out s. 44 as it existed prior to the amendment of 1958 and after it.;