Law:

Section:

Section 153 read with sections 149 and 150 of the Income-tax Act, 1961 - Assessment - Time limit for completion of - Assessment years 1957-58 to 1958-59 - Whether mere exclusion of an income from one assessment by an appellate authority would empower ITO to reopen assessment for a different year under Explanation 2 - Held, yes - Whether to such a case section 149 is not applicable and consequently time limit for issue of notices and prior sanction of Board or Commissioner do not apply to an assessment or reassessment made under section 150(1) - Held, yes FACTS In consequence of information in his possession that the assessee actually paid Rs. 38,000 for the purchase of two vehicles as against Rs. 25,000 shown by him. The ITO, after due service of notices on the assessee, reopened the assessment for 1959-60, under section 147 and revised the assessment by adding Rs. 13,000 to the income assessed originally, as he was satisfied that the assessee had not satisfactorily explained the source of the unexplained investment. The legality of the addition made in the reassessment was challenged before the AAC in first appeal. The AAC deleted the addition after giving the finding and directions that the unexplained investment was during the accounting years 1956-57 and 1957-58. The relevant assessment years for which the sum should be brought to tax were 1957-58 and 1958-59. In consequence of the finding and to give effect to the direction contained in the order passed by the AAC in the appeal relating to the assessment year 1959-60, the ITO issued notices dated 20-6-1969, to the assessee, and completed the assessment. The assessee filed writ petition to quash the reassessment contending that (1) the notice and assessments were time-barred and bad in law; (2) the finding and direction given by the AAC in the appeal relating to the assessment year 1959-60 to reassess the unexplained investment in the assessment years 1957-58 and 1958-59 were without jurisdiction and void; (3) Explanation (2) to section 153(3) was not applicable to the facts of the case, and even assuming that it was applicable, then the Explanation was ultra vires of section 251(1) and the AAC had no…

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