THE PR. COMMISSIONER OF INCOME TAX vs. M/S BIOPLUS LIFE SCIENCES PVT LTD

- 1 - IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 16TH DAY OF FEBRUARY, 2023 BEFORE THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.1014 OF 2017 (T-KST) BETWEEN: M/S. RAINBOW COLOUR LAB, NO.13, D.J.C. COMPLEX, HUDSON CIRCLE, BENGALURU – 560 027. A PARTNERSHIP FIRM REPRESENTED BY ITS PARTNER SRI.G.K.MADAN MOHAN, AGED ABOUT 62 YEARS, S/O SRI.G.V.KRISHNA REDDY. ...PETITIONER (BY SRI. M.THIRUMALESH, ADVOCATE ) AND: 1. STATE OF KARNATAKA,

REPRESENTED BY PRINCIPAL SECRETARY TO GOVERNMENT,

FINANCE DEPARTMENT, GOVERNMENT OF KARNATAKA, VIDHANA SOUDHA, BENGALURU-560001. 2. COMMISSIONER OF COMMERCIAL TAXES KARNATAKA VANIJYA THERIGE, KARYALAYA, GANDHINAGAR, BENGALURU-560 009. 3. ASST.COMMISSIONER OF COMMERCIAL TAXES (A & R) – 4.9 DVO-4, KORAMANGALA, BENGALURU – 560 047.

…RESPONDENTS (BY SRI. HEMAKUMAR, AGA) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE REASSESSMENT ORDERS PASSED UNDER KST ACT, 1957 FOR THE YEARS 1998-99 TO 2004-05 BY THE ASST.COMMISSIONER

- 2 - OF COMMERCIAL TAXES (A & R) – 4.9, BANGALORE, R-3 HEREIN, DATED 15.04.2016 IN THE CASE OF THE PETITIONER VIDE ANNEXURES-K, L, M, N, P, Q & R & ETC., THIS W.P. IS BEING HEARD AND RESERVED ON 24.11.2022 COMING ON FOR PRONOUNCEMENT OF ORDERS THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER

This petition takes exception to the impugned re- assessment orders for the years 1998-99 to 2004-05 dated 15.04.2016 and consequent Demand notices dated 15.04.2016 passed by the 3rd respondent at Annexures-K, L, M, N, P, Q and R respectively.

The petitioner is engaged in the business of processing and supplying photograph, photo prints and photo negatives. In the case of Keshoram Surindranath Photo-Mag.(Pvt.) Ltd., & others vs. ACCT, Bangalore & others – (2001) 121 STC (KAR), Entry No.25 of the 6 Schedule to the Karnataka Sales Tax Act, 1957 (for short ‘the KST Act’) was declared unconstitutional and struck down by this Court and confirmed by the Apex Court on

- 3 - 20.04.2000. Under these circumstances, the assessment of the petitioner for the years 1998-99 to 2004-05 was passed exempting the petitioner from levy of sales tax.

2.1 Meanwhile, Entry No.25 was reintroduced vide Karnataka Act No. 3 of 2004 w.e.f. 29.01.2004 with retrospective effect. The said reintroduction of Entry No.25 was once again challenged before this Court and struck down vide judgment dated 19.08.2005 in the case of M/s. PRO Lab, Mangalore & others vs. State of Karnataka – 2005 (59) Kar.L.J.410. The State preferred Civil Appeal 1145/2006 before the Apex Court in which, an interim order dated 19.11.2007 was passed, whereby the revenue authorities were permitted to proceed with the assessment in terms of Entry No.25 but restrained from taking coercive steps against the respondents – assessees in the said appeals. In this context, it is relevant to state that the petitioner – assessee herein was not a party to the said proceedings.

2.2 By final judgment dated 30.01.2015 in the case of State of Karnataka vs. PRO Lab & others – (2015) 81 Kar.L.J. 377, the Apex Court allowed the appeals filed by

- 4 - the State and set aside the judgment of the Division Bench of this Court, thereby reversing the judgment of the Division Bench of this Court and restoring the aforesaid Entry No.25 to Sixth Schedule of the KST Act.

2.3 Subsequent to the judgment of the Apex Court in PRO Lab’s case supra, the respondents issued notices dated 07.10.2015 to the petitioner under Section 12-A of the KST Act seeking to re-open the assessment passed for the years 1998-99 to 2004-05, thereby levying tax at 4% on the business of the petitioner. The petitioner having submitted its reply on 29.02.2016, respondents issued revised notices dated 23.03.2016, to which also the petitioner filed replies dated 11.04.2016. Pursuant thereto, the 3rd respondent proceeded to pass the impugned orders dated 15.04.2016 under Section 12-A of the KST Act followed by the impugned demand notices which are assailed in the present petition.

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In support of his contentions, learned counsel for the petitioner has placed reliance upon the following decisions:-

- 6 - (i) ITO Sitapur vs. M/s.Muralidhar Bhagawandas – AIR 1965 SC 342; (ii) Mysore Cements vs. State of Karnataka & Another – (2000) 118 STC 563 (KAR); (iii) Commissioner of CGST vs. M/s.Narbada Industries – CEA 10/2020 & Connected matters Dated 23.05.2022(J & K); (iv) Hungerford Investment Trust Ltd., vs. ITO – (1998) 231 ITR 175 (SC); (v) CIT Bihar & Others vs. Sardar Lakshmir Singh – AIR 1963 SC 1394 (FB); (vi) CIT, Patiala vs. Ambala Flour Mills – AIR 1972 SC 82 (SC); (vii) CIT, UP vs. Mohd. Shakoor Bashir – AIR 1973 SC 2359 (SC); (viii) Rajinder Nath vs. CIT – AIR 1979 SC 1933; (ix) M. CT.Muthuraman vs. ITO Madras – (1968) 69 ITR 432 (Mad.HC); (x) DCIT vs. Simplex Concrete Piles (India) Ltd., - (2013) 11 SCC 373; (xi) Gauri Shankar Choudhary vs. Addl.Commissioner of IT – (1998) 234 ITR 856 (Pat.); (xii) Krishak Bharati Co-operative Limited vs. State of Gujarat – C/SCA/3708/2012 dated 10.01.2023 (Gujarat HC); (xiii) Neelam Motors vs. DCST – W.P.No.14486/2021 & others dated 26.08.2021 (Orissa HC);

