LAKSHMANA AIYAR K M S Vs. ADDITIONAL INCOME TAX OFFICER

JUDGEMENT

(1.) THIS is a petition under Article 226 of the Constitution praying for the issue of a writ of certiorari to call for records in G. I. No. 7-I/55-56 dated 28-2-1957, and to quash the order of the Additional Income-tax Officer, Special Circle, Madras, assessing the petitioner to tax under Section 34 of the Indian Income-tax Act.

(2.) THE petitioner, an assessee, was assessed to an income of Rs. 3362 for the year 1955-56 (the corresponding year of account being 13-4-1954 to 12-4-1955) on the basis of his return; no tax was levied thereon, as it was below the taxable limit. Some time thereafter, the Additional Income-tax Officer, Special Circle, Madras, obtained information which reveated that the assessee had tailed to disclose fully and truly his real income for the year. THE officer initiated proceedings under Section 34 of the Act, and after enquiry, found that, during the year of account, the assessee should be held as deemed to have received by way of dividend a sum of Rs. 1,01,695.

(3.) SECTIONS 2(6A)(e) and 12(1B) were introduced by way of amendment in the Indian Income-tax Act, by the Finance Act of 1955, and they came into operation from 1st April 1955. The former section brought into the definition of the term "dividend" three types of payments made by a controlled company (which had accumulated profits) to or on behalf of its shareholders, namely (1) payment by way of loan or advance made to a shareholder, (2) payment to a third party on behalf of a shareholder, and (3) payment made for the benefit of a shareholder.