Law:

Section:

JUDGMENT This reference arises out of a group of 12 assessments, 11 out of which are in respect of the assessments for the assessment year 1944-45 and one for the assessment year 1943-44. Assessments in all these cases were made taking recourse to section 34 of the Indian Income-tax Act and the question to be considered is whether the action taken was barred by time. The assessees involved in this reference are some of the partners of the firm of M/s. Narayandas Kedarnath, which was formed in the year 1930. It consisted of 16 partners, 13 out of which belonged to three Hindu undivided families and the remaining three were outsiders. Thus, Narayandas Pokarmal and his three sons, Govindram, Bhagwandas and Vasudeo, formed one Hindu undivided family; Meghraj Pokarmal and his three sons, Onkar-mal, Banarasilal and Beniprasad, were the members of another Hindu undivided family and Hanumandas Sewakram and his four sons, Kedarnath, Banarasidas, Durgaprasad and Harkisondas, formed the third Hindu undivided family. The partnership deed, however, showed these 13 persons constituting the three undivided Hindu families and the three outsiders as sixteen partners of the firm. Since the commencement of the firm up to the assessment year 1939-40, the sixteen partners were all assessed as individuals in respect of their respective shares of profits of the partnership firm. For the assessment years 1939-40, 1940-41 and 1941-42 the Income-tax Officer assessed them as six units: the three outsiders partners as three units and the remaining 13 constituting the Hindu undivided families as the three Hindu undivided family units represented by their respective kartas, Narayandas Pokarmal, Meghraj Pokarmal and Hanumandas Sewakram. It appears that the assessment for these three years on the said basis was made in pursuance of a settlement arrived at between the assessees and the income-tax department. The settlement, however, was to apply only for these three years and it was agreed that the Income-tax Officer was to make an order and declare that a partial partition disrupting the joint families had taken place on the 30th October, 1940, which was the last year of the previous year…

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