SARDAR BALDEV SINGH versus COMMISSIONER OF INCOME-TAX, DELHI & AJMER

Citation: [1961] 1 S.C.R. 482 · Decided: 02-09-1960 · Supreme Court of India · Bench: BHUVNESHWAR PRASAD SINHA · Disposal: Dismissed

Cited by 5 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

z9'10 
482 
SUPREME COURT REPORTS 
(1961] 
SARDAR BALDEV SINGH 
v. 
COMMISSIONER OF INCOME-TAX, DELHI 
& AJMER. 
(B. P. SINHA, c. J., JAFER IMAM, A. K. SARKAR, 
K. SuBBA RAO an<l J. C. SHAH, JJ.) 
Income-tax-Assessment-Undistributed dividwd deemed to 
have been distributed--Reassessment as incutne escaping assessment 
-Venue-Constitutional validity of rnactment--Indian Income-tax 
Act, 1922 (II of 1922), ss. 23A, 34, 22, 64- Government of India 
Act, I935, Seventh Sch., List /, Entry 54. 
The appellant, at the time a resident of Lahore, was asses-
sed to income-tax on an income of Rs. 49,047 for the. assessment 
year 1944-45 by the Income-tax Officer, Lahore. After the 
partition in 1947 he shifted to Delhi and resided there. 
He was 
one of the three share-holders of a company called hclra Singh 
and Sons Ltd. of Calcutta, the shares of all the three share-
holders being equal. The company at a meeting held Gn April 
17, 1943· passed its accounts for the year ending Mar~h 31, 1942, 
but declared no dividends although the accounts disclosed large 
profits. On June Ir, 1947, the Income-tax Officer, Calcutta, 
passed an order under s. 23A of the Income-tax Act that the 
sum of Rs. 4,74,370, being the appellant's share of the undistri-
buted assessable income of the company, be included in his 
income for the assessment year 1944-45. Thereupon the Income-
tax Officer, Delhi, on April ro, 1948, issued a notice to the appel-
lant, who was then working as·the Defence Minister of India 
and residing in Delhi, under s. 34 of the Act to file a revised 
return, which he did under protest, reopened the earlier assess-
ment and by a fresh order made on ~larch 25, 1949, assessed 
the appellant on an income of Rs. 5,23,417 for the year in ques-
tion. It was contended on behalf of the appellant that the 
f
roceeding under s. 34 could be held only in Lahore and not in 
ndia at all. The question for determination was whether the 
Income-tax Officer, Delhi, could validly reassess the appellant 
under s. 34 of the Act. 
Held, that the issue of a notice under s. 34 of the In-
come-tax Act. 1922, under the provision of the section itself, 
attracted such provisions of the Act as might apply to a 
notice issued under s. 22(2) of the Act and since s. 64 of the Act 
was the only provision under which the place of assessment 
upon a notice under s. 22(2) could be determ11:1ed, in absence of 
anything to the contrary in the Act, s. 64 applied to an assess-
ment under s. 34 of the Act. The appellant was, therefore, 
rightly assessed by the Income-tax Officer, Delhi, under s. 64(2) 
of the Act. 
1 S.C.R. SUPREME COURT REPORTS 
483 
C. V. Govindarajulu v. Commissioner of Income-tax, Madras, 
I.LR. (1949) Mad. 624 and Lakshminarain Bhadani v. Commissio-
ner of Income-tax, Bihar and Orissa,, (1951) 20 l.T.R. 594, held 
inapplicable. 
The time specified by the proviso to s. 64(3) could have no 
application since the contention in the present case was that 
the assessment under s. 34 could be made only in Lahore and 
not in India at all. 
Section 23A of the Act, as it then stood, raised only one 
fiction, and not two, and that was of an income arising on a 
specific date in the past with .the purpose that such income 
might be included in the income of a share-holder for assess-
ment. That income must, therefore, be deemed to have existed 
on the date for the purpose of assessment and, if not included 
in the assessment for the relevant year, must be ta!>en. to have 
actually escaped assessment so as to attract s. 34 of the Act. 
, 
Dodworth v. Dale, 20 T. C. 285, D. & G. R. Rankine v. Com-
missioners of Inland Revenue, 32 T. C. 520 and Chatturam Horli-
ram Ltd. v. Commissioner of Income-tax, Bihar and Orissa, [1955] 
2 S.C.R. 290, held inapplicable. 
There is no warrant for the proposition that s. 23A of the 
Act was meant to apply' only to cases where pending assessment 
for any year, an order is made under that section creating a 
fictiona I income that year. Such an order could, therefore, be 
made even after the assessment of the income of the share-holder 
for the year concerned'had already been completed. Buts. 23A 
does not itself provide for any assessment being made and that 
has to be made under other provisions of the Act authorising 
assessmentincluding s. 34. 
It is not correct to say thats. 23A(1), as it then stood, was 
beyond the competence of the Legislature and was as such 
unconstitutional. Under Entry 54 -of List I of the Sevent

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