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Issues Involved:
1. Validity of proceedings initiated under Section 147(b) read with Section 150 and Explanation 3 to Section 153 of the Income-tax Act, 1961. 2. Whether the order dated January 31, 1965, filing the proceeding amounted to an order of assessment. 3. Whether the firm, M/s. Manaklal Porwal, was given an opportunity of being heard. Issue-wise Detailed Analysis: 1. Validity of proceedings initiated under Section 147(b) read with Section 150 and Explanation 3 to Section 153 of the Income-tax Act, 1961: The Tribunal had to decide whether the reopening of the assessment under Section 147(b) was valid and within limitation. The original return for the assessment year 1961-62 was filed on August 29, 1962, with an order passed on January 31, 1965, stating the firm was not genuine. The Tribunal of the Bombay Bench later held the firm was genuine. Based on the AAC's order dated March 13, 1969, the ITO issued a notice under Section 148 and reopened the assessment under Section 147(b). The Tribunal found that the reopening was based on information from the AAC's order, which constituted "information" within the meaning of Section 147(b). The Tribunal also opined that Section 150 and Explanation 3 to Section 153 were applicable, saving the bar of limitation. The Tribunal's decision was supported by precedents such as CIT v. Ayodhyakumari and Kalyanji Mavji & Co. v. CIT, which clarified that information could be derived from judicial decisions or external sources. 2. Whether the order dated January 31, 1965, filing the proceeding amounted to an order of assessment: The Tribunal had to determine if the order dated January 31, 1965, constituted an order of assessment. The assessee argued that the order was not a determination order as the procedure under Section 143 was not followed. The Tribunal, however, held that an order filing the proceedings is an order of assessment, relying on cases like Sivalingam Chettiar v. CIT and M. CT. Muthuraman v. CIT. These cases established that an order terminating assessment proceedings, even if not communicated, is valid and final. 3. Whether the firm, M/s. Manaklal Porwal, was given an opportunity of being heard: The Tribunal addressed the contention that the firm was not given an opportunity of being heard before the AAC's order dated March 13, 1969. It was noted that Shri Manaklal Porwal, a major partner, was heard, which was deemed sufficient. The Tribunal held that the opportunity given to the partner was tantamount to giving an opportunity to the firm, as per Sections 189 and 283 of the Act. The Tribunal also repelled the argument that the firm's dissolution negated the opportunity of hearing, stating that notice to a partner is notice to the firm. Conclusion: All three questions referred to the court were answered in the affirmative, in favor of the Revenue and against the assessee-firm. The Tribunal's decisions on the validity of the proceedings under Section 147(b), the nature of the order dated January 31, 1965, and the opportunity of being heard were upheld. The parties were directed to bear their own costs.
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