Law:

Section:

Section 153 of the Income-tax Act, 1961 [Corresponding to section 34(3) of the Indian Income-tax Act, 1922] - Assessment - Time limit for completion of - Assessment year 1952-53 - Appellant-firm filed its return of income and also applied for registration - ITO refused registration and assessed it in status of HUF - On appeal AAC allowed its registration and further held that business belonged to firm and, therefore, its income must be excluded from that of family - On direction by AAC, ITO issued a fresh notice to appellants under sections 22(4) and 23(2) of 1922 Act which appellant refused to comply with on ground of statutory bar created by section 34(3) of 1922 Act - Whether it could not be said that appellant was stranger to proceedings which was under appeal before AAC and had no intimate connection with person whose assessment had been made by ITO and, therefore, second proviso to section 34(3) would be applicable and bar of limitation would be lifted - Held, yes FACTS The appellant-firm filed its return of income for the assessment year 952-53 on 31-3-1953 and also applied for the registration under section 26A. The ITO passed an order on 26-3-1957, holding that the assessee constituted a Hindu undivided family and not a firm. The registration under section 26A was also refused. The appellants approached the AAC in appeal who made an order on 11-8-1959, allowing registration of the partnership firm under section 26A. He further held that the business belonged to the firm and, therefore, its income must be excluded from that of the family. The ITO was directed to assess the income of the business in the hands of the firm. The ITO issued fresh notice to the appellants under sections 22(4) and 23(2). The appellant refused to comply with these notices and moved the IAC for giving a direction that the assessment should not be proceeded with owing to the statutory bar created by section 34(3) of the Act. As the income-tax authorities did not accede to the request of the appellants, a petition under articles 226 and 227 was filed in the High Court. The High Court dismissed the petition on the ground that, in view of the decision of this Court in ITO v.…

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