TMI Blog1979 (8) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... T The judgment of the court was delivered by PATHAK J .-- These appeals, by special leave, are directed against a judgment dated September 17, 1971, of the High Court of Delhi, disposing of an income-tax reference. There was a Hindu undivided family consisting of the karta, Lala Sham Nath, and his three sons, Rajinder Nath, Ram Chander Nath and a minor, Surinder Nath. The family carried on business. On April 29, 1949, land was acquired in Sunder Nagar, New Delhi, in the name of the karta, and the price was paid out of the books of the family. A building was constructed on the land and was completed in September, 1954. Another building was constructed in the following year on a plot at Golf Links, New Delhi. On March 18, 1950, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the partnership firm was not the owner of the properties, and, therefore, it could not be said to have earned any concealed income. The ITO then initiated proceedings under s. 147(a) of the I.T. Act, 1961, against the individual assessees for the assessment years 1955-56 and 1956-57, and the additions on account of concealed income originally made in the assessments of the partnership firm were now divided between the assessees and included in their individual assessments. The ITO rejected the plea of the assessees that as they had already disclosed that they have invested in the properties when filing their original individual returns there was no case for invoking s. 147(a). The AAC, on appeal, agreed that there was no default on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was justified in holding that the Appellate Assistant Commissioner in appeals before him could not convert the provisions of section 147(a) into those of section 153(3)(ii) of the Income-tax Act, 1961, and that provisions of section 153(3)(ii) of the Act were not applicable to the instant case ? " The High Court noted the finding of the AAC that the properties did not belong to the partnership firm, and, therefore, the excess amount of the cost of construction could not be regarded as the concealed income of the firm. The High Court observed that such a finding was necessary for the disposal of the appeals filed by the firm, and as a corollary it was held that the buildings belonged to the co-owners. This, according to the H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the impugned assessments have been made. The expressions " finding " and " direction " are limited in meaning. A finding given in an appeal, revision or reference arising out of an assessment must be a finding necessary for the disposal of the particular case, that is to say, in respect of the particular assessee and in relation to the particular assessment year. To be a necessary finding, it must be directly involved in the disposal of the case. It is possible in certain cases that in order to render a finding in respect of A, a finding in respect of B may be called for. For instance, where the facts show that the income can belong either to A or B and to no one else, a finding that it belongs to B or does not belong to B would be dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act. In view of s. 153(3)(ii) dealing with limitation merely, it is not easy to appreciate the relevance or validity of the point. In the present case, the AAC found that the cost of constructing the two buildings had not been met by the partnership firm. The firm had merely advanced money to the individual four co-owners, whose personal accounts in the books of the firm had been debited accordingly. On that material, the AAC held that the partnership was not the owner of the property and consequently any excess over the disclosed cost of construction could not be added in the assessments of the firm. All that has been recorded is the finding that the partnership firm is not the owner of the properties. It is true that the findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessed in the hands of the co-owners. What is a " direction " for the purposes of s. 153(3)(ii) of the Act has already been discussed. In any event, whatever else it may amount to, on its very terms the observation that the ITO " is free to take action " to assess the excess in the hands of the co-owners cannot be described as a " direction ". A direction by a statutory authority is in the nature of an order requiring positive compliance. When it is left to the option and discretion of the ITO whether or not to take action, it cannot, in our opinion, be described as a direction. Therefore, in our judgment, the order of the AAC contains neither a finding nor a direction within the meaning of s. 153(3)(ii) of the I.T. Act in consequen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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