Law:

Section:

Section 3 of the Income-tax Act, 1961 [Corresponding to section 2(11) of the Indian Income-tax Act, 1922] - Previous year - Assessment year 1944-45 - Whether only possible way in which undisclosed income can be assessed or re-assessed is to make assessment during ordinary financial year - Held, yes Section 147 of the Income-tax Act, 1961 [Corresponding to section 34(1)(a) of the Indian Income-tax Act, 1922] - Income escaping assessment - Position prior to 1-4-1989 - Assessment year 1944-45 - Whether where income of assessee from firm had escaped assessment by failure on part of assessee to disclose fully and truly all facts necessary for making assessment provisions of section 34(1)(a) of 1922 Act were attracted and, therefore, revised assessment dated 16-10-1952 was not barred by limitation as period of limitation was eight years - Held, yes FACTS For the assessment year 1944-45, the assessment of the assessee-HUF was completed. This order was revised under section 34 and certain income was included as income from undisclosed sources. This assessment was challenged before the Tribunal, and was set aside on the ground that there had not been proper service of a notice under section 34. A fresh notice under section 34 was issued in October, 1951. On 16-10-1952, a revised assessment order was passed and the total income of the assessee was computed which included a sum of Rs. 49,696 as income from undisclosed sources. On 31-3-1953, the ITO served on the assessee another notice under section 34 in respect of the same assessment year 1944-45. On 18-3-1954, a revised assessment was made in which was included a sum of Rs. 32,000 as the assessee's income from undisclosed sources, being the alleged investment of the assessee in the sarpat and bamboo business. On second appeal the Tribunal held that the income of the assessee from the firm had escaped assessment by failure on the part of the assessee to disclose fully and truly all the facts necessary for making the assessment and that the provisions of section 34(1)(a) were attracted and, therefore, the period of limitation was eight years and not four years. On reference as regards the first revised assessment the…

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