Desai, C.J. - (1.) THE following question has been referred by the Income-tax Appellate Tribunal, Delhi Bench: "Whether in the fact and circumstances of this case and on a true interpretation of the relevant terms of Sections 31 and 34 the assessment for year (1944-45 made on the assessee on 24-1-52 in the status of an 'individual' was in order?" THE reference was laid before a Bench which, considering that a decision of another Bench of this Court may require reconsideration, has referred it to a larger Bench, and so it has been laid before us.
(2.) WE are concerned with the assessment for the year 1944-45, the relevant account year being the financial year 1943-44. The assessee is Lakshman Prakash, who calls himself proprietor of Messrs. National Emporium. In the assessment years 1940-41 and the next three years the assessee was assessed as a Hindu undivided family. For the assessment year in question the assessee filed a return in his capacity as an individual and not as a manager of a Hindu undivided family. On 29-3-49 the Income-tax Officer assessed him as representing a Hindu undivided family, but without discussing his status and without noticing that the return had been filed by an individual. The assessee preferred an appeal which was allowed by the Appellate Assistant Commissioner because the Income-tax Officer had not discussed the question of his status. The operative part of his order ends with these words: "the assessment proceedings, which have accordingly to be set aside to be made de novo in accordance with law after determination of the status of the appellant." In compliance with this order the Income-tax Officer on 24-1-52 passed another assessment order against the assessee but as an individual. The 'assessee preferred an appeal from that order on the grounds that in the remand proceedings he could be assessed only as representing a Hindu undivided family and that the assessment order was barred by time. The Appellate Assistant Commissioner dismissed the appeal, holding that no question of limitation arose because the assessment Was made in pursuance of his order, that the assessee was estopped from pleading that he could not be re-assessed in his capacity as an individual 'and that the issue of a notice under Section 28(3) had the effect of extending the period of limitation for making an assessment to eight years. The assessee went up in appeal to the Income-tax Appellate Tribunal, which upheld the assessment order. The assessee wanted the Tribunal to refer two more questions to this Court, but it refused to do so, and we are not called upon to answer them.
(3.) THE assessment order in question, having been passed on 24-1-52, was barred by time, if it could not be made after the expiry of four years from the end of the assessment year, and, within time, if it could be made within eight years of it. Section 34(3), as it was in force upto 31-3-1952 lays down that no order of assessment or re-assessment can be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable. THEre are two exceptions to this law, but, admittedly, the present case does not come under either of them. THEre arc two provisos, one laying down that, where a notice under Section 34 (1)(b) has been issued within four years from the end of the assessment year, the assessment or re-assessment to be made in pursuance of it may be made before the expiry of one year from the date of the service of the notice, and the other being: "Provided further that nothing contained in this sub-section shall apply to a reassessment made under Section 27 or in pursuance of an order under Section 31". Since 1-4-1952 this proviso is to the effect that an assessment or reassessment may be made at any time if it is made on the assessee or any person inconsequence of, or to give effect to, any finding or direction contained in an order under Sees. 31, etc. Originally an assessment order is made by an Income-tax Officer under Section 23, Sub-section (1), or Sub-section (3), or Sub-section (4), depending upon whether the return filed by the assessee is correct and complete, whether evidence was called for by the Income-tax Officer and produced and whether there was failure on the assessee's part to make the return or to comply with all the terms of a notice. If an Income-tax Officer in the course of assessment proceedings finds that the assessee failed to furnish the return, or failed to furnish it within the time allowed and in the prescribed manner, or tailed to comply with a notice issued under Section 22(4), or 23(2), or concealed the particulars of his income, ox deliberately furnished inaccurate particulars of it, be is empowered by Section 28 to impose upon him a penalty. An appeal from an assessment order made by an Income-tax Officer lies to the Appellate Assistant Commissioner, vide Section 30. The powers of the Appellate Assistant Commissioner when exercising appellate jurisdiction are described in Section 31(3). He may confirm, reduce, enhance or annul the assessment, or set aside the Assessment and direct the Income-tax Officer to make a fresh one, after making, such further enquiry as he thinks fit, or is directed to make.;