Law:

Section:

JUDGMENT Bishan Narain, J.-The Income-tax Officer, Amritsar (Ward A), on July 25, 1958, issued a notice under section 34, Income-tax Act, 1922, to Messrs. Shahzada Nand and Sons (Hindu undivided family) on the ground that he had reason to believe that the firm's income for 1945-46 (year ending March 31, 1946) had escaped assessment or had been underassessed. It is stated in this notice that it was being issued after obtaining the necessary satisfaction of the Central Board of Revenue. The firm, through Sahib Dyal and the three sons of Sahib Dyal, as partners of the firm, has filed this petition under article 226 of the Constitution challenging its validity on various grounds. The facts leading to this petition are not in dispute. The firm carried on its business within the jurisdiction of the Income-tax Officer (C-Ward). Its case was transferred on March 18, 1954, to Ward-A by the Income-tax Commissioner. The Income-tax Officer (A-Ward) on March 26, 1954, issued notice under section 34 of the Income-tax Act to the firm, through Sahib Dyal, on the ground that he had reason to believe that its income for 1945-46 had escaped assessment. This notice was issued after obtaining the necessary certificate of the Commissioner of Income-tax, Simla. This notice was contested by the firm. The Income-tax Officer by order dated March 29, 1955, added Rs. 3,62,000 to the income, originally assessed after rejecting all the objections raised by the firm. The firm appealed and the Appellate Assistant Commissioner accepted the appeal and annulled the assessment on the ground that the notice was served oh the firm after expiry of the period fixed in section 34 of the Income-tax Act. The Appellate Assistant Commissioner, however, decided also the other objections on merits raised by it but they were decided against the firm. Both sides appealed to the Appellate Tribunal. The appeal filed by the income-tax authorities was dismissed by the Appellate Tribunal because in its opinion the notice was served after expiry of limitation. The appeal of the firm was, however, accepted and the findings given by the Appellate Assistant Commissioner on merits were set aside on the ground that…

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