- 7 - (xiv) Sky Automobiles vs. DCCT – WP (C) No.2225 / 2017 dated 01.10.2021 (Orissa HC); (xv) K.M.Sharma vs. ITO – (2002) 254 ITR 772 (SC); (xvi) Speces Hotels Pvt. Ltd., vs. DCIT – (2003) 263 ITR 263; (xvii) National Agricultural Co-operative Marketing Federation of India Ltd., vs. Union of India – (2003) 260 ITR 548;

- 8 - last date for re-opening assessments would expire on 31.03.2013 for the last year i.e., 2004-05. It is therefore an undisputed fact that the notices dated 07.10.2015 issued by the respondents purporting to initiate the impugned re- assessment proceedings were well clearly beyond the period of limitation of 8 years provided under Section 12- A(1) of the KST Act. 8. In order to overcome the aforesaid prescribed statutory period of limitation, the respondents seek to place reliance upon the proviso to Section 12-A(2) in order to contend that the aforesaid period of 8 years prescribed in Section 12-A(1) was not applicable, since the impugned reassessment orders were passed pursuant to the judgment of the Apex Court in PRO Lab’s case (supra) dated 30.01.2015; in other words, it is sought to be contended by the respondents that prescribed period of 8 years under Section 12-A(1) is not applicable to the petitioner and that the impugned reassessment proceedings, albeit initiated beyond the period of 8 years were not barred by limitation, since the same were

- 9 - pursuant to the judgment of the Apex Court in PRO Lab’s case (supra) dated 30.01.2015. 9. Under these circumstances, the only question that arises for consideration in the present petition is, whether the proviso to Section 12-A(2) of the KST Act is applicable to the facts of the instant case. In order to appreciate the rival contentions, it is necessary to extract Section 12-A of the KST Act which reads as under:- 12-A. Assessment of escaped turnover.- (1) If the assessing authority has reason to believe that the whole or any part of the turnover of a dealer in respect of any period has escaped assessment to tax or has been under assessed or has been assessed at a rate lower than the rate at which it is assessable under this Act or any deductions or exemptions have been wrongly allowed in respect thereof, the assessing authority may, notwithstanding the fact that the whole or part of such escaped turnover was already before the said authority at the time of the original assessment or reassessment but subject to the provisions of sub-section (2), at any time within a period of eight years from the expiry of the year to which the tax relates, proceed to assess or re-assess to the best of its judgment the tax payable by the dealer in respect of such turnover after issuing a notice to the dealer and

- 10 - after making such enquiry as it may consider necessary. (2) In computing the period of limitation for assessment of the escaped turnover under this section, the time during which an assessment has been deferred on account of any stay order granted by any Court or other authority in any case, or by reason of the fact that an appeal or other proceeding is pending before the Appellate Tribunal or the High Court or the Supreme Court, shall be excluded: Provided that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or re-assessment may be made, shall apply to an assessment or re-assessment made on the assessee or any person in consequence of, or to give effect to, any finding, direction or order made under section 20, 21, 22, 22A, 23 or 24 or any judgment, or order made by the Supreme Court, the High Court, or any other Court. 10. In my considered opinion, the said proviso is not applicable to the instant case and the impugned assessment orders are barred by limitation for the following reasons:- (i) It is a matter of record that the petitioner was not one of the parties in PRO Lab’s case and consequently,

- 11 - would not come under the expression ‘assessee’ contained in the proviso to Section 12-A(2); (ii) The petitioner can also not be considered, construed or treated as ‘any person’ as contemplated in the said proviso since the same means, only a person who is intimately connected or interlinked or has a nexus to the parties in PRO Lab’s case and not to anyone else, much less, the petitioner herein, who was neither a party to PRO Lab’s case (supra) nor had any connection / link / nexus with the parties to the said case; to put it differently, in order to apply the judgment of the Apex Court in PRO Lab’s case, which would enable the respondents to initiate the impugned re-assessment proceedings, pursuant thereto, it is absolutely essential that the petitioner herein has to be ‘any person’ within the meaning of the proviso to Section 12-A(2); it follows there from that if the petitioner cannot be construed, considered or treated as ‘any person’ in terms of the said proviso, the same would be inapplicable to the petitioner and the benefit of exclusion of the period of 8 years prescribed in Section 12-A(1) would not be available to the petitioner;

- 12 - (iii) In ITO, Sitapur vs. M/s.Muralidhar Bhagwan Das case (supra), the Apex Court held as under:- 9. Now, let us scrutinize the expressions on which strong reliance is placed for the contrary conclusion. The words relied upon are “section limiting the time”, “any person”, “in consequence of or to give effect to any finding or direction”. Pointing out that before the amendment the word “sub- section” was in the Proviso but it was replaced by the expression “section”, it is contended that this particular amendment will be otiose if it is confined to the assessment year under appeal, for it is said that under no circumstances the Income Tax Officer would have to initiate proceedings for the said year pursuant to an order made by an Appellate Assistant Commissioner. This contention is obviously untenable. The Appellate Assistant Commissioner or the Appellate Tribunal may set aside the notice itself for one reason or other and in that event the Income Tax Officer may have to initiate the proceedings once again in which case Section 34(1) will be attracted. The expression “finding or direction”, the argument proceeds, is wide enough to take in at any rate a finding that is necessary to dispose of the appeal or direction which Appellate Assistant Commissioners have in practice been issuing in respect of assessments of the years other than those before them in appeal. What does the expression “finding” in the proviso to

- 13 - sub-section (3) of Section 34 of the Act mean? “Finding” has not been defined in the Income Tax Act. Order 20 Rule 5 of the Code of Civil procedure reads: “In suits in which issues have been framed, the court shall state its finding or decision, with the reasons therefor, upon each separate issue, unless the finding upon any one or more of the issues is sufficient for the decision of the suit.” Under this order, a “finding” is, therefore, a decision on an issue framed in a suit. The second part of the Rule shows that such a finding shall be one which by its own force or in combination with findings on other issues should lead to the decision of the suit itself. That is to say, the finding shall be one which is necessary for the disposal of the suit. The scope of the meaning of the expression “finding” is considered by a Division Bench of the Allahabad High Court in Pt. Hazari Lal v. Income Tax Officer, Kanpur There, the learned Judges pointed out : “The word “finding”, interpreted in the sense indicated by us above, will only cover material questions which arise in a particular case for decision by the authority hearing the case or the appeal which, being necessary for passing the final order or giving the final decision in the appeal, has been the subject of controversy between the interested parties or on which the parties concerned have been given a hearing.” We agree with this definition of “finding”. But a Full Bench of the same High Court in Lakshman Prakash v. CIT construed the word “finding” in a rather comprehensive way. Desai, C.J., speaking for the Court, observed:

