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TMI Blog1968 (11) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 direction the Income-tax Officer reopened the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 direction which is not necessary for that purpose. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act and a direction such as the one made by the Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that when the Appellate Assistant Commissioner made his direction, the partners of the firm had no opportunity of being heard. So we reach the conclusion that the Tribunal was right in taking the view that the third Explanation appearing under section 153(3) of the new Act on which the department depended could be of no assistance to it, although we reach that conclusion for reasons other than those on which the Tribunal depended. Our answers to the two questions before us should therefore be in favour of the assessee. Our answer to the first question is that the Appellate Tribunal was right in law in holding that the direction of the Appellate Assistant Commissioner in the firm's appeal was an invalid direction and that it conferred no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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