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Issues:
1. Inclusion of dividend income in fresh assessment under Income-tax Act. 2. Limitation period for assessments under section 34(3) of the Income-tax Act. Issue 1: Inclusion of Dividend Income in Fresh Assessment: The case involved questions regarding the Income-tax Officer's authority to include dividend income deemed received by the assessee under section 23A orders in a fresh assessment. The Tribunal referred two questions of law, one being whether the Income-tax Officer could include such dividend income in a fresh assessment. The assessee owned shares in a company that declared dividends, and the Income-tax Officer passed section 23A orders deeming the assessee to have received larger dividends. The Appellate Assistant Commissioner set aside the original assessments and remanded for fresh assessment. The Income-tax Officer, in reassessing, included the deemed dividend income, leading to appeals by the assessee. The High Court held that the Income-tax Officer, when reassessing, had the authority to consider section 23A orders and assess the assessee on the larger income, not bound by findings in the original assessment. The Appellate Assistant Commissioner's directions empowered the Income-tax Officer to reassess based on the larger income, even if the original assessment findings differed. Issue 2: Limitation Period for Assessments: The second issue revolved around the limitation period for assessments under section 34(3) of the Income-tax Act. Section 34(3) sets a four-year limit for assessments, subject to exceptions. The High Court noted that the reassessments in this case were made after the four-year period from the end of the assessment years. However, the reassessments were done in compliance with the Appellate Assistant Commissioner's orders under section 31, which directed reassessment. The second proviso to section 34(3) exempts reassessments made in pursuance of section 31 orders from the time limit. As all reassessments were made following the Appellate Assistant Commissioner's directions, they were not barred by the time limit. The Court emphasized that since the reassessments were in line with the directions given, they were not subject to the time restriction under section 34(3), ensuring the validity of the reassessment orders. In conclusion, the High Court upheld the Income-tax Officer's authority to include deemed dividend income in a fresh assessment and ruled that the reassessment orders were valid despite being made after the four-year limitation period due to compliance with the Appellate Assistant Commissioner's directions. The judgment clarified the scope of reassessment powers and the exceptions to the time limit under the Income-tax Act.
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