Law: Income Tax Act, 1961

Section: 23A,31,34,42

Income-tax---Reassessment---Limitation---Exception---Reassessment on assessee or any person pursuant to a direction in appeal---"Or any person", scope of expression---Reassessment made on wholly owned Indian subsidiary as agent of non-resident holding company in respect of dividends from Indian subsidiary---Appeal by Indian subsidiary---Direction by A.A.C. to make assessment afresh on holding company---Proper---Non-resident holding company is "any person" intimately connected with assessment proceedings-¬Reassessment notices issued to holding company---Not barred by limitation-¬Indian Income-tax Act, 1922, Ss.23-A, 31, 34 & 42. The second proviso to subsection (3) of section 34 of the Indian Income-tax Act, 1922, lifts the bar of limitation when, inter alia, an assessment or reassessment is made on an assessee or any person in consequence of or to give effect to any finding or direction contained in an order under section 31. If the person against whom notices are issued under section 34 of the Indian Income-tax Act, 1922, pursuant to a direction given by the Appellate Assistant Commissioner under section 31, is a person intimately connected with the original assessee, the period of limitation will not apply to a notice issued against him under section 34. He would be covered by the phrase "assessee or any other person" under the second proviso to section 34(3). Whether the person is so connected will depend on the facts of each case. The only reason why the words "any person" are read down to exclude total strangers is to prevent infringement of Article 14 of the Constitution of India. Under subsection (4) of section 31, where, as the result of an appeal any changes are made in the assessment of a firm or association of persons or a new assessment of a firm or association of person is ordered to be made, the Appellate Assistant Commissioner may authorise the Income-tax Officer to amend accordingly any assessment made on any partner of the firm or any member of the association. This provision under section 31(4) cannot be read as limiting the scope of the words "any person" in the second proviso to section 34(3) as referring only to those persons who are…

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