Reassessment notice beyond limitation requires a definite appellate finding or direction; a tentative remark is insufficient.

A reassessment notice issued after the normal limitation period is saved only when it is directly referable to a definite finding or direction in an appellate order. A tentative observation that income may be assessable in another year is not enough, because the appellate authority must actually determine that year or give a clear direction to act on it. Here, the appellate order did not decide that the income belonged to 1944-45; it only noted that it could be assessed, if at all, for that year. The notice was therefore not protected by the second proviso to section 34(3), was time-barred, and lacked jurisdiction.

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Issues: Whether a notice under section 34 of the Income-tax Act, 1922, issued after the ordinary period of limitation was saved by the second proviso to section 34(3) on the ground that the appellate order contained a finding or direction within section 31.

Analysis: The proviso protects only action taken in consequence of, or to give effect to, a finding or direction contained in an appellate order. The appellate order merely held that the amount did not represent income for the assessment year 1945-46 and added that it could be assessed, if at all, for 1944-45 and that the Income-tax Officer might take steps if so advised. That language did not amount to a finding or direction that the income belonged to 1944-45. The appellate authority had not been called upon to decide that year and did not determine it.

Conclusion: The notice was not protected by the second proviso to section 34(3) and was therefore time-barred and without jurisdiction.

Ratio Decidendi: A reassessment notice issued beyond limitation is valid only if it is directly referable to a definite finding or direction in an appellate order; a tentative observation that income may be assessable for another year does not satisfy that requirement.

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