1968 (11) TMI 20

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....so invested by the partners was treated as the income of the firm by the Income-tax Officer and assessed accordingly. But the appeal preferred by the firm was allowed by the Appellate Assistant Commissioner who recorded a finding that that sum of money was not the income of the firm. He accordingly held that it was not taxable income of the firm. But the Appellate Assistant Commissioner issued a direction in the appeal to the Income-tax Officer that he should proceed against the individual partners of the firm under the second proviso to section 34(3) of the Income-tax Act, 1922, and consider the assessability or otherwise of the part or the whole of their investment in the Cine Syndicate & Traders (P.) Ltd. On the basis of this directio....

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....ibunal was that in the order made by the Appellate Assistant Commissioner under section 31 of the Income-tax Act, 1922, it was not within his competence to make a direction that the Income-tax Officer should proceed to reopen the assessment on the partners of the firm who were not the appealing assessees. That view which the Tribunal took receives support from the decision of the Supreme Court in Income-tax Officer v. Murlidhar Bhagwan Das in which it was explained that a direction which could be made by the appellate authority under section 31 should be one which is necessary for the disposal of the appeal or for giving relief to the appealing assessee, and that there is no power in the appellate authority to record a finding or to issue a....

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....icer in the case of the assessee before us was made to give effect to the direction contained in the order made by the Appellate Assistant Commissioner in the firm's appeal, the reassessment proceedings would not be timebarred, Mr. Rajasekhara Murthy, for the department, urged that, although that direction could have no efficacy for the purpose of the second proviso to section 34(3) of the old Act, it could effectively constitute the basis for a proceeding under section 147 read with section 153 of the new Act. But Mr. Srinivasan, appearing for the assessee, maintained that the third Explanation to section 153(3) on which Mr. Murthy depends can have no relevance since the direction to which it refers is one made under section 250 of the new....