Law:

Section:

Section 153, read with sections 147 and 148 of the Income-tax Act, 1961 [Corresponding to section 34(3), read with section 34(1) of the Indian Income-tax Act, 1922] - Income escaping assessment - Time limit for completion of reassessment - Assessment year 1948-49 - Assessee-firm was originally assessed on 24-4-1950 - Subsequently, ITO received information that assessee had received a sum by telegraphic transfer from 'N' Ltd. on 3-6-1947 on sale of 826 bales of cotton - Accordingly, ITO took view that there was case for reopening assessment and issued a notice to assessee on 23-3-1957 - Thereafter a reassessment order was passed on 18-3-1958, a copy of which was received by assessee on 25-3-1958 - AAC, on appeal, overruled objection of assessee that reassessment was barred and that ITO had erred in holding that transaction of sale of 826 bales of cotton was not a transaction of 'H' but of assessee itself - Whether impugned notice issued on 18-3-1957 and served on assessee on 23-3-1957 and reassessment consequent thereof were not governed by unamended provisions of section 34(3) as it stood prior to 1-4-1956, therefore, there was no question of assessment made in instant case being barred by time on ground of not having been made within period of one year from date of service of notice - Held, yes FACTS The assessee was a partnership firm consisting of three equal partners. One of the partners died subsequently and the firm was dissolved on his death. The original assessment was completed by the ITO on 24-4-1950, which was after the dissolution of the firm. The total income was determined at Rs. 3,600. The application under section 26A made by the assessee was granted and its registration was renewed for the assessment year in question. Subsequently, the ITO received information that the assessee-firm had received a sum by telegraphic transfer from 'N' Ltd. on the 3-6-1947. The preliminary enquiry made by the ITO on receipt of this information showed that the said amount represented a part of the total sale proceeds of Rs. 1,76,444 in respect of 826 bales of cotton sold by the assessee-firm to the 'N' Ltd. and 'R' Ltd. In the assessee's account books, which had…

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