M. Ramiza Bi Saheb vs The Income Tax Officer

Rajagopalan, J.—Ahmed Batcha, the husband of the petitioner, and his son Abdul Rahman traded in partnership. The name of the firm was

Malang Trading Company. After the death of these two, the petitioner and Qumarunnissa, the widow of Abdur Rahman, entered into a

partnership, evidenced by the partnership deed dated 6th March, 1952, and continued the business under the same name. The petitioner''s minor

son Hayat and Qumarunnissa''s minor son Ahmed Batcha were admitted to the benefits of the partnership, each of the minors was allotted a four

annas share. The petitioner had a seven annas share, and Qumarunnissa, a one anna share.

For the assessment years 1953-54, 1954-55 and 1955-56 the Income Tax Officer refused to grant registration u/s 26-A to Malang Trading

Company, and he treated it as an association of persons for purposes of assessment to tax. The assessees appealed to the Assistant

Commissioner. He granted registration and directed the Income Tax Officer to make the consequential revisions of the assessments he had already

completed.

Meanwhile, the Income Tax Officer had completed the proceedings to assess the petitioner, and in each of three years 1953-54, I954-55 and

1955-56 the petitioner was assessed in the status of an individual. The assessment proceedings for 1953-54., 1954-55 and 1955-56 were

completed respectively on 21st July, 1953, 28th July, 1955 and 28th October, 1955. In those proceedings the share income of her minor son

Hayat from Malang Trading Company was taken into account for the purpose of determining the rate at which the tax had to be assessed on the

petitioner''s income. In the assessment years 1954-55 and 1955-56 the petitioner was treated as having no assessable income. The main source of

income was the profits of the Malang Trading Company, and that, it should be remembered, was separately assessed as constituting an association

of persons. Against these orders of assessment the petitioner did not prefer any appeals, but, then it should be remembered there was no demand,

at least for 1954-55 and 1955-56.

It was the partners of Malang Trading Company that appealed to the Assistant Commissioner against the orders of the Income Tax Officer

treating them as an association of persons and refusing the registration they had sought u/s 26-A of the Act. The appeals in respect of the

assessment for the years 1953-54 and 1954-55 were disposed of by the Assistant Commissioner on 9th January, 1956, and the appeal in relation

to the 1955-56 assessment was disposed of on 28th April, 1956. The result was that Malang Trading Company had to be assessed as a

registered firm. That necessitated the revision of the assessment of the petitioner''s income in the three years in question, taking into account the

share of the profits of the registered firm.

On 4th May, 1956, the Income Tax Officer issued revised orders of assessment for the assessment years 1953-54 and 1954-55. On 28th

June, 1956, he revised the assessment for the assessment year 1955-56. In all the three years the share income of the petitioner''s minor son Hayat

from the profits of the registered firm. Malang Trading Company was included in the petitioner''s income under the provisions of Section 16(3)(a)

of the Income Tax Act. No notice was given to the petitioner before the assessments were revised, and she was given no opportunity of making

any representations at that stage.

The petitioner applied under Article 226 of the Constitution for the issue of writs of certiorari to set aside the revised orders of assessment dated

4th May, 1956 and 28th June, 1956. W.P. No. 1217of 1956 related to the assessment year 1954-55, W.P. No. 1218 of 1956 to the assessment

year 1955-56 and W.P. No. 1220 of 1956, to the assessment year 1953-54.

The validity of the revised orders of assessment was challenged by the learned Counsel for the petitioner on two grounds: (1) the revision was

without notice to the petitioner and without giving her an opportunity to show cause against the revision on the lines ultimately adopted by the

Income Tax Officer; (2) the Income Tax Officer had no jurisdiction to levy a tax on the petitioner on the share income of her minor son Hayat,

though Hayat had been admitted to the benefits of the partnership.

The second ground is certainly well taken. The question at issue, whether u/s 16(3)(a) the share income of a minor son from the partnership, of

which the mother also was a partner could be included for the purpose of assessment in the mother''s income, is concluded by the decision of the

Supreme Court in A. St. Arunachalam Pillai, Proprietor, Vinayagar Transport Vs. Southern Roadways and Another, . The Supreme Court held:

In computing the total income of a mother, the income of her child arising from the admission of the minor to the benefits of the partnership in a firm

of which the mother is a partner cannot be included u/s 16(3)(a)(ii).

