TMI Blog1973 (3) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... 66(1) of the Indian Income-tax Act, 1922, to be hereinafter referred to as the " Act The reference in question relates to the assessment of the assessee for the assessment years 1954-55, 1955-56 and 1956-57. The question of law referred by the Tribunal is : " Whether, on the facts and the circumstances of the case, the assessments made on the firms for each of the assessment years 1954-55, 1955-56 and 1956-57 are valid in law ? " Now, we shall set out the material facts as could be gathered from the case stated by the Tribunal. Up to and including the assessment year 1953-54, business with which we are concerned in this case, was carried on by Vadde Pullaiah. He was assessed as an " individual ". On March 20, 1953, he entered into a par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the Income-tax Officer to register that firm and in Pullaiah's appeal he set aside the assessment made on him. In the operative portion of his order he stated thus : " The Income-tax Officer is directed to adopt the correct share of income of the appellant from this firm. " But, in the body of his order he specifically held that the business in question was carried on by the firm and not by Pullaiah. After this order was made, the Income-tax Officer proceeded to assess the firm in respect of the income earned by that firm during the assessment years 1953-54, 1954-55 and 1955-56. When the Income-tax Officer initiated proceedings against the firm for the purpose of assessment, the firm resisted the same taking the plea that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 34. That section deals with income escaping assessment. We are now concerned with sub-section (3) of section 34 and the second proviso thereto. Sub-section (3) of section 34 reads : " No order of assessment or reassessment, other than an order of assessment under section 23 to which clause (c) of sub-section (1) of section 28 applies or an order of assessment or reassessment in cases falling within clause (a) of sub-section (1) or sub-section (1A) of this section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable. The first proviso is not relevant for our present purposes. Hence, we shall proceed to quote the second proviso to sub-section (3) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that we have got to decide is whether the assessee can be considered as one of the persons coming within the scope of the proviso in question. There has been considerable controversy as to the meaning of the word " finding " in the second proviso to section 34(3). This question came up before this court for consideration in Income-tax Officer, A-ward, Sitapur v. Murlidhar Bhagwan Das. This is what this court observed in that case : " The expression 'finding or direction', the argument proceeds, is wide enough to take in at any rate a finding that is necessary to dispose of the appeal or direction which Appellate Assistant Commissioners have in practice been issuing in respect of assessments of the years other than those before them i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing' ". The same view was taken by this court in N. KT. Sivalingam Chettiar v. Commissioner of Income-tax. Therein this court ruled that a finding or direction by an appellate authority in an order relating to the assessment of one year does not warrant the avoidance of the bar of limitation under section 34 of the Indian Income-tax Act, 1922, against initiation of proceedings for assessment for another year. A finding within the second proviso to section 34(3) must be a finding for giving relief in respect of the assessment for the year in question. A finding may only be that which was necessary for the disposal of an appeal in respect of an assessment of a particular year. The law on the question was elaborately examined by this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision. Further, that person should be intimately connected with the proceedings in which the finding was given. The same view was taken in other cases referred to earlier. In the instant case Pullaiah was the dominant partner of the firm as found by the Tribunal. He had 8as. share in the firm. He was the original owner of the firm. He was not only interested in his own assessment, he was also interested in the assessment of the firm. The partners of Pullaiah were intimately connected with him. Hence, we are clearly of the opinion that they are " persons " coming within the scope of the second proviso to section 34(3). It may be n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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