Law:

Section:

Section 153(3) of the Income-tax Act, 1961 - Assessment - Time limit for completion of - Whether conjoint effect of sections 147 and 153(2) being that where income has escaped assessment limitation period is fixed for initiating reassessment proceedings and it limitation placed by section 153(2) disappears, section 153(3) comes into play and, thereafter, no Question of limitation would arise - Held, yes Section 147 of the Income-tax Act, 1961 - Reassessment - General - Whether where it is conceded that there has been an escapement of income and bar of limitation has been listed, distinction between sub-sections (a) and (b) of section 147 become irrelevant and ITO's order cannot be invalidated even if it is passed under wrong sub-section - Held, yes Section 34 of the Indian Income-tax Act, 1922 [corresponding to section 147 of the Income-tax Act, 1961] - Assessee S, was an individual, being legal heir of late J - For assessment year 1953-54 - J & Sons was originally assessed in status of HUF - In assessment proceeding 3, as karta of HUF, contended that certain deemed dividend belonged to J as 'individual' as shares stood in his name and, therefore, HUF should not be assessed on such sum - ITO rejected contentions of J but AAC directed ITO by order to take action under section 34 for assessing that deemed dividend income in hands of registered shareholder - 110 initiated proceedings under section 34(3) against late J, who was dead by that time and no return was filed - Pending proceedings ITO with approval of CBDT initiated proceeding under section 147 and issued notice to S, legal heir of late 3 'individual' - Whether AAC was competent to give directions to assess 3 as individual so as to lift bar of section 34(1), second proviso - Held, yes - Whether in view of section 153(3), action under section 147(b) had not become barred at point of time when AAC gave direction - Held, yes - Whether where action under section 34(1)(a) had been taken in name of deceased and during its pendency a proceeding under section 147 was initiated, ITO was entitled to treat first proceeding as non est as it was against a dead person and, therefore, proceeding under section 147 was…

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