T.P. Mukherjee, J. - (1.) THIS consolidated reference made by the Appellate Tribunal under Section 66(1) of the Indian Income-tax Act, 1922, arises out of three assessments relating to the assessment years 1951-52, 1952-53 and 1953-54. The facts are as follows : The assessee, at the material time, was an unregistered firm constituted of two partners, Sool Chand and Ramsewak, each of whom had equal shares in the partnership. The two partners, before the constitution of the firm, were members of a Hindu undivided family styled M/s. Mannoo Lal Mool Chand. The family claimed total disruption in the assessment year 1948-49 and applied for an order under Section 25A(1), Indian Income-tax Act, 1922 (hereafter referred to as the Act), but the application was rejected by the Income-tax Officer. In the alleged partition, the business carried on by the family was allocated to Sool Chand and Ramsewak. These two members thereafter constituted a partnership and carried on the business under the firm name of Sool Chand Ramsewak. THIS firm is the assessee in the present reference. The assessee-firm filed returns of its income for the assessment years 1951-52, 1952-53 and 1953-54. These returns were filed on the 2nd November, 1951, 4th August, 1952, and 24th September, 1953, respectively. It may be noted that each of these returns had been filed within the respective assessment years and the incomes returned were Rs. 3,471, Rs. 2,260 and Rs. 2,200 respectively.
(2.) THE Income-tax Officer who did not accept the claim of partition of the family took no action whatever on these returns and he included the income returned by the firm in the assessments of the Hindu undivided family for the said assessment years. Against the assessments made by the Income-tax Officer the Hindu undivided family filed appeals to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner did not accept the claim of total disruption but he held that there had been a partial partition in respect of the business only and the firm was duly constituted. He, therefore, excluded the income of the firm, M/s. Sool Chand Ram Sewak, from the assessment of the Hindu undivided family. He also directed the Income-tax Officer to start proceedings under Section 34 of the Act and make assessments, inter alia, on M/s. Sool Chand Ram Sewak in the status of a firm. In pursuance of the direction, the Income-tax Officer issued separate notices to the assessee-firm under Section 34(1) of the Act, on the 12th January, 1959, for all the three assessment years. These notices, it may be noted, were issued after the expiry of four years from the last of the three assessment years under reference, namely, 1953-54. In response to these notices the assessee filed returns under protest showing the incomes declared in the past. The assessee, however, contended that returns had already been filed by the firm for the said years and, therefore, action under Section 34 was invalid. The Income-tax Officer did not, however, accept the contention and completed the assessments of the assessee for the said years in the status of an unregistered firm on 18th March, 1959.
(3.) THE assessee appealed to the Appellate Assistant Commissioner. THE Appellate Assistant Commissioner held that the assessments were time-barred and invalid and he vacated the assessments by his order dated the 25th August, 1959. Against the decision of the Appellate Assistant Commissioner the department preferred appeals to the Appellate Tribunal. In the Tribunal there was a difference of opinion between the Judicial and the Accountant Members. The Judicial Member held that the notices issued by the Income-tax Officer under Section 34(1) of the Act, on the 12th January 1959, were without jurisdiction inasmuch as the assessee-firm had already filed returns for each of the three years in good time and, therefore, income could not be said to have escaped assessment. He was also of the view that the Appellate Assistant Commissioner was not competent to give a direction in the appeals of the Hindu undivided family of M/s. Mannoo Lal Mool Chand for the assessment of the firm of M/s. Sool Chand Ram Sewak, the assessee in the case. The Judicial Member, therefore, made an order dismissing the departmental appeals. The Accountant Member, on the other hand, passed an order allowing the appeals. His view was that on the 12th January, 1959, when the notices under Section 34(1) were issued no artion could be taken on the returns filed by the assessee as the time limit for normal assessment had already expired. The returns already on record had, to all intents and purposes, become mere scraps of paper and, thus, income had escaped assessment, so that, Section 34 of the Act was applicable. He further held that, in view of the decision of this court in the case of PL Hazari Lal v. Income-tax Officer, Dist. II ii , Kanpur, 1960 39 ITR 265. , the Appellate Assistant Commissioner was competent to give the impugned direction for the consequential assessment of the assessee-firm. In view of the difference of opinion between the two members, the case was referred to the President of the Tribunal under Section 5A(7) of the Act. The President agreed with the view taken by the Accountant Member and held that the assessments under Section 34 of the Act for the three years under appeal were valid and competent. In accordance with the view taken by the majority, the three departmental appeals were allowed by the order of the Bench dated 30th June, 1962.;