Coparcener assessments after appellate direction fall within the limitation proviso and remain valid under income-tax law.

Assessments on coparceners made pursuant to an appellate direction were treated as valid because they were made in consequence of, and to give effect to, the finding and direction in the earlier order. The limitation bar in section 34(3) of the Income-tax Act, 1922 did not apply, as the second proviso lifted the time restriction for assessments of persons connected with the original assessment and not strangers to it. The principle applied was that coparceners are sufficiently connected with the family assessment for the proviso to operate. Earlier constitutional objections to the proviso were rejected in light of later Supreme Court authority.

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Issues: Whether the assessments made for the years 1953-54 and 1954-55 on 2 February 1962 were valid in law, in particular whether the second proviso to section 34(3) of the Income-tax Act, 1922 applied to assessments made on the coparceners pursuant to the appellate direction.

Analysis: The assessment on the Hindu undivided family had resulted in a direction under section 31 requiring the Income-tax Officer to consider the income from the assets allotted on partial partition in the individual assessments of the coparceners. The Court held that the Income-tax Officer had not reopened concluded assessments under section 34 and that the limitation bar in section 34(3) was lifted by the second proviso because the subsequent individual assessments were made in consequence of, and to give effect to, the finding and direction contained in the appellate order. The Court applied the principle that members of a coparcenary are intimately connected with the assessment of the family and are not strangers for the purpose of the proviso. The reliance placed on earlier constitutional objections to the proviso was rejected in light of the later Supreme Court ruling that such connected persons fall within the scope of the proviso.

Conclusion: The assessments were valid in law and the reference was answered in favour of the department.

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