COMMISSIONER OF INCOME-TAX vs. SARDAR LAKHMIR SINGH

CIVIL APPEAL No. 214/1958Supreme Court[1964] 1 S.C.R. 14812 December 1962Bench: 5 JudgesAuthor: S.K. DAS, J.L. KAPUR, A.K. SARKAR, M. HIDAYATULLAH, RAGHUBAR DAYAL15 pages
AI SummaryDismissed

What were the facts?

The assessee and his father filed separate returns for assessment year 1946-47. The father also filed a return as Karta of a Hindu Undivided Family (HUF), declaring nil income due to its alleged cessation. On March 15, 1951, the Income-tax Officer (ITO) amalgamated their incomes and assessed them as an HUF, without assessing the assessee as an individual. The father appealed, and on March 20, 1953, the Appellate Assistant Commissioner (AAC) held there was no HUF and directed reassessment of both as individuals. Subsequently, on November 27, 1953, the ITO assessed the assessee as an individual. The assessee contended this assessment was time-barred under Section 34(3) of the Indian Income-tax Act, 1922, as it was made more than four years after 1946-47. The Appellate Tribunal referred the validity of the assessment to the High Court, which ruled in favor of the assessee. The revenue appealed to the Supreme Court, arguing the assessment was saved by the second proviso to Section 34(3) as amended in 1953 and validated by Section 31 of the Amending Act, 1953.

What did the Supreme Court hold?

By a majority of 3:2, the Supreme Court held that the assessment was barred by limitation. The majority (Das, Kapur, and Sarkar, JJ.) reasoned that the second proviso to Section 34(3), which came into force on April 1, 1952, did not revive a remedy that had already become barred before its commencement. Furthermore, Kapur and Das, JJ., found that the question of Section 31 of the Amending Act, 1953, was not covered by the question referred to the High Court. Sarkar, J., additionally held that the second proviso to Section 34(3), as amended in 1953, was void for violating Article 14 of the Constitution, as it created a discriminatory classification by saving assessments in consequence of orders under Section 31 for some persons but not others, without an intelligible differentia having a rational connection to the object of the statute. The dissenting judges (Hidayatullah and Raghubar Dayal, JJ.) held the assessments were valid, saved by the second proviso to Section 34(3) and Section 31 of the Amending Act, 1953, and that Article 14 was not violated.

What were the issues?

1. Whether the assessment made on November 27, 1953, for the assessment year 1946-47 is barred by limitation under Section 34(3) of the Indian Income-tax Act, 1922. (Question of law) Assessee's contentions: - The assessment was made beyond the four-year period prescribed by Section 34(3) of the Income-tax Act, 1922, and was therefore barred. Revenue's contentions: - The assessment was saved by the second proviso to Section 34(3) of the Income-tax Act, 1922, as amended by the Indian Income-tax (Amendment) Act, 1953. - The assessment was validated by Section 31 of the Indian Income-tax (Amendment) Act, 1953. - The High Court should have considered Section 31 of the Amending Act, 1953, even if not explicitly mentioned in the reference order. - The second proviso to Section 34(3) as amended in 1953 was not discriminatory and did not violate Article 14 of the Constitution of India, as the classification of assessees was based on rational differentiations related to tax evasion.

Which sections of the Income-tax Act were involved?

Section 34(3),Section 31

AI-generated summary — verify with the full judgment below

1962 CommiuiONr of lneom1-1ax, Modrtir Y. J..,nbh2 Muliammad H11sr .;., .,Varhiar .1Jtm111l Sa1kar, /, 1962 Dr(tmber, 12, 148 · SUPREME COURT REPORTS [1964] VOL. [For the Judgment of Hidayatullah and Raghubar Dayal, JJ., see S.

0.

Prashar, Jnwme.tax Officer v. Vasantsen Dv.:arkadas, ante p. 29.] BY CouRT : In accordance with the opinion of the Omajority, the appeal is allowed. The appellant will pay the costs of the respondent as was agreed to by the parties. ..4. ppeal allowed. COMMISSIONER OF INCOME-TAX "· SARDAR LAKHMIR SINGH (S. K. DAS, J. L. KAPUR, A. K. SARKAR, M. HIDAYATULLAJI an:! RAGHUBAR DAYAL, JJ.) lncom<!·lax-Limitntion-A•aeumenl made after /OW' year.•-IJ barred-Provi.1ion aat-ing assessment in rup<<ll of aome persons-If di..criminatory-lndian lncom<!0 ta:r A<ll, 1922 (11 of 1922), 1. 31, 34(3)-lndi.an lncome-ta:r (A>nendment) Act, 1953 (25 of 1953), ••· 18, 31-Conatitution of India, Art.

14.

The asscssee and hi• father filed separate returns for the year 1946.47 and the father al'° filed a return as Karta of the Hindu undivided family in which the income was declared as ... nil on the ground that the Hindu undivided family had cea

The order continues below.

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