- 14 - “A finding is nothing but what one finds or decides and a decision on a question even though not absolutely necessary or not called for is a finding.” If that be the correct meaning, any finding on an irrelevant or extraneous matter would be a finding. That certainly cannot be the intention of the legislature. The Madras High Court also in A.S. Khader Ismail v. Income Tax Officer, Salem gave a very wide interpretation to that word, though it did not go so far as the Full Bench of the Allahabad High Court. Ramachandra Iyer, J., as he then was, speaking for the Court, observed that the word “finding” in the Proviso must be given a wide significance so as to include not only findings necessary for the disposal of the appeal but also findings which were incidental to it. With respect, this interpretation also is inconsistent with the well- known meaning of that expression in the legal terminology. Indeed, learned counsel for the respondent himself will not go so far, for he concedes that the expression “finding” cannot be any incidental finding, but says that it must be a conclusion on a material question necessary for the disposal of the appeal, though it need not necessarily conclude the appeal. This concession does not materially differ from the definition we have given, but the difference lies in the application of that definition to the finding given in the present case. A “finding”, therefore, can be only that which is

- 15 - necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner may hold, on the evidence, that the income shown by the assessee is not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context is that that income does not belong to the relevant year. He may incidentally find that the income belongs to another year, but that is not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. The expression “direction” cannot be construed in vacuum, but must be collated to the directions which the Appellate Assistant Commissioner can give under Section 31. Under that section he can give directions, inter alia, under Section 31(3)(b), (c) or (e) or Section 31(4). The expression “direction” in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other Tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the expression “finding” as well as the expression “direction” can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is empowered to give under the sections mentioned therein. The words “in consequence of or to give effect to” do not create

- 16 - any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso. If the scope is limited as aforesaid, the said words also must be related to the scope of the findings and directions. 10. The words “any person”, it is said, conclude the matter in favour of the Department. The expression “any person” in its widest connotation may take in any person, whether connected or not with the assessee, whose income for any year has escaped, assessment; but this construction cannot be accepted, for the said expression is necessarily circumscribed by the scope of the subject-matter of the appeal or revision, as the case may be. That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision. If so construed, we must turn to Section 31 to ascertain who is that person other than the appealing assessee who can be liable to be assessed for the income of the said the assessment year. A combined reading of Section 30(1) and Section 31(3) of the Act indicates the cases where persons other than the appealing assesses might be affected by orders passed by the Appellate Commissioner. Modification or setting aside of assessment made on a firm, joint Hindu family, association of persons, for a particular year may affect the assessment for the said year on a partner

- 17 - or partners of the firm, member or members of the Hindu undivided family or the individual, as the case may be. In such cases though the latter are not eo nominee parties to the appeal, their assessments depend upon the assessments on the former. The said instances are only illustrative. It is not necessary to pursue the matter further. We would, therefore, hold that the expression “any person” in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessments of the year under appeal. 11. We shall now briefly touch upon the conflict of decisions on the question. The Full Bench of the Allahabad High Court in Lakshman Prakash case overruled the decision of the Division Bench in Pt. Hazari Lal case . A Division Bench of the Madras High Court, consisting of Rajagopalan and Balakrishna Ayyar, JJ., in Simrathmull v. Additional Income Tax Officers, Ootacamund , took the same view as the Full Bench of the Allahabad High Court in Lakshman Prakash case . But a Division Bench of the Calcutta High Court, consisting of Bose, C.J., and Mookerjee, J., in Brindaban Chandra Basak v. Income Tax Officer though it had not finally expressed any opinion that, was inclined to accept the view expressed by the Division Bench of the Allahabad High Court in Pt. Hazari Lal case . We have gone through the decision carefully, for the reasons given by us, we agree with the view expressed by the Division Bench of the Allahabad

- 18 - High Court in Pt. Hazari Lal case on the interpretation of the proviso to sub-section(3) of Section 34 of the Act. 12. In the result, we hold that the said proviso would not save the time limit prescribed under sub-section (1) of Section 34 of the Act in respect of an escaped assessment of a year other than that which is the subject-matter of the appeal or the revision, as the case may be. It follows that the notice under Section 34(1) of the Act issued in the present case was clearly barred by limitation. (iv) In Mysore Cements Ltd., case (supra), the co- ordinate Bench of this Court while dealing with proviso 12- A(2) of the KST Act, under identical circumstances, held as under:- All these petitions are disposed of by this common judgment since the controversy involved is common. 2. Notices issued under section 12A of the Karnataka Sales Tax Act, 1957, relying the decision given in Romeo Cement Distribution Co. Pvt. Ltd. v. State of Tamil Nadu, [1993] 88 STC 151 (SC) have been challenged in these petitions. It is stated that the notices are time-barred and that the provisions of section 12-A(2) are not applicable. The said proviso is as under:

- 19 - “12-A(2) In computing the period of limitation for assessment of the escaped turnover under this section, the time during which an assessment has been deferred on account of any stay order granted by any court or other authority in any case, or by reason of the fact that an appeal or other proceeding is pending before the appellate Tribunal or the High Court or the Supreme Court, shall be excluded: Provided that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be made, shall apply to an assessment or reassessment made on the assessee or any person in consequence of, or to give effect to any finding, direction or order made under sections 20, 21, 22, (22A), 23 or 24 or any judgment or order made by the Supreme Court, the High Court, or any other court.” 3. The wording in section 12-A(2) “in consequence of, or to give effect to, any finding, direction or order” should be pertaining to the assessee. 4. Reliance is placed on the judgment given in the case of Hungerford Investment Trust Ltd. v. I.T.O., [1998] 231 ITR 175 (SC) where the provisoo to subsection 3 of section 34 of the Income-tax Act were interpreted by the apex Court. It was found that if the person is intimately connected with the

