AIA GENTLE, J. - The applicant is a firm consisting of three partner each of who is also the Karta of a Hindu undivided family. Up to and including the year 1934-35 the three families were each separately assessed to income-tax. In the year 1935-36 they were grouped together and were assessed as an association of individuals. The assessment contained the whole of the income of the three families from all sources including the profits from the business conducted by the applicant firm. In the years 1936-37 and 1937-38 similar assessments were made as in the previous year. The assessees objected, in respect of these two assessments, to the method by which they had been made, the objection being taken to the Commissioner of Income-tax who took cognizance of the matter under Section 33 of the Indian Income-tax Act.
Whilst these two assessments were under consideration by the Commissioner, Income-tax Officer on February 15, 1939, made a further assessment upon the association of individuals for the year 1938-39 and against which an appeal was preferred to the Appellate Assistant Commissioner on March 6, 1939. By his order dated May 12, 1939, the Commissioner accepted the contention that the three families should not have been grouped together in one assessment and the profits of the firm should be eliminated from it. The Commissioners order was passed after the Income-tax Officer had made the assessment upon the association for the year 1938-39 and before the appeal against it was decided.
On July 14, 1939, the Income-tax Officer was informed of the Commissioners order and he served a notice under Section 34 of the Act upon the applicant firm requiring it to furnish a return of profits from the business for assessment for the year 1938-39 on the ground that they had escaped assessment for that year.
On July 5, 1940, the appeal by the association in respect of the assessment made upon it for the year 1938-39 was allowed and on December 21, 1940, the applicant firm was assessed in respect of the year 1938-39 under Sections 23(3) and 34 of the Act.
The validity of the notice under Section 34 of the Act is questioned in this Reference. The question which is raised is 'Whether in the facts and the circumstances of the case the action of the Income-tax Officer in issuing a notice under Section 34 for the assessment year 1938-39 was valid in law ?'
During the course of the argument it transpired that the association has paid all the tax pursuant to the assessment for the years 1936-37 and 1937-38 and that the firm has also paid the tax in respect of the year 1938-39. The individuals who were the subjects of the assessment upon the association and upon the firm are in fact the same. The learned Advocate on behalf of the applicants stated that whatever may be the answer to the question raised in this Reference, whether it is in favour of the applicant firm or whether it is adverse to it, there will be no action taken to obtain refund of any of the income-tax which has in fact been paid. The payments which have been made will remain and the assessments have all been fully satisfied so far as the tax is concerned.
The question raised is one which can never reassure so far as the applicant firm or the association are concerned. That being so, it seems that the question is one to which the answer would be purely academic and nothing else; no purpose would be served by answering the question; and nothing would follow from the answer which might be given. In Raja Bahadur Sir Rajendra Narayan Bhanja Deo v. Commissioner of Income-tax, Bihar and Orissa, the position in regard to academic questions in income-tax reference was considered and discussed by the Judicial Committee. In the course of the judgment of the Board delivered by Luxmoore, L.J., he pointed out that the question referred to the High Court for its consideration in that matter had only an academic interest whichever way it might be answered. Later the learned Lord Justice observed that in those circumstances their Lordships did not think it would be right to depart from the well-established practice of the Board to refuse to decide a question which was purely academic, and later still, that in their Lordships opinion, both the respondent and the High Court ought to have refused to answer the question referred to it.
On the authority of the decision, to which reference has just been made, this question being purely of an academic nature this Court is not called upon nor required in any way to express any opinion by giving an answer to the question. The result is that this Reference will be returned.
DERBYSHIRE, C.J. - I agree.