V S CHELLIAH Vs. INCOME TAX OFFICER TUTICORIN

JUDGEMENT

(1.) THE petitioner and Murugan were partners, each with a half share in the firm of Messrs. Murugan Arulanandam and Co. which carried on business at Tuticorin. THE petitioner himself was a resident of Ceylon. THE Income-tax Officer refused registration of that firm for the assessment year 1951-52 also, as he had refused it in the previous years from 1949-50. THE Income-tax Officer completed the assessment for 1951-52 on November 11, 1954. It was the unregistered firm that was assessed. THE only source of income of the petitioner in the taxable territories was his share of the profits of that firm. He filed a separate return, wherein he claimed that he was a non-resident. On February 24, 1955, the Income-tax Officer closed the individual assessment of the petitioner. THE petitioner was treated as resident and ordinarily resident, as against his claim that he was a non-resident. THEre was, however, no assessment of tax and it was treated as a case of " no demand ", because his share of the income of the firm had already been assessed along with the rest of the income of the unregistered firm. THE petitioner himself did not pursue the matter further THE firm appealed against the refusal to grant registration, as it had appealed with reference to the previous years also. THE Appellate Assistant Commissioner allowed the appeal for 1949-50. THE appeal with reference to 1951-52 also was allowed on August 21, 1955, though the appellant was absent at the hearing. THE relevant portion of the appellate judgment in relation to the assessment year 1951-52 ran

(2.) ON September 29, 1955, the Income-tax Officer purported to rectify under section 35 of the Act the order of the petitioner's assessment dated February 24, 1955. The petitioner was treated as a non-resident. His share income, from the firm, treated as a registered firm, was assessed to tax. He was given credit for his share of the tax paid by the firm under the order of assessment dated November 11, 1954, and the balance of the tax payable by the petitioner was assessed at Rs. 2, 522-8-0. This order under section 35 was subsequently cancelled by the Income-tax Officer himself on November 8, 1958, and action had been taken under section 35 without notice to the petitioner

(3.) THE Income-tax Officer, we pointed out, set aside his order dated May 29, 1955, on November 8, 1958. He followed it up by issuing a notice to the petitioner on November 18, 1958, under section 35 to show cause why the order of assessment in his case, dated February 24, 1955, should not be rectified (1) to assess him as a non-resident, and (2) to assess him on his share of the profits of the registered firm. THE petitioner was eventually given time till December 15, 1958, to file his objectionsWithout preferring his objections within the time allowed to him by the Income-tax Officer the petitioner moved this court for the issue of a writ of prohibition under article 226 of the Constitution and obtained a rule nisi on December 8, 1958. In C.M.P. No. 7602 of 1958, the petitioner asked for an interim stay of all further proceedings before the Income-tax Officer, and on December 8, 1958, itself this court granted an order ex parte the respondent staying the proceedings for three weeks. Apparently both the department and the petitioner lost sight of the feature that the court limited the interim stay to three weeks. As the period of four years within which rectification could be effected under section 35 would run out on February 24, 1959, the respondent applied to this court for permission to complete the proceedings. On December 16, 1959, this court ordered