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Judgment
Rajagopala Ayyangar, J.—The legality of an order of the Income Tax Officer refusing to rectify an assessment order passed by him in 1952
is the subject-matter of this petition for the issue of a writ of certiorari to quash this order of refusal.
The assessee is an undivided Hindu family and was represented before the assessing authorities by Annamalai Chettiar who was the kartha of
the family. For the assessment year 1951-52, the account year being that ended 13th April, 1951, the assessee filed a return claiming that the joint
Hindu family was ""resident but not ordinarily resident"" and was, therefore, taxable on remittances. The assessee''s return disclosed a loss in its
money-lending business in India but there were profits from its business in Malaya which were transmitted to India. On the basis of these
remittances the assessee was taxed and the net tax due was ascertained at Rs. 4,151-4-0 in the year of assessment by an order passed on 31st
January, 1952. The Income Tax Officer stated : ""The assessee being a resident but not ordinarily resident is assessable only on the remittances
and that was the basis on which the assessment was completed. The facts in relation to the status of the assessee as ""not ordinarily resident"" were
set out in a note appended to the relevant return reading thus :
Degree of residence. - Sri Annamalai Chettiar, kartha of the family was absent in Malacca during the years Sarwajith and Vikruthi. He left
Kottayur on 5th Avani Vijaya and reached Malacca on 5th Purattasi Vijaya. He left Malacca on 23rd Adi Sarvathari and reached Kottayur in the
first week of Avani Sarvathari. Again, the assessee left Kottayur for Malacca on 29th January, 1950 and reached Malacca on 15th February,
1950. He left Malacca on 27th April, 1951 and reached Kottayur on 9th May, 1951. He was completely absent in Malacca during the years
Sarvajith and Vikruthi. He has, therefore, to be treated as ''not ordinarily resident for the assessment of 1951-52'' (It might be mentioned that for
the previous years the assessee was treated as resident and was taxed accordingly).
The tax demanded as a result of this assessment order was duly paid and nothing more was heard of this till 1955. On the 5th of March, 1955,
the assessee presented a petition to the Commissioner of Income Tax u/s 33-A(2) drawing his attention to the fact that the manager had been
absent from India for the days set out in the note appended to the return for 1951-52 and that there had been a mistake committed both by the
Registered Accountant who acted for the assessee in the assessment proceedings as well as bythe Income Tax Officer, in treating the assessee as
not ordinarily resident"" and claimed that it should have been treated as ""nonresident"" for the year. The Commissioner of Income Tax dismissed this
petition on 8th July, 1955, on two grounds, namely, (1) that the application to him was out of time being more than one year after the date of the
assessment order and (2) that even on the merits no case had been made out since the entire control and management of the affairs of the family
were not situated without the taxable territories in the assessment year. After receipt of the order of the Commissioner rejecting his petition, the
assessee applied to the Income Tax Officer u/s 35 to rectify the order of assessment, dated 31st January, 1952, on the basis that a mistake had
crept into the order in the assessee being treated as ""not ordinarily resident."" The Officer declined to interfere for the reason that the matter had
been agitated before the Commissioner and the prayer had been rejected by him. It is this order of the Income Tax Officer that is challenged as
illegal in this writ petition.
Two grounds were urged by Mr. Narayanaswami Iyer for the petitioner. The first was that the Income Tax Officer had not applied his mind to
the question but had dismissed the assessee''s application merely because the Commissioner had rejected the petition u/s 33-A of the Act.
I do not think there is much substance in this objection because I read the order of the Income Tax Officer as meaning that the Commissioner
had expressed himself against the assessee on the merits and that he saw no reason to take a different view.
The second point urged was that the Income Tax Officer erred in holding that no mistake had been committed in treating the assessee as ""not
ordinarily resident"" within the meaning of Section 4-B(b) of the Income Tax Act, and that the Income Tax Officer should have held that on the facts
set out in the note appended to the return filed for the assessment year 1951-52, the assessee had clearly made out that the Hindu undivided family
whose assessment was then before the Officer was ""non-resident"". It is therefore necessary to set out the criteria laid down by the statute for
determining the status of ""non-resident"" and ""not ordinarily resident"" in the case of Hindu families. Section 4-A enacts : (I will quote only the
relevant words):
4-A for the purpose of this Act
* * *
(b) a Hindu individual family, firm or other association of persons is resident in the taxable territories unless the control and management of its
affairs is situated wholly without the taxable territories ; and
Section 4-B dealing with ""Ordinary residents"" enacts:
4-B. For the purposes of this Act:
(a) an individual is '' not ordinarily resident'' in the taxable territories in any year if he has not been resident in the taxable territories in nine out of the
ten years preceding that year or if he has not during the seven years preceding that year been in the taxable territories for a period of, or for
periods amounting in all to, more than two years;
(b) a Hindu undivided family is deemed to be ordinarily resident in the taxable territories if its manager is ordinarily resident in the taxable territories
In the light of these provisions it appears to be clear that the facts set out in the note appended to the return by the assessee made a claim only
u/s 4-B(b) and not one u/s 4-A(b). It would be noted that for the purpose of Section 4-A(b) the essential point is as regards control being
exercised throughout the year from outside the taxable territory and that no precise period of non-residence outside the taxable territory by the
manager or other member of the family is predicated as a condition for the applicability of the provision. On the other hand, when one turns to
Section 4-B definite periods of non-residence are specified in Sub-section (a) in relation to individuals and the same are so to speak, incorporated
into the provision in relation to Hindu undivided families. These two Sub-sections, Section 4-A(b) and Section 4-B(b) point to different criteria for
the determination of the status defined by each of them and it is clear that the draftsman of the note appended to the return for 1951-52 clearly
intended to invoke the provisions of only Section 4-B(b) and not of Section 4-A(b) and committed no mistake in stating in the return the status as
in Section 4-B(b). It would also follow that the Income Tax Officer who passed the order on 31st January, 1952, made no mistake either and that
the assessment order discloses no mistake at all not to speak of a mistake apparent from the record which could be rectified u/s 35. No doubt
normally it is the kartha who has control of the business of a Hindu undivided family, but it does not follow as a matter of law that control was not
exercised at any particular point of time by someone other than the kartha. If in the note there had been any statement regarding the non-resident
kartha having solely been in control of the business during 1951-52 the departmental authorities would have verified whether this was so and
reached their own findings as to facts and the assessment would have proceeded on that basis. Those, however, are not the facts here and when
the assessee raised no question as to control which is the sole consideration for determining the applicability of Section 4-A(b) he cannot now be
heard to say that absence of control from out of the taxable territories should as a matter of law be inferred from the mere absence of the kartha
during the accounting year. There might be some substance in the objection urged by learned Counsel that the Income Tax Officer in effect arrived
at a positive finding that control had been exercised from within the taxable territories in the accounting year without the assessee being given an
opportunity to make his representations in that regard, but as I am satisfied that there was no mistake apparent from the record in the order of
assessment, dated 31st January, 1952, I consider that the impugned order rejecting the petition for rectification was the correct order to have been
passed and I therefore decline to interfere.
In the result, the petition fails and is dismissed and the Rule nisi discharged"" The respondent is entitled to his costs. Counsel''s fee Rs. 100.