Law:

Section:

Section 22(2) read with section 25(1) of the Indian income-tax act, 1922 [corresponding to section 139(2) read with section 176(1) of the income-tax act, 1961]-Return of income-Notice-Premature assessment of a dissolved firm-Assessee-firm, dissolved on 18-4-1956, had filed return for assessment year 1956-57 pertaining to accounting period ended on 21-6-1955-ITO issued notice to assessee on 20-12-1956 to file return for assessment year 1957-58 pertaining to accounting period from 22-6-1955 to 18-4-1956 (date of dissolution)-Whether notice issued before commencement of assessment year 1957-58 and consequent assessment framed thereunder valid-Held, yes Facts The assessee-firm had filed its return for the assessment year 1956-57 pertaining to the accounting period ended on 21-6-1955. The firm was dissolved on 18-4-1956. For making a premature assessment under section 25(1) of the 1922 Act [corresponding to section 176(1) of the 1961 Act] for the assessment year 1957-58 (pertaining to the accounting period from 22-6-1955 to 18-4-1956 when the firm was dissolved), the ITO issued on 20-12-1956 a notice to the assessee under section 22(2) of the Indian Income-tax Act, 1922 [corresponding to section 139(2) of the 1961 Act]. The assessee consequently filed a return on 18-3-1957 showing an estimated income of Rs. 1,40,000, and paid the provisional tax determined under section 23B. On 9-4-1958, the assessee filed a revised return for the assessment year 1957-58 showing an income of Rs. 1,82,249. The ITO eventually completed the assessment on 28-2-1962 determining the total income at Rs. 2,29,609. In his appeal before the A AC, the assessee challenged the validity of (j) the ITO's notice dated 20-12-1956 because it had been issued before the commencement of the assessment year 1957-58; and (ii) the resultant assessment made thereunder. The AAC, however, set aside the ITO's order and directed him to start the proceedings for the assessment year 1957-58 de novo. The AAC also held that, since the assessment had been set aside, the question of treating the firm as unregistered did not arise. The Tribunal upheld the AAC's action. On reference : Held 1.On a harmonious…

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