Law:

Section:

Section 153 of the Income-tax Act, 1961 (Corresponding to section 34(3) of the Indian Income-Tax Act, 1922) - Income escaping assessment - Time limit for completion of reassessment - Assessment year 1945-46 - Whether effect of second proviso to section 34(3) of 1922 Act is to abrogate or do away with period of limitation prescribed in section in those cases where ITO takes action in consequence of a finding or direction given in an order made under sections 31, 33, 33A, 33B, 66 or 66A of 1922 Act - Held, yes - Whether, position, therefore, is that when action is taken in pursuance of a finding or direction given by one of various authorities indicated in said proviso, ITO can take action at any time - Held, yes FACTS For the assessment year 1946-47, the petitioner-assessee was assessed under section 23(3) of 1922 Act. Subsequently on 31-3-1956, the reassessed him, in which certain amount was included which the assessee alleged he had taken on loan from 'M', a firm carrying on business in Rajasthan, but which the ITO held was income from undisclosed sources. On appeal, the assessee contended that the ITO had not judicially considered the evidence which he had tendered to show that the sum really represented a loan that he had taken from firm 'M'. Alternatively he contended that in any event the entire sum of Rs. 31,000 would not come in for assessment for the assessment year 1946-47, as his previous year relevant for the assessment year 1946-47, ended on 5-11-1945, and, it had been held that for assessing the income from other sources the previous year to be adopted is the financial year unless the assessee has any other previous year in respect of the same. The AAC found that a sum of Rs. 20,000 out of Rs. 31,000 came in as credits on 25-1-1945, and 8-3-1945, and that, therefore, the amount of Rs. 20,000, could not be assessed in the assessment year 1946-47. He, therefore, ordered that this sum of Rs. 20,000 should be deleted from the income for that year. The assessment for 1945-46 had been completed by the ITO on 31-12-1945. But, acting on what the AAC had said, the ITO issued a notice dated 6-2-1957, under section 34 of 1922 Act, calling upon the petitioner…

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