Law:

Section:

Section 127 of the Income-tax Act, 1961 [Corresponding to section 5(7A) of the Indian Income-tax Act, 1922] - Income-tax authorities - Power to transfer cases - Assessment year 1949-50 - Whether it is not incumbent upon income-tax authorities to offer an opportunity to an assessee of being heard before his case is transferred - Held, yes Section 148 of the Income-tax Act, 1961 [Corresponding to section 34 of the Indian Income-tax Act, 1922] - Income escaping assessment - Issue of notice for - Assessment year 1949-50 - Second petitioner and third petitioner were partners of a firm which was dissolved - A notice under section 34 of Act 1922 was served on petitioner on ground that income of dissolved firm was under assessed - Subsequent to that notice it was found that there was another AOP in which petitioners were also members, it had also not filed return of income, therefore, notice under section 148 was issued to petitioners on behalf of AOP - Whether subsequent discovery of facts could not invalidate notice under section 34 of 1922 Act or section 148 which was a valid notice - Held, yes - Whether therefore notice initiating re-assessment proceedings in respect of dissolved firm and association of persons could not be assailed - Held, yes FACTS Second petitioner and third petitioners were partners of the firm, "S". The firm was engaged in whole sale business of clothes. The head office of the firm was at the place "B" and a branch office at "K". On 1-7-1949 the firm was dissolved. After dissolution of firm it was assessed as unregistered firm at "B". Notice under section 34 of Act 1922 was served upon the second and third petitioners as partners of the dissolved firm stating that the income of the firm for the relevant assessment year had been under assessed and that the partners were jointly and severally liable to assessment under section 44 in respect of the income of the firm. In the mean time the case of the firm was transferred from Commissionerate jurisdiction at place "B" to "K". After the proceedings under section 34 in respect of the firm had been commenced, the department came into information that another group of 18 persons, which included second…

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