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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 ..... other concern called Cine Syndicate Traders (P.) Ltd. When the income of the partnership firm was assessed in respect of the assessment year 1950-51 that sum of Rs. 1,20,000 which had been so invested by the partners was treated 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depends upon the answer to the first. If the first question has to be answered in favour of the assessee, the second also should be answered in the same way. The view taken by the Tribunal was that in the order made by the Appellate 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, provided such other person was given an opportunity of being heard before the said order was passed. " Since it is clear that, if the reassessment made by the Income-tax Officer in the case of the assessee before us was made to give 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, maint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner who made the direction on which the Income-tax Officer depended did not record a finding that the sum of Rs. 1,20,000 which was excluded from the total income of the firm was the income of the three partners. It is also uncontroverted 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 fav ..... X X X X Extracts X X X X X X X X Extracts X X X X
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