- 20 - assessee he would be covered by the phrase “assessee or any other person”. The decision given in Income-tax Officer v. Murlidhar Bhagwan Das, [1964] 52 ITR 335 (SC), was accepted and applied. In Murlidhar's case, [1964] 52 ITR 335 (SC), the words “assessee or any other person” were interpreted to mean a person who would be liable to be assessed for a whole or part of the income under appeal or revision. 5. In the case of S. Zoraster & Company (Supplies) Pvt. Ltd. v. State of Rajasthan, [1995] 99 STC 281, the High Court of Rajasthan held that the extended time for reassessment to give effect to an order of competent court, would mean an order passed under the sales tax law and not under any other Act. 6. In S.C. Prashar v. Vasantsen Dwarkadas, [1963] 49 ITR 1 (SC), Godbole (P.V.), Income-tax Officer v. Jagannath Fakirchand, [1963] 49 ITR 88 (SC) and Commissioner of Income-tax v. Sardar Lakhmir Singh, [1963] 49 ITR 70, it was observed that the second proviso to section 34(3) of the Income-tax Act relating to any person other than the assessee is a stranger and has nothing to do with the assessment proceedings in which a finding or direction is given is ultra vires article 14 of the Constitution. 7. In Daffadar Bhagat Singh and Sons v. Income-tax Officer, [1969] 71 ITR 417 (SC), the view taken in

- 21 - Murlidhar Bhagwan Das's case, [1964] 52 ITR 335 (SC), was again reiterated. 8. In Rajinder Nath v. Commissioner of Income-tax, [1979] 120 ITR 14 (SC) and Consolidated Coffee Ltd. v. Income-tax Officer, [1985] 155 ITR 729 (Kar) on the term finding, direction or order the view expressed in Murlidhar Bhagwan Das's case, [1964] 52 ITR 335 (SC), was upheld. 9. In Navabharat Agrl. & Commercial Corporation v. Commissioner of Commercial Taxes, [1995] 97 STC 435 (AP), it was held that pursuant to the law declared by the authority under the Act, whose orders are binding on the assessing authority, the assessing authority can reopen the assessment under section 14(4) of the Act. 10. I have considered over the matter. 11. The power under section 12-A for assessment of escaped turnover can be exercised if the assessing authority has reason to believe that the whole or part of the turnover of a dealer has escaped the assessment to tax or under-assessed or assessed at too low a rate. The reason to believe for a assessing authority could be for different grounds. If a law is declared by the apex Court then under article 141 of the Constitution of India it is binding. The assessing authority, therefore, has the jurisdiction to invoke the provisions of section 12-A.

- 22 - 12. The second question is of limitation. 13. Section 12-A(1) provides the limitation of eight years from the expiry of the year to which the tax relates. The assessing authority can proceed to assess or reassess the dealer’ after issuing the notice. It is not necessary that the assessment itself should be completed within a period of eight years. 14. The other question which arises is as to whether the bar of limitation could not have come in the way assessing authority in proceeding for assessment/reassessment under section 12-A if a finding or direction or order has been given in the case of any other person. It may be observed that the proceedings can be taken in consequence of or to give effect any finding, direction or order made under sections 20, 22, 22-A, 23, 24, etc. If a judgment or order has been given by the High Court or Supreme Court then also there is no problem. The word “any person” which has been used in the proviso though is similar to the provisions of the Income-tax Act, but may have a different concept in sales tax law. If a judgment, is given by the Supreme Court or by the High Court of that very State, the judgment being binding could be a ground for reopening the assessment or making the assessment of escaped turnover. But if the judgment itself has been given, in some other case unconnected with the assessee, then it cannot be interpreted with the word “any person” referred

- 23 - under the proviso to section 12-A(2) should even extend the limitation of eight years as prescribed under section 12-A(1). It is stated that the appeal against the order passed under section 25-A are pending. Under the proviso to section 12(B) (sic), the time limit prescribed under section 12(1) or 12(2) is not applicable for an action to be taken or order assessment or reassessment to be made. The assessment has to be made of the assessee or any person; such assessment could be in consequence of or to give effect to any finding, direction or order as mentioned in the proviso. 15. Learned counsel for the respondent has relied on the decision given in the case of N.A. Jailabdeen v. State of Kerala, [1999] 113 STC 100 (Ker), wherein it was held that initiation of reassessment proceedings applying the decision given in another case by the Supreme Court is justified as the Supreme Court does not make the law and only declares the existing law. The word “any person” here could therefore only be interpreted to mean a person other than the assessee. The words “in consequence of or to give effect” are not in dispute. But if the assessment or reassessment is made in consequence of or to give effect to any finding, direction or order of the various authorities mentioned in the proviso, the directions could be interpreted to mean the directions given by the said authority or court in the case. The finding also stand

- 24 - on the same footing and therefore the finding recorded in a particular cases are sufficient for initiation of the proceedings for assessment/reassessment in that case. If the direction is given in that very case, then it has to be considered that the directions relate to that very assessee as held in the case of Murlidhar Bhagwan Das, [1964] 52 STC 335 (SC). If there is no finding or direction and it is only the order of judgment of the High Court and Supreme Court in another case, then for that purpose it has to be seen that the proviso to section 12-A(2) could be considered as an extension to the main section and thus the order or judgment referred in the proviso of the High Court, Supreme Court or any other court will extend the period of limitation. Section 12-A(2) has extended the time-limit during which the stay was granted by any court or any other authority. It is only the time during which the stay granted is extended. But in a case where the stay is not granted and ultimately the matter is decided against the assessee requiring to make the assessment on the basis of the ultimate order or judgment given then the proviso further extends the time but, if a judgment is given in other case, then it would justify reopening of the assessment only within the time prescribed under section 12-A(1) and if it is in the case of the same assessee or person then, proviso to sub-section (2) of section 12-A thereof extends the time-limit for initiation of the

- 25 - assessment/reassessment of that assessee. The petitioners may file their objections to the respondent who may decide the same following the observations made above. 16. Petitions stand disposed of. 17.Petitions disposed of. (v) In Hungerford Investment Trust Ltd., case supra, the Apex Court held as under:- 15. The scope of this second proviso to Section 34(3) was examined by a Constitution Bench of this Court in the case of S.C. Prashar v. Vasantsen Dwarkadas [(1963) 49 ITR 1 : AIR 1963 SC 1356] . This Court, examining the second proviso to sub-section (3) of Section 34 which came into effect from 1-4-1952, said that it patently introduced an unequal treatment in respect of some out of the same class of persons. Those whose liability to pay tax was discovered by one method would be proceeded against at any time and no limitation would apply in their case and in the case of others the limitation laid down by sub-section (1) of Section 34 would apply. Referring to the distinction made by the High Court in that case on a somewhat narrower ground, this Court observed that so far as the assessees were concerned, there might be a rational ground of distinction because appeal, proceedings etc. might take a long time and the assessee being a party to the appeal could not

