Law:

Section:

Section 163 of the Income-tax Act, 1961 [Corresponding to section 43 of the Indian Income-tax Act, 1922] - Non-resident - Agent of - Assessment year 1946-47 - Assessee submitted return voluntarily as agent of non-resident principal without being called upon to do so under section 22(2) of 1922 Act and admitted his status - However, before AAC he contended that assessment made on basis of said return was bad in law as no notice under section 43 of 1922 Act was served upon him - Whether since assessee admitted his liability, neither notice under section 43 of 1922 Act nor opportunity to be heard by ITO would be necessary and, hence, assessment made by ITO was not bad in law - Held, yes FACTS The assessee, as an agent of a non-resident principal submitted a return. When assessment was completed, the assessee contended, on appeal before the AAC that the assessment was bad in law as he had not been served with a notice as required by law under section 43 of the 1922 Act. The AAC rejected the contention of the assessee and the Tribunal dismissed the second appeal. On reference : HELD The fact was that without having been called upon to make a return by a notice under section 22(2) the assessee voluntarily made a return and in that the admitted his status as an agent of a non-resident principal. It is section 42 that imposed the liability upon the agent. That is the charging section with regard to the liability of an agent to pay the tax due by his non-resident principal. Section 43 is procedural and it lays down the procedure for determining who is the agent who has got to meet the liability which has already been fixed under section 42. The contrast between the provisions of section 34 and section 43 will be apparent. Section 34 makes the service of the notice a condition precedent to the assumption of jurisdiction by the ITO to tax income, which has escaped assessment. The language of that section makes that clear, and it is only when a notice has been made a condition precedent in this sense that failure to serve that notice could not be waived. It could not be waived because the notice was not intended merely for the benefit of the assessee; the Legislature…

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