This is a writ petition under article 226 of the Constitution.
The prayer contained in the petition is that two notices dated September 7, 1959, issued under section 34 of the Income-tax Act in respect of the assessment years 1948-49 and 1949-50 be quashed by issuing a writ of certiorari. There is a further prayer that a writ of prohibition may be issued restraining the Income-tax Officer from proceeding with the reassessment proceedings in consequence of the impugned notices.
It appears that an appeal in respect of the assessment for the year 1949-50 went up before the Income-tax Appellate Tribunal, which the Tribunal disposed of by an order dated April 9, 1959. It appears that in this appeal five items were involved, two of Rs. 15,000 each, credited in the books of the petitioner on January 23, 1948, and January 28, 1948, respectively. The Tribunal recorded the finding that, as these two items were sought to be included in the assessment year 1949-50, on the ground that they were the income of the assessee from undisclosed sources, the correct year for inclusion of such income was 1948-49, which was the assessment year succeeding the previous year in which these two sums of money were found entered in the account books of the petitioner.
There were three other sums of money and with regard to them the Tribunal held that even though thy came into the books of the petitioner through one of the partners, Laxmi Narain, there was nothing on the record to connect these deposits with the 'affairs of the assessee firm'. The Tribunal went on to observe that if an enquiry as to the source and nature of these sums is to be made 'It has to be made on the file over than the file of the assessee'. It follows that in respect of these three sums of monies were at all assessable in the year 1949-50 with which the Tribunal was concerned, then these three sums of monies had nothing whatever to do with the assessee.
In a Division Bench case of this courts in Pt. Hazari Lal v. Income-tax Officer, Kanpur, it has been laid down that, if for purposes of avoiding the bar of limitation the income-tax department seeks to take its stand on the second provision to sub-section (3) of section 34, it can do so only if the 'direction' or the 'finding' relates to the assessee himself and realities to the very year in which the question arose and in regard to which the order sought to be relied upon was passed by the appellate authority. It follows that so far as the facts of this particular case are concerned that 'finding', if any, in respect of the first two sums of monies amounting to Rs. 15,000 each was not in respect of the year 1949-50 which was the assessment year in respect of which alone the question was up for consideration before the Tribunal. As such, the observation which the Tribunal made in respect of the assessability of these two sums of monies in any year other than the year 1949-50 could neither be properly called a 'finding' nor could the Tribunal legally give any 'direction' within the meaning of the second proviso to section 34(3). So far as the other three sums of monies are concerned the Tribunal made it clear that the petitioner had not concern with these three sums of monies and if there there sums of monies were liable to be taken into consideration they could be considered only in the assessment of a person other than the petitioner. It follows that reliance in respect of these three sums of monies also could not be based on the second proviso to sub-section (3) of section 34.
It has not been sought to be argued on behalf of the income-tax department that if the proviso is not applicable the notices are not beyond time.
The result, therefore, is that this writ petition must succeed. It is accordingly allowed. A writ of certiorari shall issue quashing the two notices under section 34 dated September 7, 1959. The petitioner shall be entitled to the costs of the petition.