MANCHANDA J. - The disposal of this writ petition which relates to the assessment year 1956-1957 will also govern the remaining five writ petitions for the assessment years 1953-54, 1954-55, 1955-56, 1956-57, 1957-58 and 1958-59.
The writ petitions are directed against the notices dated January 11, 1962, under section 34 of the Indian Income-tax Act, 1922 (hereinafter referred to as the Act) and the notices issued under section 22 (4) and section 23 (2) dated the 14th of March, 1962, and 11th of September, 1962.
The facts leading up to this petition are these. The petitioner was a partner in a firm M/s. Mangal Sen Manchand, an unregistered firm carrying on business at Doiwala, Dehra Dun. The other partner was Manchand. The business carried on was that of contract of loading and unloading of sugar-cane from the centre of purchase to the gate of the sugar mill called Sir Shadi Lal Sugar and General Mills Limited, Mansurpur. There was an agreement between the two partners of the firm and the said mill in regard to the loading and unloading contract. Under this agreement the firm was entitled to receive 10 paise per maund as labour and commission charges on the quantity supplied at the mill gate. In addition the firm was entitled to two per cent. driage occasioned in the transport from the centre of purchase to the mill gate. During the summer months when driage was expected to be more the percentage of driage to be calculated was 3%.
At the time of the original assessment which was completed under section 23(3) on 8th June, 1956, the petitioner merely filed a statement from the said sugar mill showing total payment of Rs. 82,000 made by the mill to the assessee firm for the relevant assessment year 1956-57. The assessee maintained no accounts and the receipts were returned on the cash basis. The certificate filed by the mills did not disclose separately the amounts ascribable to labour charges and driage. The petitioner alleges that at the time of the original assessment the attention of the Income-tax Officer was specially drawn to the receipts on account of shortage due to driage. This fact is denied by the opposite party and the assessment order, annexure 'B', does not specifically mention the point about the receipts on account of driage. The material portion of the assessment order reads :
'Total payments amount to Rs. 82,000. Assessees counsel has argued that margin of profit in such cases is not as high as taken last year but in view of the nature of the contract I cannot accept the contention of the assessees counsel more so when there are no accounts maintained by him. However after discussion with him profit at 15% as last year on total payment of Rs. 82,000 comes to Rs. 12,300...'
Stress is laid on the words 'nature of the contract' which according to the petitioner goes to indicate that the question of the receipts attributable to the quantum of driage must have been brought to the notice of the then Income-tax Officer. I will advert to this aspect a little later when considering whether all the primary facts had been duly disclosed by the petitioner at the time of the original assessment and as such notice under section 34 was not justified. To continue with the narration of facts, for the assessment year 1959-60, the Income-tax Officer considered for the first time the question of the nature of the receipt in respect of driage. He applied a rate of 121/2% on the labour or commission receipts but in respect of the receipts on account of shortage due to driage he was only prepared to allow the actual shortage that had been proved to have ensued. He therefore added back the balance of the receipts on account of driage and treated it as the income of the petitioner. Against the said assessment order dated January 29, 1960, the petitioner went up in appeal to the Appellate Assistant Commissioner who upheld the principle on which the Income-tax Officer had made the assessment for the year 1959-60, but granted some small reduction in the quantum of the assessment. The petitioner did not file any appeal to the Tribunal. In the meanwhile, the petitioner filed a return for the assessment year 1961-62 wherein the appended a note to the effect that the firm of which he was a partner had been dissolved on the 22nd June, 1959. No notice as required by section 25 (2) within the statutory period stipulated therein was ever given by the petitioner. Pursuant to the assessment made for 1959-60 the Income-tax Officer issued notices under section 34 on the 11th January, 1962, in the name of the firm although it was within the knowledge of the Income-tax Officer that the firm was dissolved. The notices were for the assessment years 1953-54 to 1958-59. These were served on the petitioner on the 3rd of February, 1962. No notice was served on the other ex-partner, Manchand. The petitioner filed a return under protest on the 7th of May, 1962. Notices under section 22(4) and section 23(2) were also issued on the 14th March, 1962, and 11th September, 1962, respectively but no compliance has yet been made. The petitioner filed the writ petitions challenging the issue of the notice under section 34 on the ground, inter alia, (1) that all the primary facts were disclosed at the time of the original assessment, (2) that the notice issued under section 34 was misleading, (3) that if all the primary facts were disclosed and the notice under section 34(1) was invalid then the notice if treated as one under section 34(1)(b) would be barred by limitation and (4) that the firm having been dissolved, notice could not be issued in the name of the firm but had to be issued to both the erstwhile partners and served upon them before joint and several liability could be enforced.
I do not propose to enter into an elaborate discussion of the contentions raised for the reason that I have come to the conclusion that on the materials on record it is not possible to say positively all the primary facts were disclosed at the time of the original assessment. The facts are disputed, as noticed hereinabove, and from the words in the original assessment order 'in view of the nature of contract' it is not possible to infer that the receipts on account of driage were specifically brought to the notice of the then Income-tax Officer. The admitted fact only is that the certificate was produced from the mill showing the total receipt of Rs. 82,000. The break-up of this receipt was not shown in the certificate. This will, therefore, be a matter of proof based on evidence which cannot be undertaken in these proceedings and will fall to be considered in the course of the regular reassessment proceedings which are still pending.
On the question whether a notice under section 34 can be issued in the name of the dissolved firm and served on only one of the erstwhile partners is again a matter which cannot be said to be free from all doubt. To put it at its lowest, the question of law that is raised thereby is not one on which it can be said that two opinions are not possible. In this connection see the cases : Narayana Chetty v. Income-tax Officer, Nellore [(1959) 35 I.T.R. 388;  Suppl. 1 S.C.R. 189.], Lakshminarain Bhadani v. Commissioner of Income-tax [(1951) 20 I.T.R. 594.], Commissioner of Income-tax v. S. V. Angidi Chettiar [(1962) 44 I.T.R. 739 (S.C.).], Maharaj Kumar Kamal Singh v. Commissioner of Income-tax [(1959) 35 I.T.R. 1;  Suppl. 1 S.C.R. 10], Bhawani Prasad Girdhar Lal v. Income-tax Officer (Miscellaneous case No. 224 of 1960, decided on 31st October, 1962 (unreported decision of a Division Bench of this court) and Ram Niwas Hanuman Bux Somani v. S. Venkataraman [(1959) 43 I.T.R. 152.].
Lastly, even if it can be said that the issue of the notice under section 34 was misleading because at one place the date by which the return had to be filed was given as the 16th February, 1962, yet as, in the very next sentence it had been made clear that the return could also be filed within 35 days of the receipt of the notice, no prejudice can be said to have been caused to the petitioner. The position is similar with regard to the other connected objection that in the notice under section 34, the Income-tax Officer had only mentioned that there had been an 'escapement' of assessment but not that there had been an 'under assessment' as was in fact the case. The petitioner knew full well that the notices under section 34 were issued as a result of the assessment which was made for the assessment year 1959-60. The notice, therefore, cannot be said to be misleading and even if it was misleading no prejudice having been shown to have been caused to the petitioner any interference under article 226 of the Constitution would be wholly unjustified, particularly, as the petitioner has all his remedies open to him under the Income-tax Act, in respect of reassessment proceedings which have yet to take place.
For the reasons given above the petition is dismissed. In the circumstances of the case the parties are left to bear their own costs.