Limitation for reassessment of deemed dividend under income-tax law runs from the end of the assessment year, not the order date.

Notice under section 34(1)(b) to tax deemed dividend under section 23A(1) had to be served within four years from the end of the relevant assessment year, because the deemed distribution was treated as occurring on the date of the general meeting. Although section 23A(1) itself did not prescribe a separate time limit for the Income-tax Officer's order, the shareholder's assessment still had to proceed under section 34(1)(b). The reassessment period therefore ran from the end of that assessment year, and the proviso to section 34(3) was not applicable. The notice served on 1 April 1954 was time-barred.

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Issues: Whether the notice issued under section 34(1)(b) of the Income-tax Act for bringing to tax the deemed dividend under section 23A(1) was barred by limitation.

Analysis: The deemed distribution under section 23A(1) was treated as having taken place on the date of the general meeting, so the relevant accounting and assessment year remained the year in which that meeting was held. Even though section 23A(1) empowered the Income-tax Officer to pass the order without fixing a separate time limit, the shareholder's assessment still had to be made through section 34(1)(b), and the notice had to be served within four years from the end of the assessment year. The time limit for reassessment began from the end of the assessment year, and the proviso to section 34(3) did not govern the issue framed for decision.

Conclusion: The notice served on 1 April 1954 was out of time, and the assessment was barred by limitation. The decision was in favour of the assessee.

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