Hegde, J. - (1.) This appeal by certificate arises from the decision of the High Court of Allahabad in a reference under Section 66 (1) of the Income-tax Act 1922 (to be hereinafter referred to as the Act). The assessee is a Hindu Undivided Family. In this case we are concerned with the assessee's assessment for the assessment year 1950-51.
(2.) The question for decision in this case is whether on the facts and circumstances of the case the proceedings which were commenced by a notice under S. 34 (1) (b) could have been converted into proceedings under Section 34 (1) (a) by the Income Tax Appellate Tribunal. In order to decide this question it is necessary to refer to the material facts. For the assessment year in question the assessee was assessed without any objection. Thereafter the Income-tax Officer issued a notice to him under Section 34 of the Act without mentioning therein whether he was taking action under Section 34 (1) (a) or 34 (1) (b). The assessee filed its objection to the notice in question. It pleaded that it had supplied to the Income-tax Officer correct information and there was no justification for taking action against it under Section 34. The Income-tax Officer in his order opined that it had not given the full particulars but all the same it was not necessary to go into that question as he was taking action under Section 34 (1) (b). The assessee's objection that proceedings under Section 34 (1) (b) were barred by limitation, was rejected by the Income-tax Officer. The assessee went up in appeal to the Appellate Assistant Commissioner against the order of the Income-tax Officer. The only point considered by the Appellate Assistant Commissioner was whether proceedings under Section 34 (1) (b) were barred by limitation or not. He did not go into the question whether the proceedings taken by the Income-tax Officer could be justified under S. 34 (1) (a). The Appellate Assistant Commissioner agreeing with Income-tax Officer came to the conclusion that the required notice had been served within time and therefore the proceedings taken under Section 34 (1) (b) were valid proceedings. Against this order of the Appellate Assistant Commissioner the assessee went up in second appeal to the income-tax Appellate Tribunal. The Tribunal not only upheld the order of the Appellate Assistant Commissioner but upheld that order on an alternative ground namely that the impugned proceedings could be justified under Section 34 (1) (a). Thereafter at the instance of the assessee the Tribunal submitted the following questions soliciting the opinion of the High Court. (1) Whether the reopening of the case by the Income-tax Officer by the issue of a notice under Section 34 of the Indian Income-tax Act fell within the ambit of Section 34 (1) (a) of the Act or under Section 34 (1) (b) of the Act (2) Whether the service of the notice under Section 34 of the Indian Income-tax Act by affixture on the residential house of the assessee was legal and proper (3) Whether the amount of Rupees 62, 500/- was liable to tax under Section 4 (1) (b) (iii) of the Indian Income-tax Act
(3.) The High Court answering the first question, came to the conclusion that the notice in question was a valid notice and it was a notice under Section 34 (1) (a). It answered the second question in the negative and in favour of the assessee. It answered the third question in the affirmative and in favour of the Revenue. It came to the conclusion that the proceedings under Section 34 (1) (b) were barred by time but it agreed with the Tribunal that the proceedings were validly initiated under section 34 (1) (a).;