Law:

Section:

Section 254, read with sections 143 and 153 of the Income-tax Act, 1961 [Corresponding to Section 33(4), read with sections 23(3) and 34(4) of the Income-tax Act, 1922] - Income escaping assessment - Time limit for completion of assessment - Assessment year 1961-62 - Assessee filed return on 8-3-1962 and ITO passed assessment orders under section 143(3) - By its order dated 20-7-1966, Tribunal held assessment order as invalid because it ought to have been completed under 1922 Act - It accordingly restored case back to ITO for fresh assessment under 1922 Act - Whether Tribunal having passed its order after expiry of 4 years prescribed by Section 34(3) of 1922 Act for making an assessment order, could not direct that ITO should proceed from return stage and make a fresh assessment according to law under old Act - Held, yes FACTS For the assessment year 1961-62, the assessee filed his return declaring income from remuneration as director and fee for attending meetings of board of directors. The HUF of which he was a karta, filed its return in respect of interest income form deposits and dividends from certain shares. The assessment proceedings started in assessee's case under section 23(2) of the Indian Income-tax Act, 1922, but were not finalised. The successor - ITO, However, again started assessment proceedings under section 143(3) of the new 1961 Act, and completed assessment by including in addition to the income declared by HUF., director's remuneration and fees in HUF's hands. On second appeal, the Tribunal held that the assessment was invalid because it was made under the new Act. It accordingly set aside the orders passed by the authorities below and remanded the case back to the ITO with the direction to proceed from the return stage and make a fresh assessment under the 1922 Act. On reference: HELD As the return was filed before 31-3-1962, the proceedings for assessment had to be completed under section 297(2)(a) of the Income-tax Act, 1961, under the Indian Income-tax Act of 1922. Under section 34(3) of that Act the assessment had to be completed within four years from the end of the year in which the income, profits or gains were first assessable. In…

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