Section 23A super-tax on undistributed profits falls outside assessment limitation under section 34(3), with prior precedent maintained.

An order under section 23A of the Indian Income-tax Act, 1922 was treated as a levy of additional super-tax on undistributed profits, not as an assessment or reassessment of income, profits or gains. On that basis, the limitation in section 34(3), which applies to assessment or reassessment orders, was held inapplicable to section 23A orders. The earlier Supreme Court view that a section 23A order is not an assessment order within section 34(3) was maintained, since no sufficient reason was shown to depart from the prior precedent under Article 141.

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Issues: (i) Whether the earlier decision holding that an order under section 23A of the Indian Income-tax Act, 1922 is not an assessment order within section 34(3) should be overruled; (ii) whether an order under section 23A is barred by the limitation prescribed in section 34(3).

Issue (i): Whether the earlier decision holding that an order under section 23A of the Indian Income-tax Act, 1922 is not an assessment order within section 34(3) should be overruled.

Analysis: The Court applied the principle that its prior decisions bind under Article 141 of the Constitution of India and should not be departed from unless the earlier view is plainly erroneous. It found no vital point or relevant statutory provision that had been overlooked in the earlier decision and held that no sufficient ground was made out to review it.

Conclusion: The earlier decision was not overruled and was left undisturbed.

Issue (ii): Whether an order under section 23A is barred by the limitation prescribed in section 34(3).

Analysis: The Court held that an order under section 23A does not assess income, profits or gains as such, but levies super-tax on undistributed profits. Since the taxable event is the non-distribution of profits already assessed, section 34(3), which governs orders of assessment or reassessment, was held to be inapposite. The Court also noted that section 106 of the Income-tax Act, 1961 specifically provides a limitation for the corresponding provision, reinforcing the view that the limitation in section 34(3) did not apply to section 23A orders under the 1922 Act.

Conclusion: An order under section 23A was not barred by section 34(3).

Final Conclusion: The appeal failed because the challenged order under section 23A was held not to attract the limitation in section 34(3), and the earlier precedent on the point was maintained.

Ratio Decidendi: An order levying additional super-tax on undistributed profits under section 23A of the Indian Income-tax Act, 1922 is not an assessment or reassessment order within section 34(3), and the limitation applicable to assessment or reassessment does not govern such an order.

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