SIVALINGAM CHETTIAR V S Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS reference is concerned with the validity of the certain orders made under section 34(1) (b) of the income-tax Act, 1922, relating to the assessment years 1955-56 and 1956-57. The assessee is the son of V. S. Chettiappa Chettiar. Until 1939, they constituted a Hindu joint family. But in that they became divided and the partition of the family was accepted the revenue with effect from April 1, 1939. Thereafter, the father was assessee as an individual and the son in the status of the Hindu undivided and the son in the status of the Hindu undivided family. Chettiappa Chettiar died On May 17, 1941, leaving a will dated November 11, 1939 bequeathing his entire property to his son, Sivalingam Chettiar. Since the death of this father Sivalingam Chettiar submitted return one as an individual and the other as a Hindu undivided family, and they were assessed as such. He made similar returns of the assessment years here in question in response to notices under section 22(2) of the Act. For the first of the years the return which was dated August 29, 1954, was filed on September 5, 1955 and for the second year it was file on February 1, 1957. The income-tax officer found that the income returned by Sivalingam Chettiar as an individual in fact belonged to her joint family and assessed the joint family accordingly. On the reruns filed as an individual he noted "N. A." apparently signifying nil assessment. THIS he did on January 27, 1956, in respect of the return for the assessment year 1955-56 and on February 27, 1957, in the other case. From the supplemental statement, which we called for from the Tribunal, we find that notices were served on Sivalingam Chettiar in a respect of both the years under section 22(4) and 23(2). The assessee produced his books, which were examined and also tapered by his representative. In the file relating to the first of the two years, the Income-tax officer that, as the income from the properties belonging to the estate of Chettiappa Chettiar would be added to the family to V. S. Sivalingam Chettiar, there was on income to be assessed on the return find by Sivalingam Chettiar as an individual. He went on to add :" Hence, for this year this will be closed as N. A." For the next year a similar note was made by the income-tax officer, which read :

(2.) NEITHER of these orders was communicated to the assessee. The joint family represented by Sivalingam Chettiar preferred appeals against the clubbing of the income shown in the individual return with the income of the family. These appeals were allowed. While disposing of them the Appellant Assistant Commissioner of income-tax made the following direction to the income-tax officer in respect of the assessment year 1956-57 :

(3.) WITH respect, we concur with the view except that we would add that such an order of termination of the returns, as in that case, would well be within the purview of section 23. It should be remembered that the power of the income tax officer to assess is only under that section, and when a return is filed he is called upon to dispose of it by making an assessment which means by determining the quantum of chargeable income which may be nil or anything fix the tax payable on that basis. Mr. Srinviasan, however, contends that this court in that case was not right in applying Esthuri Aswathiah v. Income-tax officer Mysore State to the fact there. He says that Esthuri Aswathiah v. Income-tax officer, Mysore State was a case of a return of income below the taxable limit and the income-tax officer accepting the return. That being therefore, an order under sub-section (1) of section 23, according to the learned counsel for the assessee simply accepting the rotten the principle applicable to that cannot be applied to an order made under section 23(3). We are unable to accept this view. We have already held that in the context of the power to assess there is on distinction between sub-section (1) and sub-section (3) of section 23. Acceptances of the return on a satisfaction that it is correct or non-acceptance of it on the impression of the income-tax officer that the return is not satisfactory does not bear upon the scope of the power to assess but only relates to the procedure that the income-tax officer will have to follows. Where he is not satisfied with the correctness of the return, he has to follow the procedure prescribed by sub-section (2) of section 23 before he exercises his power to assess the total income.