- 26 - complain of such delay. Therefore, an assessee did not occupy the same position as strangers. This Court, therefore, held that the proviso, insofar as it affected strangers, must be held to be ultra vires as violating Article 14 of the Constitution. 16. The same Bench delivered another judgment on the same day in CIT v. Sardar Lakhmir Singh [(1963) 49 ITR 70 : AIR 1963 SC 1394] in which it affirmed its finding in S.C. Prashar case [(1963) 49 ITR 1 : AIR 1963 SC 1356] . In the case of S.C. Prashar [(1963) 49 ITR 1 : AIR 1963 SC 1356] the assessee before the Tribunal was Vasantsen Dwarkadas representing his deceased father. The Tribunal in appeal held that the income in question should be deleted from Dwarkadas's income. If the Income Tax Officer can include the same in the income of the firm of Purshottam Laxmidas (of which Dwarkadas was a partner) he is at liberty to do so. He can then apportion the income of Purshottam Laxmidas amongst the partners thereof as provided in Section 23(5) of the Act. Thereupon the Income Tax Officer served a notice under Section 34 on the firm of Purshottam Laxmidas. This Court held that the firm of Purshottam Laxmidas was not before the Tribunal and, therefore, the firm was no better than a stranger who was in some way associated with the assessee. Therefore, the second proviso to Section 34(3) would have no application to the firm and the notice under

- 27 - Section 34 which was issued on the firm of Purshottam Laxmidas was barred by limitation. 17. In the second case of Sardar Lakhmir Singh [(1963) 49 ITR 70 : AIR 1963 SC 1394] the assessee and his father had filed separate returns of income in their individual capacity. But the Income Tax Officer amalgamated their income and assessed the total income as the income of the Hindu Undivided Family. He did not make any protective assessment with regard to the separate income shown in the return of the assessee. The Appellate Assistant Commissioner set aside the assessment of the Hindu Undivided Family. Thereafter, the Income Tax Officer made an assessment on the assessee in individual capacity on the basis of the original return filed by him. This was held to be barred by limitation. 18. In the subsequent case, however, of ITO v. Murlidhar Bhagwan Das [(1964) 52 ITR 335 : AIR 1965 SC 342] a Constitution Bench of this Court considered the ratio laid down in S.C. Prashar case [(1963) 49 ITR 1 : AIR 1963 SC 1356] . This Court observed (ITR p. 346) that the expression “any person” in the second proviso to Section 34(3) in its widest connotation may take in any person, whether connected or not with the assessee, whose income for any year has escaped assessment; but this construction cannot be accepted. For the said expression is necessarily circumscribed by the scope of the subject-matter of the appeal or revision, as the

- 28 - case may be. That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision. “If so construed, we must turn to Section 31 to ascertain who is that person other than the appealing assessee who can be liable to be assessed for the income of the said assessment year. A combined reading of Section 30(1) and Section 31(3) of the Act indicates the cases where persons other than the appealing assessees might be affected by orders passed by the Appellate Commissioner. Modification or setting aside of assessment made on a firm, joint Hindu family, association of persons, for a particular year may affect the assessment for the said year on a partner or partners of the firm, member or members of the Hindu undivided family or the individual, as the case may be. In such cases though the latter are not eo nomine parties to the appeal, their assessments depend upon the assessments on the former. The said instances are only illustrative. It is not necessary to pursue the matter further. We would, therefore, hold that the expression ‘any person’ in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessments of the year under appeal.” 19. Therefore, if the person against whom notices are issued under Section 34 pursuant to a direction given by the Appellate Assistant

- 29 - Commissioner under Section 31, is a person intimately connected with the original assessee, the period of limitation will not apply to a notice issued against him under Section 34. He would be covered by the phrase “assessee or any other person” under the second proviso to Section 34(3). 20. The principle laid down in the above case of Murlidhar Bhagwan Das [(1964) 52 ITR 335 : AIR 1965 SC 342] was applied by this Court in the case of CIT v. Ambala Flour Mills [(1970) 2 SCC 96 : (1970) 78 ITR 256] . In that case an individual, Debi Prasad, had submitted the returns in various capacities and had appealed against the order of assessment. The income earned by the assessee was assessed to tax as income of an association of persons of which, on the findings of the Income Tax Officer, Debi Prasad was a member. In making a direction against Debi Prasad, the Tribunal did not exercise its power qua a stranger to the assessment proceedings. Therefore, this Court held that the period of limitation would not be applied. The Appellate Assistant Commissioner was competent to set aside the assessment of an association of persons and to direct the Income Tax Officer to assess the members individually. 21. In the case of Estate of Late Rangalal Jajodia v. CIT [(1970) 3 SCC 371 : (1971) 79 ITR 505] the return had been filed by one Rangalal Jajodia who died before the assessment order was made. The assessment order showed the name of the assessee

- 30 - as the estate of late Shri Rangalal Jajodia by legal heirs and representatives (these being the son, the (second) wife and her children. No notice, however, was served on the wife. Therefore, in appeal, a necessary direction was given that notice should be given to her and after hearing her assessment should be made. Interpreting the second proviso to Section 34(3) this Court said that she was not a stranger to the assessment, she was not merely intimately connected with the assessment. She was in fact an assessee. Therefore, the second proviso to Section 34(3) would apply. 22. In the case of CIT v. Mohd. Shakoor Mohd. Bashir [(1973) 4 SCC 107 : 1973 SCC (Tax) 393 : (1973) 89 ITR 57] one Zahur Bux who was the sole owner of the business gifted his business to his two sons Mohd. Shakoor and Mohd. Bashir. Zahur Bux died thereafter. The two sons submitted their returns of income in respect of the business. The Income Tax Officer, however, rejected their returns and proceeded to assess all the heirs of Zahur Bux as an association of persons. In appeal, the Appellate Assistant Commissioner held that the assessee, namely, the association of persons consisting of all the heirs of Zahur Bux was not liable to be taxed in respect of the business. He held that the business had been gifted to two sons, Mohd. Shakoor and Mohd Bashir. He set aside the order of the Income Tax Officer but directed him to assess the income from various sources in the

