Law:

Section:

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34 of Indian Income-tax Act, 1922] - Income escaping assessment - General - Assessment years 1948-49 and 1949-50 -Assessee, a member of HUF, was also a partner in a firm Income from firm was so far assessed in assessee's hand - But during relevant year it was treated as income of HUF against which HUF filed reference which was still pending - On other hand assessee had already filed returns for these years - However, ITO issued notices under 34(1)(a) for filing returns - Assessee filed returns in protest - AAC while upholding ITO's action under section 34, directed him to proceed under section 34(1)(b) - Tribunal confirmed AAC's order - Whether when a return was filed but no assessment made, it could not be said that income escaped assessment so as to justify action under section 34 - Held, yes - Whether assessee had already submitted his returns, reassessment proceedings ignoring these, were void, and AAC's direction was neither lawful nor valid - Held, yes - Whether direction given by AAC while setting aside order of assessment that ITO should invoke provision of section 34(1)(b) and action of ITO in reassessing income was neither lawful nor valid - Held, yes FACTS The assessee was a number of an HUF. He was also partner of a firm. Initially his share of income from the firm was assessed in his individual capacity. However, for tears under consideration the income was treated as income of the HUF against which the HUF filed reference application which was still pending in the High Court. Though the assessee had already filed in individual returns for the relevant years, the ITO issued notice under section 34(1)(a) for reassessment. The assessee submitted returns under protest. In the assessment of the assessee the ITO treated above income firm the firm as the assessee's individual income. On appeal, the AAC while upholding the ITO's action under section 34, was of the view that the case came under section 34(1)(b). However, the AAC set aside orders of ITO for recovering the income. On second appeal, the Tribunal held that the appeals had become otiose, as the AAC had vacated the assessments…

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