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Issues involved:
The legality of notice issued u/s 148 of the Income-tax Act, 1961, and the time limitation for assessment. Summary: The High Court of ALLAHABAD was tasked with determining the legality of a notice issued u/s 148 of the Income-tax Act, 1961, to M/s. Goel Brothers for the assessment years 1958-59, 1959-60, and 1960-61. The Income Tax Officer (ITO) had included the income of M/s. Goel Brothers in the assessment of M/s. Kanodia Brothers, leading to protective assessments on M/s. Goel Brothers. The Appellate Assistant Commissioner (AAC) annulled the assessments on M/s. Goel Brothers, which was upheld by the Tribunal. Subsequently, the ITO issued notices u/s 148 to M/s. Goel Brothers for escaped income assessment, which were challenged by the assessee. The Tribunal held that the notices were time-barred, leading to the current legal scrutiny. The crux of the matter revolved around the interpretation of sections 147, 148, 149, 150, and 153 of the Income-tax Act. The department argued that the notices were issued in consequence of the Tribunal's order in M/s. Kanodia Brothers' case, thus falling under s. 150(1) and not restricted by time limitations. However, the Court found that the Tribunal's order did not direct the assessment of M/s. Goel Brothers' income in their hands, rendering the notices invalid. Additionally, as the AAC had annulled the assessments on M/s. Goel Brothers without further departmental action, s. 150(1) did not apply, making the notice issuance time-barred. In conclusion, the Court ruled in favor of the assessee, holding that the notices issued u/s 148 were indeed barred by time, citing a similar precedent in Gupta Traders v. CIT. The department's contentions were dismissed, and the assessee was awarded costs amounting to Rs. 250.
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