In my opinion, in the circumstances of this case, the failure to give an opportunity to the petitioner to be heard before the assessments were

revised vitiated the exercise of the jurisdiction the Income Tax Officer had to revise the assessments. The Income Tax Officer had jurisdiction to

revise the assessments in the case of the petitioner. In fact he was bound to do so u/s 31(4) of the Act, to comply with the directions given by the

Appellate Authority in the appeals preferred by the Malang Trading Company. No doubt no specific provision is made in Section 31(4) for the

issue of a notice to the assessee before the assessments are revised. But by about the middle of 1956, when the Income Tax Officer undertook the

revision of assessments, the question had been raised whether Section 16(3)(a) authorised the inclusion in the mother''s income, for the purpose of

assessment, the share income of the partnership profits of her minor child. That question was finally concluded by the decision of the Supreme

Court rendered on 17th May, 1957 in The Commissioner of Income Tax, Madhya Pradesh and Bhopal Vs. Sodra Devi, . Whether the Income

Tax Officer, who certainly could not have had the benefit of the ruling of the Supreme Court given in 1957 when he completed the revision in

1956, would have taken the same view is not the question. The petitioner should, I think, in the circumstances of this case have been given an

opportunity to show cause against the inclusion of her minor son''s income in hers for the purpose of assessment.

It is true, as the learned Counsel for the Department pointed out, that the petitioner had a statutory remedy open to her. She could have

invoked the revisiona jurisdiction vested in the Commissioner and she did not. That, however, in the circumstances of this case, may not be

sufficient to refuse relief to the petitioner, if she is otherwise entitled to it, that is, if she is otherwise entitled to the issue of writs of certiorari, ex

debito justitiae. The question is really one of jurisdiction. In view of the decision of the Supreme Court in The Commissioner of Income Tax,

Madhya Pradesh and Bhopal Vs. Sodra Devi, , it will have to be held that the Income Tax Officer had no jurisdiction to include in the petitioner''s

income the share income of her minor son, in the sense the law did not authorise such an inclusion.

The learned Counsel for the Department urged that the question of the petitioner''s liability to have her minor son''s share income included in

hers for the purpose of assessment was concluded by the original orders of assessment dated 21st July, 1953, 28th July, 1955 and 28th October,

1955 respectively, and that even had an opportunity been given to the petitioner to show cause against the revision of assessment in compliance

with the directions given by the Appellate Assistant Commissioner u/s 31(4) of the Act, it would no t have been open to the petitioner to challenge

in the subsequent proceedings the correctness or otherwise of the decision of the Income Tax Officer in the original orders of assessment, that the

petitioner was liable u/s 16(3)(a) to be taxed on the share income of her minor son also. The same argument was presented in a slightly different

aspect. The learned Counsel for the Department urged that the basis of the original orders of assessment stood and became final. There was only a

substitution of figures which had to be done in compliance with the directions given u/s 31(4) of the Act.

I am unable to accept the contention of the learned Counsel for the Department, that it was only a case of substitution of figures. When the

revised orders of assessment were issued the original orders of assessment ceased to be operative. The liability of the petitioner has to be

determined only under the revised orders of assessment issued in 1956. It was not therefore necessary for the petitioner thereafter to challenge the

validity of the original orders of assessment in any appropriate proceedings. The principle of res judicata can have no application either. The

learned Counsel for the assessee was, in my opinion, well-founded in his contention, that the petitioner had a right to contend and establish, if she

could, in the proceedings to revise the original assessments that Section 16(3)(a) did not authorise the Income Tax Officer to include in her income

the share income of her minor son. That the share income of the minor son was taken into account for the purposes of computation in the original

assessment proceedings can therefore be no bar to the investigation of the question, whether, when the Income Tax Officer revised the orders and

issued in effect fresh orders of assessment, he had jurisdiction to include in the petitioner''s assessable income the share income of her minor son,

and whether Section 16(3)(a) conferred the jurisdiction on him to order such inclusion.

Neither of the objections urged by the learned Counsel for the Department is therefore a bar to the exercise of discretion in favour of the

petitioner to grant her the relief to which she is entitled, as I have pointed out earlier, ex debito justitiae.

As I have already pointed out the petitioner''s right to have her minor son''s income from the partnership excluded from hers is concluded by A.

St. Arunachalam Pillai, Proprietor, Vinayagar Transport Vs. Southern Roadways and Another, .

The rule nisi in each of these cases is made absolute, and the revised orders of assessment of the Income Tax Officer dated 4th May, 1956

and 28th June, 1956, will stand set aside by the issue of writs of certiorari. That in effect, means the Income Tax Officer will have to carry out

afresh the statutory duty imposed upon him by Section 31(4) of the Act to revise the assessment of the petitioner''s income for the three years in

question.

The petitioner will be entitled to her costs in one petition, W.P. No. 1217 of 1956-Counsel''s fee Rs. 250. There will be no order as to costs in

the other two writ petitions.