- 31 - hands of the respective persons to whom they arose. The Income Tax Officer thereafter issued notices to the two brothers. This Court held that the directions which were given by the Appellate Assistant Commissioner did not fall within the scope of second proviso to Section 34(3) and, therefore, the subsequent notices which were issued by the Income Tax Officer were barred by limitation. The brothers to whom the business was gifted were strangers to assessment proceedings against the association of persons consisting of the heirs of Zahur Bux. (vi) In Ambala Floor Mill’s case supra, the Apex Court held as under:- 10. Section 34, sub-section (3) prescribes for the period in which assessment proceedings shall be completed. The section at the date of assessment by the Income Tax Officer read as follows: “No order of assessment or reassessment, other than an order of assessment under Section 23 to which clause (c) of sub-section (1) of Section 28 applies or an order of assessment or reassessment in cases falling within clause (a) of sub-section (1) or sub- section (I-A) of this section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable: * * * Provided further that nothing contained in this section limiting the time within which any action may be taken or any order, assessment or reassessment may be

- 32 - made, shall apply to a reassessment made under Section 27 or to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under Section 31, Section 33, Section 33-A, Section 33-B, Section 66 or Section 66- A.” 11. The assessment of tax had according to the law at the relevant time in force, ordinarily, to be completed by the Income Tax Officer within four years from the last date of the year of assessment in which the income was first assessable. But to this rule there were several exceptions. If the assessment had to be made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order of the Appellate Assistant Commissioner or of the Appellate Tribunal or of the Commissioner in revision or of an order made in a reference, the assessment could be made even after the expiry of the four years. The exception applied to an assessment made against the assessee or any person in consequence of, or to give effect to any finding or direction contained in the order of any superior tribunal, or the High Court or this Court. This Court in S.C. Prashar v. Vasantsen Dwarkadas [49 ITR 1] held that the second Proviso to Section 34(3) of the Income Tax Act, 1922, insofar as it authorised the assessment or reassessment of any person other than the assessee after the expiry of the period of

- 33 - limitation specified in Section 34 in consequence of or to give effect to a finding or direction given in an appeal, revision or reference arising out of the proceeding in relation to the assessee violated the provisions of Article 14 of the Constitution and was invalid to that extent. 12. In a later case Income Tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das [52 ITR 335] this Court explained the connotation of the expression “any person” as used in Section 34, sub-section (3), proviso 2 at p. 346: “The expression ‘any person’ in its widest connotation may take in any person, whether connected or not with the assessee, whose income for any year has escaped assessment, but this construction cannot be accepted, for the said expression is necessarily circumscribed by the scope of the subject-matter of the appeal or revision as the case may be. That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision. If so construed, we must turn to Section 31 to ascertain who is that person other than the appealing assessee who can be liable to be assessed for the income of the said assessment year. A combined reading of Section 30(1) and Section 31(3) of the Act indicates the cases where persons other than the appealing assessee might be affected by orders passed by the Appellate Commissioner. Modification or setting aside of assessment made on a firm, joint Hindu family, association of persons for a particular year may affect the assessment for the said year on a partner or partners of the firm, member or members of the Hindu Undivided Family or the individual, as the case may be. In such cases, though the latter are not eo nominee parties to the appeal, their assessments depend upon the assessment of

- 34 - the former. The said instances are only illustrative. It is not necessary to pursue the matter further. We would, therefore, hold that the expression ‘any person’ in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessments of the year under appeal.” 13. In CIT v. Kanpur Coal Syndicate [53 ITR 225] this Court held that where the Income Tax Officer assessed the income of an association of persons under Section 31(3)(b), the Appellate Assistant Commissioner was competent to set aside the assessment and to direct the Income Tax Officer to assess the members individually. The Court observed that the Appellate Assistant Commissioner had under the Act plenary powers in disposing of an appeal, the scope of his powers being conterminous with that of the Income Tax Officers he can do what the Income Tax Officer can do and can also direct the Income Tax Officer to do what he has failed to do. 14. Debi Parshad had submitted the returns, and Debi Parshad appealed against the order of assessment. He could, in the circumstances of the case, not be called a stranger to the assessment. The income earned by the assessee was assessed to tax as income of an association of persons, of which on the finding of the Income Tax Officer, Debi Parshad was a member. In making a direction against Debi Parshad the Tribunal did not exercise his powers qua a stranger to the assessment proceeding. Civil Appeal Nos. 1280-82 of 1966 must therefore fail.

- 35 - 15. The Appellate Assistant Commissioner had directed that the income in the three assessment years be assessed in the hands of the family of Debi Parshad, apparently on the view that Debi Parshad represented the Hindu Undivided family of which he was a member. The Tribunal set aside the direction to assess the income of the Ambala Flour Mills in the hands of Debi Parshad personally for in their view Debi Parshad was a stranger to the proceeding for assessment. The High Court held that the order of the Appellate Assistant Commissioner directing assessment of “the family of Debi Parshad” was “clearly unwarranted and could relate only to Debi Parshad in his individual capacity”. 16. Appeals Nos. 1277 to 1279 of 1966 were filed against that part of the order of the High Court by which they sought to modify the order of the Appellate Assistant Commissioner. The High Court in exercising advisory jurisdiction was incompetent to amend the order of the Appellate Assistant Commissioner. But on the question referred to the High Court, no inquiry into the power of the Appellate Assistant Commissioner to make the impugned direction was competent. The second question only related to the assessment of the income in the hands of Debi Parshad after annulling the assessment of the Ambala Flour Mills. It was not contended before the Tribunal that the income of the Ambala Flour Mills could not be assessed in the hands of the family of

- 36 - Debi Parshad. The competence of the Appellate Assistant Commissioner to make the direction was not and could not be referred to the High Court. 17. Appeals Nos. 1277 to 1279 of 1966 filed by the Commissioner therefore fail. There will be no order as to costs in all the appeals. (vii) In M.CT. Muthuraman’s case supra, the Division Bench of the Madras High Court held as under:- 5. We shall now take up for consideration whether, in the facts and circumstances of the case, the assessment can be made under the proviso on the assessee “in consequence of or to give effect to any finding or direction in an order under section 31, section 33, section 33A, section 33B, section 66, or section 66A”. It is the admitted case of the parties that initially the partial partition between the assessee's branch and his uncle did not find favour with the Income-tax Officer. The Appellate Assistant Commissioner, however, held a contrary view. Even so, the Tribunal. In all these proceedings, the uncle was representing the alleged joint family. The assessee was eo nomine not a party thereto. It has to be therefore considered whether the representation by the uncle is sufficient such that any finding in such proceedings can be taken to be one given within the meaning of the proviso. The revenue contends, in our opinion rightly, that the

