1981 PLP 139 (PTD)

Section 153 of the Act provides for time limit for completion of assess ment and reassessments. Such time limit is prescribed in subsection (1) and subsection (2) of the said section. Subsection E3) thereof provides that the provisions of subsections (1) and (2) shall not apply to the following classes of assessments, reassessments and recomputations which may, subject to the ‑provisions of subsection (2‑A), be completed at any time "(3). (ii) where the assessment, re‑assessment or recomputations is made on the assessee or any person in subsequence of car to give effect to any finding or direction contained in an order under section 250, 254, 260, 262, 263 or 264 or in an order of any Court in a proceeding otherwise than by way of appeal or reference under this Act .." There are three Explanations to this subsection, and we are concerned with Explanation 3, which is relevant for our purpose. It reads as under :‑‑ "Where, by an order referred to in clause (if) of subsection (3), any income is excluded from the total income of 'one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed.," It is by reason of the provisions of this Explanation that it is sought to be urged by Mr. Joshi, on behalf of the I.T.O., that the bar of limitation is not attracted and in view of the order of the A.A.C. and the Income‑tax Appellate Tribunal as regards the assessment of the firm of Messrs Ramdas Dossa & Company, the taxing authorities are entitled to reopen the assess ment, irrespective of the bar of limitation, since M. R. Ruia, a director of the petitioners, was examined in that case. After appreciating his evidence the AAC as well as the Tribunal came to the conclusion that Kesardeo Hanumanbux and P. H. Nerurkar were the Benamidars of the petitioners. The short question that has to be considered in this appeal is, whether examining M. R. Ruia, a Director of the petitioners, was equivalent to an opportunity of being heard being given to the petitioners before the said order was passed by the A.A.C. or by the Tribunal with reference to the assessment of the firm of Ramdas Dossa & Company for the assessment year 1949‑50. Section 4, which is the charging section, provides for assessment of every person The word "person" is defined in section 2(31) of the Act and, under the said definition, "person" includes- (i) an individual,. (ii) a Hindu undivided family, (iii) a company, (iv) a firm, (v) an association of persons or body of individuals, whether incorpo rated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preced ing sub‑clauses." It is clear from this definition of "person" fro sub‑clause (31)(iii) of the section that a company is one of the entities capable of being taxed under the section. Here t1l4. petitioners which are a private limited com pany were given (sic) an opportunity of being heard, when the assessment order was passed by the A.A.C. qua the firm of Messrs Ramdas Dossa & Company for the assessment year 1949‑50, and which order in appeal was confirmed by the Tribunal. It is a well‑settled position in law that a limited company is a separate entity and the mere fact that M. R. Ruia, who happened to be one of the directors of the petitioners, was examined as a witness, after an order of remand was made by the A.A.C. in the assessment of the firm of Messrs Ramdas Dossa & Company, is not a sufficient compliance with the requirements of the provisions of Expln. 3 to section 153 of the Act. Under the said Explanation, the person whose assessment is require to be reopened, has to be given an opportunity of being heard. Mere examination of a director of the petitioners cannot be equated with an opportunity being given to the petitioner of being heard, If the petitioners, during the course of the assessment proceedings of the firm of Messrs Ramdas Dossa & Company, were given an opportunity of being heard, they could have asked any representative of theirs or an employee to give evidence qua the matters required to be examined. In the said assessment proceeding of the firm the petitioners were not called upon to send their representatives to give evidence in respect of the matters required to be examined. Thus, mere taking evidence of a witness, who is a director of the petitioners is not sufficient compliance with the requirements of the provisions of Expln. 3 of section 153 of the Act, as the petitioners were not given an opportunity of being heard before the order was passed as regards the assessment of the firm of Messrs Ramdas Dossa & Company for the assess ment of year 1949‑50. That being the position, the provisions of Expln. 5 of subsection (3) of section 153 of the Act are not' applicable to the petitioners and the impugned notice has been rightly quashed by the learned Trial fudge on the grounds of bar of limitation. In the result, the appeal fails and is dismissed with costs. The appellant will pay the cots, which are quantified at Rs. 250. Liberty to the respondent to withdrawn Rs. 250 (two hundred and fifty) out of the amount deposited as security for costs and. the balance of the amount so deposited be returned to the appellant. Appeal dismissed.