1973 (3) TMI 3 - SC - Income Tax

Whether the assessments made on the firms are valid in law - assessments on the firm were saved from the bar of limitation by the second proviso to s. 34(3) - hence assessments are valid - set aside the order of the High Court - question referred are answered in the affirmative and in favour of the revenue

Summary

Issues:
1. Validity of assessments made on the firms for the assessment years 1954-55, 1955-56, and 1956-57.
2. Interpretation of the second proviso to section 34(3) of the Indian Income-tax Act, 1922.

Detailed Analysis:
1. The judgment involves appeals by special leave arising from a common judgment of the Andhra Pradesh High Court regarding the validity of assessments made on the firms for the assessment years 1954-55, 1955-56, and 1956-57. The main question was whether the assessments were valid in law. The Appellate Assistant Commissioner had concluded that the firm in question was genuine, overturning the Income-tax Officer's decision to assess the individual. The High Court later ruled that the assessments were barred by time, which led to appeals brought by the Commissioner of Income-tax.

2. The judgment delves into the interpretation of the second proviso to section 34(3) of the Income-tax Act, which deals with income escaping assessment. The court examined whether the case fell within the scope of the proviso, which requires that the order made must be under specific sections and to give effect to a finding or direction contained in an order under those sections. The court analyzed previous cases to determine the meaning of "finding" in the context of the proviso, emphasizing that the finding must be necessary for deciding the appeal before the authority. Additionally, the court discussed the requirement that the person affected by the finding should be intimately connected with the proceedings.

In conclusion, the Supreme Court set aside the High Court's order, vacated the answer given by the High Court, and answered the question referred to in the affirmative and in favor of the revenue. The appeals were allowed, and the appellant was awarded costs from the respondent.