BHANJI BAGAWANDAS versus COMMISSIONER OF INCOME-TAX, MADRAS

Citation: [1968] 1 S.C.R. 17 · Decided: 18-07-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

.. 
A 
B 
' 
BHANJI BAGAWANDAS 
v. 
COMMISSIONER OF INCOME-TAX, MADRAS 
July 18, 1967 
(J. C. SHAH, S. M. SIKRI AND V. R.\MASWAMI, JJ.) 
17 
Indian Income-tax Act (11 of 1922), ss. 34 and 66(1)-Income 
Tax (Amendment) Act, 1959, S .. 2-Appellate Assistant Cl?fflmissioner 
holding that cash CTedit appeanng on first day of accaunttng year not 
ta:table in assessment year 1949-llO-Order whether amo~nts to find· 
ing that it is taxable in 1948-49-S. 34(3) second promao whether 
attracted-Notice under s. 34('1) (a) for 1948-49 issued in 1958-Limi-
tation whether to be considered in the light of Amending, Act of 
C 1959-Hiah Court in reference whether can consider effect of Amend· 
ing A'Ct when question not directlii referred. 
There was a cash credit In November 13, 1947, In the 
capital, 
account of the 
Appellant assessee whose accounting 
period was from 
November 13, 
1947 to November l, 
1948. 
The Income-tax Officer assessed the said credit as income from undis· 
closed sources In the- assessment for the assessment year 1949-50. The 
D Appellate Assistant Commissioner relying on CJ.T. v. Darolia & SOM. 
(27 I.T.R, 515) held that the amount was not taxable in the assess· 
ment year 1949-50. The Income-tax Officer thereupon assessed the 
amount in 1948-49 after having issued in November 1958 a notice 
under s. 34(1) (a) of the Indian Income-tax Act, 1922. He rejected the 
appellant's contention that notice under the said section was time-
barred. In appeal the Appellate Assistant Commissioner held that in 
the earlier appeal there was no finding that the credit represented 
g 
the assessee's income or that it should be assessed in the year 1948-49 
and that consequently the notice under s. 34 issued in November 1958 
was not saved by the second proviso to s. 34(3) of the Act: The appeal 
filed by the Revenue was allowed by the Tribunal and in reference the 
Madras High Court relying on its own ruling in A.S. Khader Ismail v. 
Income-ta,x Officer, (47 I.T.R. 16) upheld the order of the Tribunal. 
')'he appellant came to this Court and rel!led on this Court's decision 
m Income-Tax. Of/ic~r A-Ward Si~apur v. Murlidhar 
Bhaawandas 
r 
(52 I.T .R. 335) m which the aforesaid Madras decision had been over-
ruled. The Revenue urged that in answering the reference the effect 
of s., 2 of !he Incom.e-tax (Amendment) Act 1959 must be taken into 
c?ns1derabon. To this the appellant objected that the point was out-
sT1~eb the scope of the questions of law referred by the Anpellate 
ri unal to the High Court. 
" 
HELD: (i) The view taken by the Madras High Court as to the 
G scope ?f !he word 'finding' in A. S. Khader lsmail's case and follow-
ed b.Y it m the present case had been overruled by this Court 
Ac-
cord1;1'gly the department could not take advantage of the 
~e 
d 
;>rov1so to s. 34(3). [20E-F] 
con 
52 I.~~R~1;;:~p~der, A-Ward Sitaiiur v. Murlidhar Bh~'awan Das, 
(ii) Ho'!"ever, the impact of s. 2 of the Amending Act of 1959 h d 
B to be considered before the reference could be 
ro 
1 
a 
Altho~gh the qu!-'Stion had not been raised befofe tf::r tri~~~wjred. 
thi; High Court 1t was only an aspect of the quest'o of I' 
·~ t' or 
\\'.hich had bee1,1 referred. All that s. 66(1) re uire : n 
1m1 a 10n 
!Ion of. law wh1~h is referred to the High Co~rt a~d,swb~aL tfhe qHu.es-h 
Court is to decide must be the question which was · 
~ 
eb fig 
m issue e ore 
18 
SUP!llllB COURT BEPOBTS 
(1988) 1 8.C.L 
the Tribunal When the question itself was under issue there is no & 
further limitation imposed by the section that the refe!'ence should 
be lilnited to those aspects of the question which had been ar8Ued 
before the Tribunal and it will be an over-refinement of the poaition 
to hold that each aspect of a question is itself a distinct queation for 
the purpose of s. 66(1) of the Act. [22B-DJ 
C.I.T. Bombay v. Scindia Steam Navigation Co. Ltd. 42 I.T.R. 
589, applied. 
B 
Onkarma! Mehra; v. CJ.T., Bombay-1, 36 1.T.R. 369, and S. C. 
Prashar v. V asantsen Dwarkadas, 49 I. T.R. l, 'referred to. 
[On the above view the case was remanded to the High Court for 
examining the question of law referred to it after considering the 
impact of tlU! Amendment Act of 1959.) 
CIVIL APPELLATE. JURISDICl'ION: Civil Appeal No. 1984 of O 
1966. 
Appeal from the judgment and order dated January 2. 1964 
of the Madras High Court in T.C. NO'. 153 of 1962. 
S. Swaminathan and R. Gopalakrishnan, for the appellant. 
Veda Vylll'a, A. N. Kirpal, R. N. Sach

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