- 37 - appeal by the uncle as representing the Hindu undivided family created a sufficient nexus resulting in the assessee being deemed as a person who shall be bound by any finding in such proceedings. It cannot be said that the uncle's action at the earlier stages did not have anything to do with the assessee or his rights. There is therefore sufficient nexus between the earlier proceedings in which the uncle of the assessee was representing the Hindu undivided family and the assessee himself. In those proceedings which of course ultimately went against the assessee certain findings were given. But the finding given is such that it was apposite in the circumstances then confronting the parties. As pointed out by the Supreme Court in Income-tax Officer v. Murlidhar Bhagwan Das [[1964] 52 I.T.R. 335, 345, 346 (S.C.).] ; “The expression ‘direction’ in the proviso could only refer to the directions which the Appellate Assistant Commissioner or other Tribunals can issue under the powers conferred on him or them under the respective sections. Therefore, the expression ‘finding’ as well as the expression ‘direction’ can be given full meaning, namely, that the finding is a finding necessary for giving relief in respect of the assessment of the year in question and the direction is a direction which the appellate or revisional authority, as the case may be, is empowered to give under the sections mentioned therein. The words ‘in consequence of or to give effect to’ do not create any difficulty, for they have to be collated with, and cannot enlarge, the scope of the finding or direction under the proviso., If the scope is limited as aforesaid, the said words also

- 38 - must be related to the scope of the findings and directions.” 6. Such a finding or direction should obviously be necessary for the disposal of the earliest proceedings. 7. In the decision cited above, the Supreme Court had to consider the meaning of the word “person” appearing in the proviso. Their Lordships say: “The words ‘any person’, it is said, conclude the matter in favour of the department. The expression ‘any person’ in its widest connotation may take in any person, whether connected or not with the assessee, whose income for any year has escaped assessment: but this construction cannot be accepted, for the said expression is necessarily circumscribed by the scope of the subject- matter of the appeal or revision, as the case may be. That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision.” 8. Thus, in the instant case, the uncle was indeed concerned with a matter with which the assessee was intimately connected. We are of the view that the finding in the earlier proceedings can form the basis for reassessment of the assessee as a person and are, therefore, unable to accept the contention of the assessee that the finding given by the Tribunal and other authorities on the Hindu undivided family of Meyyappa cannot be deemed to relate to him as he is not a party thereto. 9. Having thus held that the petitioner was indeed connected with the earlier proceedings in which the

- 39 - finding or direction was given affecting the assessee, we shall now consider the question whether the proviso is unconstitutional as offending article 14. In Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] , Commissioner of Income-tax v. Sardar Lakhmir Singh [[1963] 49 I.T.R. (S.C.) 70.] and P.V. Godbole v. Jagannath Fakirchand [[1963] 49 I.T.R. (S.C.) 88.] the majority of the learned judges of the Supreme Court were considering the question whether the proviso should be struck down as unconstitutional as it is not supported by the well- known theory of reasonable classification. It is, however, to be remembered that in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] the majority were mainly concerned in applying the principle and text of the proviso to any person, meaning thereby an utter stranger to the earlier appeal or revisional proceedings. In that context it was held that the provisions of the second proviso to section 34(3) in so far as they authorised the assessment or reassessment of any person other than the assessee beyond the period of limitation specified in section 34 in consequence of or to give effect to a finding or direction given in an appeal, revision or reference arising out of proceedings in relation to the assessee, violated the provisions of article 14 of the Constitution of India and were invalid to that extent. As already stated by us, the ratio in the series of cases reported in 49 I.T.R. concerned itself to the consideration of the question whether an utter

- 40 - stranger in the sense an assessee who had no connection whatsoever with the earlier appeal or revisional proceedings, could be got in the net of taxation on the only ground that the expression used in the proviso is “any person”. As will be seen hereinafter, the real intent of the law as laid down by the Supreme Court was considered later by a catena of decisions including the Supreme Court itself. These later cases do not countenance that the ratio in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] lays down a totality of a ban on the jurisdiction of the Tribunal to reopen assessments under the proviso, but it is restrictive in its scope and definitely applicable to assessees who are connected with such earlier proceedings. 10. It has however become necessary for us to advert to the scope of the decision of the majority of the judges in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] , in juxtaposition to the law as expressed in the later decision of the Supreme Court in Income-tax Officer v. Murlidhar Bhagwan Das [[1964] 52 I.T.R. 335 (S.C.).] . Though on a prima facie reading of the ratio of the majority of the judges in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] , the view appears to be that the proviso is unconstitutional and is therefore invalid, yet the paramount intention of the court appears to us to be that the proviso is invalid in so fair as it affected rights of persons, who are utter strangers to the earlier

- 41 - proceedings in which a “finding” or “direction” is given. But there are indications in the said judgment to sustain the view that in so far as persons intimately and closely connected with the earlier proceedings are concerned, the proviso would still be attracted. We are unable to subscribe to the view expressed by the Bombay High Court in Mahendra Bhawanji Thakar v. S.P. Pande [[1965] 56 I.T.R. 522.] , that the Supreme Court struck down the proviso as unconstitutional unreservedly. This judgment was rendered on March 5, 1963. But the Supreme Court's ruling in Income-tax Officer v. Murlidhar Bhagwan Das [[1964] 52 I.T.R. 335 (S.C.).] , which in fact succinctly explained the decision in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] , was rendered on January 29, 1964. In the later decision in Income- tax Officer v. Murlidhar Bhagwan Das [[1964] 52 I.T.R. 335 (S.C.).] , the learned judges observed at page 354 that: “…. it is sufficient to point out that the majority of the learned judges have only struck down that part of the proviso which enables a notice to issue ‘to any person’ on the ground that it is violative of article 14. The precise question which we have before us does not appear to have been the subject of decision in the case.” 11. In fact, in this case, the classification which, according to the learned judges, is indeed a sub- classification, envisaged in the proviso is rational and permissible. The learned judges also referred to the earlier decisions of that court in A. Thangal

