TMI Blog1979 (11) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal by a short judgment. The appellant, a firm, carries on business of manufacturing ice and preservation of potatoes in its cold storage. It was assessed to income-tax for the assessment year 1961-62 by an assessment order dated July 5, 1961, on a total income of Rs. 53,548. In proceedings started on December 21, 1961, under s. 34(1) of the Indian I.T. Act, 1922, the ITO found certain property income and income to the extent of one lakh from potato transactions put through in the name of benami persons by the assessee had escaped assessment and, therefore, by his order dated December 22, 1965, he brought them to tax. The said order of the ITO was annulled by the AAC in appeal on May 10, 1967, on the ground that the initiation of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in view of two decisions of this court in S. B. Jain, ITO v. Mahendra [1972] 83 ITR 104 and Gujar Mal Modi v. CIT [1972] 84 ITR 261, where it has been held that s. 297(2)(d)(ii) is concerned with the factual pendency of proceedings under s. 34 of the 1922 Act and not with their legality. It must in fairness be stated that none of these decisions on the proper construction of s. 297(2)(d)(ii) had been rendered by this court when the Allahabad High Court decided the matter. In S. B. Jain, ITO v. Mahendra [1972] 83 ITR 104 (SC), the ITO had issued notice to the respondent-assessee on January 5, 1962, under s. 34(1)(a) of the 1922 Act to reopen his assessment for the assessment year 1946-47. The High Court quashed the notice by its ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This court held that since the proceedings under s. 34(1)(b) of the 1922 Act were pending on April 1, 1962, the second notice was incompetent. In other words, in both the cases this court laid emphasis on the factual pendency of the proceedings under s. 34 on the relevant date, and not their legality as being material for purposes of s. 297(2)(d)(ii) of the 1961 Act. In the case before us admittedly proceedings under s.34(1) of the 1922 Act in respect of the item of Rs. 1,00,000 (which was said to have escaped assessment) were factually pending on April 1, 1962, and, therefore, the notice under s. 148 of the 1961 Act would be incompetent. An attempt was made by counsel for the revenue to distinguish the aforesaid decisions on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X
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