1971 (1) TMI 16

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....of which the assessee was a partner. The Income-tax Officer included those sums as the income from undisclosed sources in the assessment of the Hindu undivided family styled M/s. Narmal Ramkumar of which the assessee was a member in the two respective assessment years. The Hindu undivided family appealed against that order. The Appellate Tribunal held in respect of the appeal for the assessment year 1947-48 that a sum of Rs. 17,425 represented the income from undisclosed sources but it could not be assessed in the hands of the Hindu undivided family. But in respect of the appeal for the year 1948-49, following the decision of the Tribunal in the appeal relating to the assessment year 1947-48, the Appellate Assistant Commissioner directed th....

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.... in the case of the assessee was invalid ?" The High Court answered the question in the affirmative. Against that order the Commissioner of Income-tax has appealed to this court. The principal argument advanced in the appeal is that the judgment of the Bombay High Court in Hiralal Amritlal Shah's case on which reliance was placed by the Tribunal was overruled by this court in K. C. Thomas, 1st Income-tax Officer, Market Ward, Bombay v. Vasant Hiralal Shah and on that account the answer to the question referred be recorded in the negative. This court held in K. C. Thomas's case that the second proviso to section 34(3) in the form in which it stood on the date of the issue of the notice of assessment would govern the whole of sect ion 34(....

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....ment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A." It was held by this court in K. C. Thomas's case that proviso (ii) to sub-section (3) was an exception to the entire section. Therefore, to an order of assessment or reassessment of the income of the assessee or any person in consequence of or to give effect to any finding or direction contained, inter alia, in an order of the Appellate Assistant Commissioner or the Tribunal, the periods of limitation contained in sub-section (1) and sub-section (3) shall not apply, i.e., the requirements as to service of notice within the period of....

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....das held that the second proviso to section 34(3) of the Income-tax Act, 1922, in so far as it authorises the assessment or reassessment of any person other than the assessee after the expiry of the periods of limitation specified in section 34 in consequence of or to give effect to a finding or direction given in an appeal, revision or reference arising out of proceedings in relation to the assessee violates article 14 of the Constitution of India and is invalid to that extent. In Income-tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwan Das, this court observed that the expressions "finding" and "direction" in the second proviso to section 34(3) mean, respectively, a finding necessary for giving relief in respect of the assessment for the ....