KODIDASU APPALASWAMY AND SURYANARAYANA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THESE two references, one under S. 66(1) and the other under S. 66(2) of the Indian IT Act respectively, arise out of the same assessment proceedings.

(2.) WE shall first take up R. C. No. 49 of 1959. The assessee is a firm consisting of two partners, Kodidasu Appalaswamy and Suryanarayana. The assessment year is 1952 -53, the account year being from 1st April, 1951, to 31st March, 1952. The assessee - firm carried on the business of milling paddy and manufacturing of groundnut oil. The application which led to this reference was filed by Kodidasu Appalaswarny, one of the two partners of the assessee -firm. It appears that he subsequently died on 26th June, 1959, and that, therefore, his son, Sanyasi Row, was impleaded as his legal representative. Appalaswamy's share was 3/4th and Suryanarayana's share was 1/4th. A notice under S. 22(2) of the IT Act was served upon the firm on 13th June, 1952, and the date before which the return had to be submitted was 18th July, 1952. But no return was filed within the time. One return was filed on 8th Jan., 1953, under S. 22(3); but it was not accompanied by the usual documents such as, profit and loss account, balance -sheet, etc., which an assessee is required to annex to the return. Therefore, a notice under S. 23(2) was issued on 17th May, 1955. It appears that, even prior to that date, the ITO had issued several notices under S. 22(4) and for every one of them the assessee asked for adjournment on some ground or other. Even after the issue of the notice under S. 23(2) a number of adjournments were asked for and granted. It appears from the statement of the case that between 17th May, 1955, and 22nd Feb., 1957, the ITO gave adjournments on not less than nine occasions. The assessment for the asst. year 1952 -53 had to be completed on or before 31st March, 1957. In spite of this, when the matter was posted to 5th March, 1957, the assessee again asked for an adjournment. The request was granted and the case was finally posted to 25th March, 1957. On that day, no one appeared for the assessee. But a telegram was sent by Sanyasi Row, the son of Appalaswamy, stating that his father was seriously ill. Since either he or the other partner, Suryanarayana, never appeared for the enquiry before the ITO, the latter refused to grant adjournment and made the order of assessment on 29th March, 1957, under S. 23(4) of the Act for default under S. 23(2). He determined the income of the assessee firm at Rs. 75,000 subject to depreciation allowance of Rs. 3,268 and determined the total assessable income at Rs. 71,732. He also refused to grant registration of the firm for the asst. yr. 1952 -53, in exercise of the discretion vested in him under S. 23(4). In due course, an application under S. 27 was made; but it was dismissed. A copy of the order of assessment and the notice demanding the payment of the tax pursuant to the order of assessment were served upon the assessee -firm on 6th April, 1957. On these facts, the following question for decision was referred to the High Court: "Whether the assessment made on 29th March, 1957, is barred by limitation according to the provisions of S. 34(3) by reason of a copy of the order and the relevant demand notice having been served upon the assessee on 6th April, 1957 -

(3.) SEC . 34, cl. (3), of the IT Act reads as follows :