HUNGERFORD INVESTMENT TRUST LTD. versus INCOME TAX OFFICERS AND ORS.

Citation: [1998] 1 S.C.R. 905 · Decided: 17-02-1998 · Supreme Court of India · Bench: SUJATA V. MANOHAR · Disposal: Dismissed

Judgment (excerpt)

HUNGERFORD INVESTMENT TRUST LTD. 
A 
v. 
INCOME TAX OFFICERS AND ORS. 
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FEBRUARY 17, 1998 
[MRS. SUJATA V. MANOHARAND D.P. WADHWA, JJ.] 
B 
~ 
""" 
Income Tax Act, 1922-Section 34(3)-lncome escaping assessment-
Limitation-Expression ''the assessee or any other person'' occurring in Section 
34-Undistributed income of the Indian Company under an order passed 
under Section 23-A (prior to amendment in 1955) deemed to be dividend c 
received by the non-resident Company-With a view to subject these income 
to tax, !TO issued notices to the Indian Company as agents for the Non-
Resident Company and directly to the Non-resident Company-Returns filed 
pursuant to notices both by the Indian Company and by the non-resident 
company through the cover letter of Indian company being agents-ITO D 
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making assessment and issuing demand notice on the Indian company as 
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agents of the non-resident company-On appeal by the Indian company, 
Appellate Assistant Commissioner directed fresh assessment to be made on 
the non-resident company directly after notice-Held, in the proceedings 
before the AAC, the non resident company was a person intimately connected 
with the assessee and was not a stranger-Hence was covered by the expression E 
"assessee or any person", occurring in second proviso to Section 34(3)-
Therefore the said notices though issued beyond the time period prescribed, 
was not time-barred-The expression "any person " occurring in Section 
34(3) is not confined to the persons enumerated in Section 31(4) 
Words and Phrases-Words ''assessee or any other person ''-Meaning F 
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of-Jn the context of Section 34(3) of Income Tax Act, 1922. 
The appellant, a non-resident company owned 100% shares in an 
Indian Company. Consequent to an order passed by the Income Tax Officer 
under Section 23-A of Income Tax Act, 1922 (prior to its amendment in 
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1955) in the case of Indian Company, the undistributed portion of the G 
)_ 
assessable income of the Indian Company was deemed to have been paid tli, 
h 
and received by, the appellant-Company.as dividends for assessment yeats 
1949-50, 1950-51 and 1951-52. In order to subject this income of the 
appellant-Company to tax, the Income Tax Officer issued notice under Section 
23(2) of the Act in respect of assessment year 1949-50 to the Indian Company H 
905 
906 
SUPREME COURT REPORTS 
[1998] l S.C.R. 
A as the agents of the appellant-Company. With respect to other assessment 
years, the Income Tax Officer issued notices under Section 34 to the appellant-
Company directly as assessee. Pursuant to these notices, returns were filed 
with respect to assessment year 1949-50 by the Indian Company as agents 
;. 
of the appellant-Company and with respect to assessment years 1950-51 and 
B 
1951-52 by the appellant-Company. The Income Tax Officer passed assessment 
orders for the said assessment years and issued demand notices in respect 
--
of each of the said assessment years to the Indian Company. On appeal, the 
.,..-
Appellate Assistant Commissioner directed the Income Tax Officer to make 
a fresh or.der of assessment on the appellant-Company. Accordingly, notices 
were issued by the Income Tax Officer to the appellant-Company for the said 
c assessment years. The appellant-Company challenged these notices before 
the High Court by way of a writ petition which was dismissed, holding that 
the assessment proceedings against the appellant-Company were validly 
commenced. The appeal before the Division Bench of the High Court was 
also dismissed. Hence this appeal. 
D 
It was contended by the appellant-Company that it was a stranger to the 
t-
proceedings before the Appellate Assistant Commissioner and hence the 
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direction given by him to make assessment on the appellant-Company was 
without jurisdiction under Section 31 of the Act and that the notices issued 
were beyond the period prescribed by Section 34 of the Act and were not 
E saved by the Second proviso to Section 34(3) lifting the embargo of limitation 
in such cases. 
Dismissing the appeal, this Court 
HELD : 1. If the person against whom notices are issued under Section 
F 34 of the Income Tax Act, 1922 pursuant to a direction given by the Appellate 
Assistant Commissioner under Section 31, is a person intimately connected 
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with the original assessee, the period of limitation will not apply to such 
notices. He would be covered by the phrase "assessee or any other person" 
under the .second proviso to Section 34(3)

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