- 42 - Kunju Musaliar v. M. Venkatachalam Potti [[1956] 29 I.T.R. 349 : [1955] 2 S.C.R. 1196.] and Balaji v. Income-tax Officer, Special Investigation Circle, Akola [[1961] 43 I.T.R. 393 (S.C.).] , and expressed positively their view that the proviso cannot in to to be struck down as offending article 14. Though, no doubt, this view was expressed by the minority in Income-tax Officer v. Murlidkar Bhagwan Das [[1964] 52 I.T.R. 335 (S.C.).] , yet it has a special signification in that the learned judges of the Supreme Court were indeed interpreting what was the purport and scope of the decision in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] . 12. That there has not been a striking down of the proviso unreservedly and without any limitation is also seen from the judgments of this court which had occasion to consider the effect of the ratio in Prashar v. Vasantsen [[1963] 49 I.T.R. (S.C.) 1.] . A reconciliation has been made and there are now clear pronouncements of this court, which we will advert to presently, to the effect that the proviso is applicable to a case where the assessee is intimately connected with the “finding” or “direction” given in the earlier proceedings. If, however, the assessee is not in any way concerned with the said “finding” or “direction”, then it would squarely come within the rule laid down in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] and any proceedings against such an

- 43 - assessee purporting to be in the exercise of jurisdiction under the proviso would be invalid. 13. The first of the decisions of this court is reported in M.K.K.R. Muthukaruppan Chettiar v. Commissioner of Income-tax [[1965] 56 I.T.R. 674.] . The learned judges held that the effect of the decision in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] and the later decisions of the Supreme Court was that in so far as the proviso authorises the assessment or reassessment of any person other than the assessee beyond the period of limitation specified in section 34, it violates the provisions of article 14 of the Constitution and is invalid: but the proviso was valid to the extent of its operation against the assessees who are parties to the proceedings. This judgment was rendered on September 16, 1964. The next case in sequence was rendered by the same Division Bench of this court wherein the learned judges reiterate that the proviso was ultra vires only in so far as it applied to the persons other than the actual assessee and those represented by him in whose appeal the appellate authority had given a finding or direction which necessitated the subsequent reopening of the assessment. This judgment was rendered on September 18, 1964. In the latest case of this court in Estate of Late Rangalal Jajodia v. Commissioner of Income-tax [[1966] 61 I.T.R. 726, 740, 741.] , to which one of us was a party, considering the scope of the proviso, it is observed as follows, after referring to the

- 44 - decisions of the Supreme Court in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] , Commissioner of Income-tax v. Sardar Lakhmir Singh [[1963] 49 I.T.R. (S.C.) 70.] and P.V. Godbole v. Jagannath Fakirchand [[1963] 49 I.T.R. (S.C.) 88.] : “In the three cases decided by the Supreme Court, which we just now referred to, it was held that the second proviso in so far as it affected ‘any person’, meaning a third party or a stranger to the appeal or revision or a person who is not the assessee and who is not the appellant or the revision-petitioner, offended article 14 and would, therefore, to that extent, be void……We would, therefore, hold that the expression ‘any person’ in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessments of the year under appeal.” 14. We are, therefore, of the opinion that, having regard to the decisions of this court and the view expressed by the Supreme Court itself in the later decisions, it cannot be said that the proviso has been struck down by the Supreme Court without any reservation or limitation whatsoever. On the other hand, the dicta referred to by us earlier and the interpretation placed upon the decisions in the series of cases reported in 49 I.T.R. lends support to the view that the application of the proviso is linked only to persons who are not intimately connected with the proceedings. 15. We have already held that the petitioner in this case is a person who cannot be characterised as an utter stranger to the earlier proceedings prosecuted

- 45 - by his uncle Meyappa; on the other hand, his uncle did have the capacity at that time to represent him and, therefore, such proceedings do have a nexus to the affairs of the assessee and such intimate connection thus established would enable the revenue to exercise jurisdiction under the proviso. We are, therefore, unable to accept the contention of the learned counsel for the petitioner that the PROviso is violative of article 14 and that this is the law as laid down by the Supreme Court in Prashar v. Vasantsen Dwarkadas [[1963] 49 I.T.R. (S.C.) 1.] . In this view, the writ petitions are dismissed with costs, one set. Counsel's fee Rs. 250. (viii) A similar view has been taken by other High Courts as can be seen from the judgments relied upon by the petitioner. (ix) In the case on hand, it is an undisputed fact that the petitioner is neither interlinked nor intimately connected nor has any nexus whatsoever with any of the parties in PRO Lab’s case before the Apex Court and consequently, the said proviso to 12-A(2) would not be applicable to the petitioner and the same cannot be relied upon by the *3rd respondent to exclude or save the prescribed period of 8 years contemplated under Section 12-A(1) of the KST Act. * Corrected vide Chamber order dated: 03.03.2023.

- 46 - (x) The material on record also discloses that there was an interim order passed in Civil Appeal 1145 / 2006 in PRO Lab’s case (supra), which was in force from 19.11.2007 up to 30.01.2015 when the said appeal was finally allowed by the Apex Court. The said interim order of the Apex Court reads as under:- Hearing of Civil Appeal is expedited. Meanwhile, authorities may make assessments but no coercive steps will be taken to recover the tax from the respondents. (xi) As can be seen from the aforesaid interim order, the respondents – revenue was permitted to proceed with the assessment by applying Entry No.25, even after the same was struck down by this Court and the only restraint imposed upon the respondents by the Apex Court was not to take coercive steps against the assesses; in other words, the Apex Court permitted the respondents – revenue to invoke and apply Entry No.25 and proceed with assessments / reassessments in respect of all assesses including the petitioner herein, as a result of which, there was no impediment for the respondents to proceed with the reassessment orders, at least from 19.11.2007 onwards

- 47 - and the period spent from that date to 30.01.2015 when the matter was finally allowed by the Apex Court clearly cannot be excluded for the purpose of computing the limitation under Section 12-A(1) of the KST Act and the proviso to 12-A(2). If the period from 19.11.2007 to 30.01.2015 referred to supra is not excluded, the impugned assessment orders for the period 1998-99 to 2004-05, in respect of which, reassessment proceedings were initiated in the year 2015 are clearly barred by limitation, since the same are beyond the prescribed period of 8 years. (xii) Viewed from this angle also, the impugned reassessment orders are barred by limitation and the same deserve to be quashed. 11. In the result, I pass the following:- ORDER (i) Petition is hereby allowed. (ii) The impugned re-assessment orders for the years 1998-99 to 2004-05 dated 15.04.2016 and consequent demand notices dated 15.04.2016 passed by the 3rd

- 48 - respondent at Annexures-K, L, M, N, P, Q and R respectively *are hereby quashed. Sd/-

JUDGE Srl. * Corrected/inserted vide Chamber order dated: 03.03.2023.