MAHADEO PRASAD BAIS (DEAD} vs. INCOME-TAX OFFICER 'A' WARD, GORAKHPUR AND ATJR.

CIVIL APPEAL No. 1934/1978Supreme Court1991 INSC 23012 September 1991Bench: 3 JudgesAuthor: S. RANGANATHAN, N.D. OJHA, V. RAMASWAMI PRASAD BAIS12 pages
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that the provisions of Section 150(1) of the Income Tax Act, 1961, are applicable and operative in respect of a notice issued under Section 148 in pursuance of Section 297(2)(d)(ii). The Court reasoned that Section 297(2) was enacted to provide continuity of proceedings following the repeal of the 1922 Act. It further held that the words of Section 297(2)(d)(ii) should be read to permit the applicability of Section 150 (or Section 153) with necessary modifications. This means that reassessment proceedings initiated under Section 148, subject to Sections 149 and 150, would apply accordingly, similar to proceedings normally initiated under these provisions. Since reassessment proceedings to give effect to orders on appeal, revision, or reference are not subject to a time limit under Section 150(1), proceedings initiated under Section 297(2)(d)(ii) read with Section 148 would also not be subject to limitations, except as mentioned in Section 150(2). The Court also noted that even if Section 150(1) were interpreted strictly, Section 297(2)(k) could be liberally construed to deem orders passed under the 1922 Act as orders under the 1961 Act, thus overcoming the time bar. The High Court's conclusion was affirmed. No issue was expressly left undecided.

What were the facts?

The assessee, Mahadeo Prasad Bais, was assessed as Karta of a HUF until AY 1948-49. For AY 1949-50 to 1961-62, he filed returns individually, claiming total or partial partition. These claims were initially rejected, and income was assessed in the HUF's hands. Appeals led to the Tribunal accepting partial partition, meaning some erstwhile family property income became assessable in the assessee's individual hands. Original individual assessments for these years under the 1922 Act had excluded this income, as it was deemed assessable to the HUF. No proceedings under Section 34 of the 1922 Act were pending on April 1, 1962. The Income Tax Officer initiated reassessment proceedings for AY 1953-54 to 1961-62 by issuing a notice under Section 148, invoking Section 297(2)(d)(ii) of the 1961 Act. The assessee contended the notice was time-barred, while the Revenue argued it was saved by Section 150(1) of the 1961 Act. The High Court upheld the Revenue's contention.

What were the issues?

1. Whether reassessment proceedings initiated under Section 148 of the Income Tax Act, 1961, pursuant to Section 297(2)(d)(ii) of the same Act, for assessment years prior to 1962-63, are barred by limitation, or if they are saved by the provisions of Section 150(1) of the Income Tax Act, 1961. Assessee's contentions: The assessee argued that the notice for reassessment was barred by limitation, as the original assessments were completed under the Indian Income-tax Act, 1922, and no proceedings under Section 34 of the 1922 Act were pending on April 1, 1962. Therefore, the provisions of Section 297(2)(d)(ii) of the 1961 Act, which allow for the issuance of a notice under Section 148, should not operate to lift the time bar, especially in light of Section 150(1) which applies to orders passed under the 1961 Act. Revenue's contentions: The Revenue contended that the reassessment proceedings were saved by Section 150(1) of the 1961 Act. They argued that Section 297(2)(d)(ii) should be interpreted to allow the applicability of Section 150 (or Section 153) with necessary modifications, ensuring continuity of proceedings and avoiding lacunae. The Revenue further argued that even if Section 150(1) were to be read literally, Section 297(2)(k) could be liberally construed to deem orders passed by the Tribunal and High Court under the 1922 Act as orders under the corresponding provisions of the 1961 Act, thereby enabling the application of Section 150(1).

Which sections of the Income-tax Act were involved?

Section 148,Section 150,Section 297(2)(d)(ii),Section 149,Section 150(1),Section 150(2),Section 297(2)(k),Section 34,Section 25A

AI-generated summary — verify with the full judgment below

MAHADEO PRASAD BAIS (DEAD} . .c\ v. l -r INCOME-TAX OFFICER 'A' WARD, GORAKHPUR AND AtJR. SEPTEMBER 12, 1991 [S. RANGANATHAN, V. RAMASWAMI AND N.D. OJHA, JJ.] B Income Tax Act, 1961-Sections 148, 150 and 297(2)(d)(ii)--Reas- sessment--Limitati01r-Removal of bar of limitation-When arises.

The appellant (since deceased) was being assessed as the Karta of c the Hindu Undivided Family consisting of himself, his mother, his wife and three sons until the assessment years 1948-49. For the assessment year 1949-50 and subsequent years upto i961-62 he filed a return in his individual capacity claiming that there had been a total partition of the family and that he was assessable in respect of the income from the properties of the family that fell to his share on partition; in the D alternative he claimed partial partition. Both of his -claims having been negatived, the entire income was assessed in the hands of the Hindu ""\ Undivided Family and the returns filed by the appellant in his individual capacity were finalised on-the footing that there was no income assessable in his individual capacity. The Hindu Undivided Family went up in appeals and ultimately the Tribun

The order continues below.

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