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TMI Blog1980 (6) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... nd ITO, Salaries Branch on the income from salary from M/s. Gorakhram Gokuldas. Thus, the ITO came to the conclusion that the profits of M/s. Ruia Chemical Industries were never assessed independently as a firm though the firm was incorporated and registered with the Registrar of Firms. During the relevant accounting year the assessee had given a loan of Rs. 90,000 to M/s. Gorakhram Gokuldas and it was claimed by the assessee that the amount came from his past savings. The ITO estimated the past savings to be Rs. 40,000 and treated Rs. 50,000 therefrom as income from undisclosed sources. He taxed the assessee on the salary income of Rs. 21,000. The result was that the assessee was assessed under s.147(a) for the asst. yr. 1962-63 on Rs. 71,000. 3. The matter was taken up in appeal before the AAC, before whom it was argued that the ITO erred in reopening the assessment under s. 147. It was contended in the grounds of appeal that the assessee filed the return of income for the asst. yr. 1962-63 within time and that the assessment was not finalised within the stipulated time limit. It was, therefore, argued before the AAC that it could not be said that the assessee's income had esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated the assessee strongly relied upon the Supreme Court decision in the case of S. Raman Chettiar (1965) 55 ITR 630 (SC) and argued that the non disposal of the original return of income was a complete bar to the initiation of proceedings under s. 148. He further pointed out that there was no omission on the part of the assessee to file his return of income and there was no non disclosure of material facts necessary for an assessment which could have given rise to a proper action under s. 147 (a). He then relied upon the Calcutta High Court decision in the case of Surajmal Ganeshram (1979) 120 ITR 715 (Cal) in support of his plea that he could take up the question of validity of the assessment proceedings under s. 147 even in an appeal against the exparte order under s. 147 even in an appeal against the expert order under s. 144. On merits, he contended that there was no justification for sustaining the addition of Rs. 40,000 and also for taxing the salary income of Rs. 21,000. 6. As for penalty, which was levied by the IAC on the strength of the additions made in the assessment order, he pointed out that there was absolutely no justification for sustaining any penalty. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de under other section or provisions of the IT Act. A specific and separate provision for appeals against such assessment or reassessment under s. 147 has been provided for. Reference may be made, in this connection to the provisions of s. 246 (e)In the Indian IT Act, 1922 there was no separate provision for appeal from an assessment or reassessment under s. 34 of the IT Act In an assessment or reassessment under s. 147 the procedure or machinery for making an assessment under s. 143 or making a best judgement under s. 144 is to be followed. Nevertheless for the purpose of s. 246 an assessment made in a proceedings under s. 147 has been treated as a separate category and has not been equated with an assessment made an accordance with the provisions of s. 143 or s. 144 simpliciter. 9. Sec 246 (e) does not limit the scope ambit of an appeal filed by the assessee. Therefore where a beset judgment assessment is made under s. 147 the appeal from such assessment is made reassessment would not be limited merely to the objection as to the amount of the income assessed or to the tax determined, but would extended to the question of reopening or initiation of assessment proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim for partition and treated the returns filed by the assessee as returns filed by the family and assessed the family On appeal the AAC held that there was a valid partition between the assessee on the one hand and his son representing the smaller family in the other He therefore recorded the partition under s. 25A of the Indian IT Act, 1922 and set aside the assessments observing that the income was required to be considered in the hands of the separate coparceners Thereafter the assessee, in his individual capacity filed returns for the asst yr. 1950-51 and 1951-52 on 3rd Feb., 1955 He filed he return of income for the asst. yr. 1952-53 in 30th June, 1956. The ITO however issued notice under s. 34 for the asst. yrs. 1950-51, 1951-52 and 1952-53 only on 2nd March, 1957 In compliance with these notices, the assessee submitted returns under protest and the ITO passed order on 31st March, 1957 assessing the income of the assessee or those years. It was held by the Supreme Court that the notices issued under s. 34 could not be issued against the assessee in his individual capacity unless the returns which had already been filed by him were disposed of and assessments made pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, held by the Supreme Court that the assessment made under s. 34 on 30th June, 1953 was invalid. Now it must be stated here that for the asst. yr. 1944-45, the assessee had filed a valid return in Sept., 1958. The ITO issued notice under s. 34 for the second time only in February 1953 i.e. long after the statutory time limit for completing the original assessment order for the asst. yr. 1944-45 had expired. In other words the time limit for acting upon the return of income filed in September 1948 had run out when the notice under s. 34 was issued in February 1953. Here also the Supreme Court struck down the proceedings under s. 34 even though the proceedings under s. 34 were taken after the statutory time limit for acting on the valid return filed by the assessee had run out Therefore, the decision relied upon by the Deptl. Rep. In the case of Jawaharlal Maniram (1969) 72 ITR 78 (All) runs directly contrary to the above Supreme Court decisions. We find that in the Allahabad High Court decision the Supreme Court decision, (1965) 55 ITR 630 (SC) was not notified. The other Supreme Court decision, also are contrary to the Allahabad High Court decision In the Allahabad High Court dec ..... 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