THE COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH, HYDERABAD versus K. ADINARAYANA MURTY

Citation: [1967] 3 S.C.R. 388 · Decided: 03-04-1967 · Supreme Court of India · Bench: J.C. SHAH · Disposal: Appeal(s) allowed

Judgment (excerpt)

THE 
COMMISSIONER OF INCOME-TAX, 
PRADESH, HYDERABAD 
v. 
K. ADINARAYANA MURTY 
April 3, 1967 
ANI>HRA 
(J. C. SHAH, S. M. SIKRI AND V. RAMASWAMI, JJ.J 
lndian Income•tax Act, 1922, s. 34-Notice of reasscssme11t issued 
to assessee in status of individual-Return 
filed in 
status of HUF-
Appellate 
Authority ho/di11g 
that correct 
starus was HUF-Another 
notice under s. 
34 
issued-Assess111ent on return filed in response 10 
second notice-Validity of asses.Hnent. 
The respondent had two sons. ·Prior to the assessment year 1954-55 the 
Income-tax Authorities assemd him as had of a Hindu undivided family. 
In 1954-55 the Income-tax Officer held that he was an 'individual' and 
assessed him accordingly. 
Thereafter, having ob'lained sanction from the 
Commissioner he issued to the respondent a not:ce under s. 34 of the 
Income-tax Act 1922 in respect of the. year 1949-50 in the status of an 
individual. A return was filed by the respondent in response to the notice. 
However in the appeal relating .to 1954-55 the Appellate Assistant Com-
miS&ioner held that the correct sta<us of the assesseo was that of a Hindu 
undivi<)ed family. 
The Income-tax Officer then issued another notice 
under s. 34 to the respondent in respect of 1949·50 in the status of a 
Hindu undivid~d family. 
On the return filed in response to this second 
notice the Income-tax Officer made an assessment adding certain "escaped 
· income" to that originally assessed for 1949-50. 
In reference, the High 
Court held that the first of the notices under s. 34 was not ;nvalid in law 
and consequently the issue of the second notice 
was 
illegal 
and 
the 
assessment made in pursuance of it was illegal. 
The Revenu·• appealed 
to this Court. 
HELD : Under the scheme of the Income-tax Act the 'lndividul' and 
the 'Hindu undivided family' are treated as sepa·rate units of assessment and 
if a notice under s. 34 of the Act is wrongly issued to the assessee in the 
status of an 'individual' and not in the correct status of 'Hindu undivided 
family', the notice is illegal and ultra vires 
and 
without 
jurisdiction. 
[39JF-O] 
The Income-tax Officer was therefore justified in ignoring the first notice 
under s. 34 of the Act and the return filed by the assessee in response to 
that notice and consequently the assessment made by the 
Income.tax 
Officer pursuant to the, second notice was a valid assessment. 
[391H] 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 632 of 
1966. 
~ppeal by special leave from the judgment and order dated 
April 14, 1964 of the Andhra Pradesh High Court in case refer-
red No. 46 of 1962. 
A 
B 
c 
D 
E 
F 
G 
3. Sen, GopaiSingh, S. P. Nayyar and R. N. Sachthey, for the 
appellant. 
H 
S. T. Desai, B. Parthasarathy and 0. C. Mathur, for the res· 
pondent. 
c.I.T. v. AD!NARAYANA (Ramaswam1, J.) 
389 
A 
The Judgment of the Court was delivered by 
B 
D 
E 
F 
c 
G 
H 
.Ramaswami, J. This appeal is brought, by special leave, fro~ 
the judgment of the High Court of Andhra Pradesh dated Apnl 
14, 1964 in Referred Case No. 46 of 1962. 
The respondent, hereinafter called the "assessee" was a Hindu 
Undivided family consisting of K. Ankineedu and his two sons. 
For the assessment year 1!149-50 corresponding to the previous 
financial year ending March 31, 1949, the assessee submitted a 
return in response to a notice sent to him. The Income-tax Officer 
computed h!S total income as Rs. 2,429 /- only which was below 
the taxable limit and so the assessee was declared not liable to pay 
income·!~. Subsequent to the assessment, the Income-tax Officer 
had information that the assessee had done some business as pro-
curement agent for the Government and in this. business he had 
earned large profits which had escaped assessment. Accordingly 
he issued a notice under s. 34 of the Income-tax Act, 1922 (here-
inaner called the 'Act') on March 22, 1957. In response to the 
notice the assessee made a return on April 30, 1957. 
Prior to 
the issue of the above notice the Income-tax Officer had taken the 
view in the assessment made for the year 1954-55 that the correot 
status of the assessee was not 'Hindu Undivided Family' but his. 
status was .. individual". In accordance with this view the notice 
under s. 34 of the Act was issued to the assessee on March 22, 
1957 in the status of an 'individual'. 
As the proceeaings under 
this notice were continuing, but before the assessment could be 
made, the Appellate Assistant Commissioner in the appeal fo

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