Law:

Section:

Section 150 of the Income-tax Act, 1961 [Corresponding to section 34(3) of the Indian Income-tax Act, 1922] - Income-escaping assessment - In pursuance of an order on appeal etc. - Assessment years 1950-51 to 1952-53 - Whether second proviso to section 34(3) of Act, 1922 is violative of article 14 - Held, no - Partial partition between assessee's branch and his uncle did not find favour with ITO - AAC and Tribunal, however, held a contrary view - In all proceedings, uncle was representing joint family - Whether it could not be said that uncle's action at earlier stages did not have anything to do with assessee or his rights and, therefore, there was sufficient nexus between earlier proceeding and assessee himself - Held, yes - Whether, therefore, finding in earlier proceeding could form basis for reassessment of assessee and revenue would be entitled to exercise jurisdiction under second proviso to section 34(3) of Act, 1922 - Held, yes FACTS A Hindu undivided family consisting of the assessee and his son as one branch and his uncle as the other suffered a partition by which one of the assets of the joint family was divided. For the years following the partial partition as above, each branch filed their individual returns of income. In particular, the assessee filed voluntarily such returns apparently under section 22, for the three years. The revenue did not consider the returns so filed but initiated proceedings against the assessee under section 34(1)(a) of the Act 1922 and assessed the assessee accordingly. In the first instance, the ITO rejected the contentions of the assessee that section 34(1)(a) could not be invoked, when no orders were made on his voluntary returns. The appeals that the assessee filed before the AAC and the Tribunal having failed, a reference was made by the Tribunal to this court under section 66(1) of the Act 1922 and the question referred was whether the reassessment under section 34 for all the assessment years was invalid. The High Court held on such a reference that the purported reassessment under section 34 of the Act was invalid. With due deference to the decision of the High Court, the Tribunal cancelled the assessment for…

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