1979 (8) TMI 4

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....31st March, 1954, the assessee-trust filed a return of income on 31st March, 1954. The ITO took the view that the assessee-trust was sham and bogus and was created merely as a device for evasion of tax and he, therefore, refused to recognise the assessee-trust as valid and made an order stating that the income accruing to the assessee-trust should be assessed in the hands of S. Raghubir Singh. The income of the assessee-trust was accordingly included in the individual assessment of S. Raghubir Singh and assessment was made on him on that basis. S. Raghubir Singh carried the matter higher in appeal and ultimately the Punjab High Court on a reference made by the Tribunal held that the assessee-trust was a valid trust and that the income which....

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....aved by the second proviso to section 34(3) of the Income-tax Act, 1922 ? " was referred by the Tribunal to the High Court. The High Court agreed with the view taken by the Tribunal and held that the second proviso to s. 34(3) was not attracted because the assessee-trust and S. Raghubir Singh were two different persons and the assessee-trust was not intimately connected with the assessment of S. Raghubir Singh. The revenue thereupon preferred the present appeal after obtaining certificate of fitness from the High Court. It is now well settled as a result of the decision of this court in ITO v. Murlidhar Bhagwan Das [1964] 52 ITR 335, that two conditions are necessary for the applicability of the second proviso to s. 34(3). The first is th....