Law:

Section:

Section 150 of Income-tax Act, 1961 [Corresponding to section 34 of Indian Income-tax Act, 1922] - Income escaping assessment - In pursuance of an order under appeal - Assessment years 1950-51 and 1951-52 - Partnership firm filed return in status of AOP - Return was disposed of by ITO by noting in his order sheet N.A. - Subsequently ITO made assessment in status of unregistered firm - AAC set aside assessment - Thereafter, ITO initiated fresh reassessment proceedings under section 34 of 1922 Act - Whether return filed in status of AOP could not be taken to be returns filed by partnership firm and, thus, as there was failure to file returns by partnership firm, reassessment proceedings under section 34 were valid - Held, yes FACTS The assessee was an unregistered firm. On 1-10-1952, a return was submitted by the firm claiming its status as that of an 'AOP'. The return was disposed of by the ITO by noting in his order sheet 'N.A.'. Thereafter a notice under section 34 was issued. The ITO completed the assessment in the status of an 'unregistered firm' and included the income from two other bus lines. When the appeal was pending before the AAC, the Sub-Court held that the firm was an entity consisting of five persons different from said two bus lines. Following the finding of the sub-court the AAC set aside the assessment order and directed the ITO to make fresh assessment. Thereafter the ITO issued notice under section 34 in the name of the firm and completed the assessment in the status of unregistered firm. The assessee questioned the validity of the assessment but AAC dismissed the appeal. The Tribunal affirmed the order of the AAC holding that the returns that had been submitted on 1-10-1952, were not by the firm but by an "association of persons" and that the returns filed on that date could not be taken to be the returns filed by the partnership firm. In that view it held that there had been a failure to file returns by the partnership firm and the case fell under section 34(1) of the 1922 Act. On reference: HELD There can be no doubt that under the scheme of the Income-tax Act "association of persons" and "firm" are treated as separate units of assessment…

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