Law:

Section:

Section 147, read with section 153 of the Income-tax Act, 1961 [Corresponding to sections 34(1) read with section 34(3) of the Indian Income-tax Act, 1922] - Income escaping assessment - General - Assessment years 1951-52 to 1953-54 - 'R' one of members of assessee, HUF was appointed as managing director of a company - For assessment year 1943-44, assessee claimed that remuneration earned by that member from company was his personal income and could not be included in income of HUF - Dispute went upto High Court where it was held that remuneration earned as managing director could not be included in income of assessee - On basis of said decision ITO excluded remuneration amount for assessing income of assessee in relevant assessment years - However in mean time dispute relating to assessment year 1943-44 went to Supreme Court, where it was held that remuneration received by "R" should be assessed in his hand of assessee - HUF - On basis of Supreme Court decision ITO reopened assessment for relevant assessment years under section 34(1) of Act 1922 after a delay between 4 years to 8 years from date of original assessment - Whether since ITO had clearly, stated in original assessment that income of "R" had not been included in assessment of HUF in view of decision of High Court, it was clear that escapement, if any had been taken place due to decision of High Court and not due to any omission on part of assessee - Held, yes - Whether therefore condition necessary for invoking provisions of section 34(1)(a) of Act 1922 was not satisfied in instant case - Held, yes FACTS The assessee was a Hindu undivided family consisting of two brothers, B and R and their families. A limited company was incorporated some time in 1930. Under the articles of association of the aforesaid company, R was appointed the first managing director of the company at an annual remuneration or a commission whichever might be higher. Until the assessment year 1943-44 the assessee HUF included the remuneration of R as managing director in its total income and was assessed accordingly. For the assessment year 1943-44 it was contended by the assessee that the remuneration earned by R was his…

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