Commissioner of Income Tax vs Nayan Engineering Works

R. Jayasimha Babu, J.—The assessment year with which we are concerned is 1963-64. 34 years have gone by. The Tribunal made its

order in the year 1981. 17 years have lapsed since then. The Revenue has collected tax from each of the two individuals in respect of half share of

the income derived from the business carried on by them in the name of Nayan Engineering Works. Long after that relevant assessment year,

proceedings were initiated to assess the association of persons. The Tribunal has held that to be unwarranted and has set aside the orders made by

the authorities below.

At the instance of the Revenue two questions have been referred to us. The first is as to whether the Tribunal''s order is justified in law and the

other is as to whether the assessment made on the other person, Seetha-lakshmi, had become final is justified and reasonable. Taking the second

question first, the Tribunal has observed that the said Seethalakshmi has been assessed by the 13th Income Tax Officer, E-Ward, Bombay, who

had also intimated such assessment to the Income Tax Officer at Coimbatore, who has made assessments impugned before the Tribunal. That fact

is not disputed before us. The findings by the Tribunal that the assessment must have become final is fully justified and is reasonable. The second

question is answered against the Revenue.

As regards the first question, counsel contended that the Revenue always has the right to tax the right person and, therefore, this assessment was

rightly made. Though the Revenue is right in normal circumstances, having regard to the passage of time of over three decades and the fact that the

assessee had been lulled into the belief at the instance of the Revenue who have taxed them as individuals and collected tax on that basis, and the

amount so collected has admittedly not been refunded with or without interest, we do not propose to disturb the Tribunal''s order. We answer the

first question, having regard to the said circumstance of the case, in favour of the assessee and against the Revenue. No costs.