K. L. VARADARAJAN versus THE COMMISSIONER OF INCOME-TAX, MADRAS

Citation: [1975] 2 S.C.R. 597 · Decided: 05-11-1974 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
K. L. VARADARAJAN 
v. 
THE COMMISSIONER OF INCOME-TAX, MADRAS 
November 5, 1974 -
[H, R. KHANNA AND A. C: GUPTA JJ.) 
597 
lJ 
f11dia11 Income tax Act, 1922-:-Sec. 17 (!)-Proviso-Whether the words 
"all assessments thereafter" includes original assessments and not reassessments 
mad" under Sec. 34. 
c 
D 
E 
F 
G 
H 
. 
The ass~ssee, durin~ the relevant pe~i~d was studying abroad. 
He derived 
mcome during the penod by way of d!Vldend on shares and 
interest 
from 
deposits. 
The original assessments for the relevant years were completed on January 
31, 1956, December 27, 1956 and February 28, 
1958. 
The residential status 
adopted in those years was "resident and ordinarily resident person". 
Income-
!ax and super.tax were calculated at the 
rates 
applicable 
on 
the 
total 
mcome. 
In the course of the assessment proceedings for 
the 
assessment 
year 
1958-59, the assessee filed a declaration under sec. 17(1 \ of 
the 
Act 
on 
March 24, 1959 claiming to be assessed at rates appropriate to 
his 
total 
world income. This assessment was completed on March 23, 1960 in the 
status of a non.resident. The application under Sec. 17 ( 1) was rejected. 
As the I. T. 0. found that the assessee was a non-resident in the 3 pre-
vious years endin1 on December 31, 1954 to December 31, 1956 and bu 
total income had been assessed to income-tax at 
the 
normal 
rates 
a~d 
further 
as 
he 
had 
failed 
to 
make 
the 
requisite 
declaration 
under 
Sec. 
17 (1 ) 
within 
the 
requisite 
time, 
the 
I. T. 0. 
was 
of 
the 
view 
that 
the 
earlier assessments 
had 
been made at a lower rate and 
action under Sec. 34 of the Act was accordingly 
taken and the 
asses•ment< 
for the above-mentioned 3 years were reopened and completed under 
Sec. 
23 (3) read with Sec. 34 of the Act. The status of the assessee was treated 
as a non-resident. and bis total 
income was brought to tax at the 
maximum 
rates. 
According to the assessee, the omission on his 
part 
to 
make 
the 
declaration earlier under Sec. 17(1) was due 
to inadvertence 
and ignorance 
and requested the I.T.O. that he should be 
taxed 
at rates appropriate 
to 
his world income. The I. T. 0. rejected all the contentions of the assessee 
and held against him. 
On appeal, the Appellate Asstt. Commissioner and the Tribunal held that 
the I.T.O.'s ·reasoning for not accepting 
the 
declaration 
under Sec. 
17(1) 
was not correct and held ·against the revenue. A question was referred to 
the High Court as to whether the declaration filed by the 
assessee 
under 
Sec. 17 (I) in respect of the assessment year 1958-59 was operative 
in. rela-
tion to the re-assessments also in respect of the assessment years 
1955.56, 
1956-51 and 1957-58. 
The High Court held against the assessee and hence the appeal before this 
Court. 
Allowing the appeal, 
HELD : (!) According to the second proviso to Section 17 ( 1 \ of 
the 
Act, once the assessee is allowed to make the declaration after the expiry of 
the period specified "such declaration shall have 
c.ffect in 
relatir>n 
to 
the 
assessment for the year in which the declaration is made (if such assessmen,t 
had not been completed before such declaration) and all assessments thereafter. ' 
The words of the 5econd provisr> to Sec. 17<1) make it clear th't th: 'Jecl''.a-
tion w0uld be operative not only for the 
assessment for the year m which 
the declaration is made if such assessment had not been completed 
before 
such declaration, but also all assessments to be made thereafter. The words 
"all assessments thereafter" signify not only assessments for 
t~e subsequent 
598 
SUPREME COURT REPORTS 
[1975) 2 S.C.R. 
years but also would cover assessments for the earlier years in 
case 
the 
assessments for those earlier years are being made subsequent to the filinR 
of the declaration. [600G-60!B] 
(2) According to Sec. 2(8) of the Income tax Act, 1961, 
the 
words 
"a">sessment" includes reassessment although such a definition was 
not 
th·~re 
in the Act of 1922. 
A. N. Lakshma11 Shenoy v. /.T.O., Bangalore &: Ors. 
[1958] 34 !TR 275 and Commissioner of Income tax v. Khem (;hand Ramdas 
A 
[19381 6 !TR 414 referred to. 
[601C] 
B 
(3) Further, in the context of Sect:on 17( I) of the Act also the word 
"assessment" must include "re-assessment under Sec. 34 of the Act; 
and 
to hold otherwise would result in an 
anomalous 
situation. It should 
be 
noicu tnat whenever the leg1slatme intended that 
the 
word 
"assessment" 
shou'd no! in

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