1. This is a reference under Section 66(1) of the Income--tax Act, 1922, and relates to the assessment years 1949-1950 to 1953-1954 and 1955-1956 and 1956-1957.
2. The assessee made returns for these years as an individual. But this status was not accepted by the Income-tax Officer who included the income of his brothers in his, on the ground that it was earned out of funds withdrawn from the joint family resources. Assessment orders for the years 1941-42 to 1944-45 had also been similarly made which formed the subject-matter of reference to this court which ended in favour of the assessee. Following this decision the Tribunal set aside similar assessment orders and assessment pertaining to the assessment years 1945-46 to 1947-48. The Appellate Assistant Commissioner, following the decision of this court and of the Tribunal for the earlier years, allowed the appeals relating to the subsequent years, 1949-50 to 1953-54 and 1955-56 and 1956-57. But while setting aside the assessments, the Appellate Assistant Commissioner was silent as to what the Income-tax Officer was to do further. The Commissioner filed appeals before the Tribunal objecting to the orders of the Appellate Assistant Commissioner on the ground that the latter, while disposing of the appeals before him, should have given a direction to re-do the assessment for those years. The appeals were resisted by the assessee on the ground that they were not maintainable. But we do not find that the Tribunal specifically disposed of that point. On the other point of the assessee, the Tribunal was not impressed that a direction as was sought for by the Commissioner would be improper and illegal because the assessee in his individual capacity was not a party to the assessment proceedings, but was a stranger so far as they were concerned, but, eventually, the Tribunal directed the Income-tax Officer to re-do the assessment according to law to the extent of the income assessable in his hands as an individual. The reference at the instance of the assessee is of the following questions:
'(1) Whether, on the facts and in the circumstances of the case, the appeals preferred by the department against the orders of the Appellate Assistant Commissioner are maintainable?
(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in directing the Income-tax Officer to re-do the assessment for the assessment years 1949-50 to 1953-54, 1955-56 and 1956-57 to the extent of the income assessable in the hands of the assessee as an individual?'
3. Two points are urged for the assessee : (i) the direction given by the Tribunal was beyond the scope of the appeals before it ; and (ii) as a result of the assessment orders having been set aside, the returns relevant to those years are pending, with the consequence that Section 34 will be inapplicable. In support of the first point our attention has been invited to Income-tax Officer, A-Ward, Sitapur v. Murtidhar Bhagwan Das, : 52ITR335(SC) and East India Corporation Ltd. v. Commissioner of Income-tax, : 61ITR16(Mad) and of the second point to a recent judgment the Supreme Court in Civil Appeal No. 754 of 1966 (Estate of the late A. M. K. M. Karuppan Chettiar v. Commissioner of Income-tax, : 72ITR403(SC) )
4. S. C. Prashar v. Vasantsen Dwarkadas, : 49ITR1(SC) had, by a majority, held that the second proviso to Sub-section (3) of Section 34 violated Article 14 of the Constitution and was invalid, in so far as it authorised the assessment or reassessment of any person other than the assessee beyond the period of limitation specified in Section 34. The scope of the proviso was again. considered in Income-tax Officer, A Ward, Sitapur v. Murlidhar Bhagwan Das. It was held that 'any person' in the second proviso must be confined to a person intimately connected with the assessment of the year under appeal. A finding and direction in the proviso, as pointed out by the Supreme Court mean respectively a finding necessary for giving relief in respect of the assessment for the year in question and a direction which the appellate or revisional authority, as the case may be, was empowered to give under the^ sections mentioned in the proviso. East India Corporation Ltd. v. Commissioner of Income-tax was not concerned with Section 34 or the second proviso, but had dealt with the question whether a direction under Section 34(3) to reassess the shareholders as a consequence of Section 23A. proceedings was legally given as a result of the Tribunal's finding. In Civil Appeal No. 754 of 1966 (Estate of the late A. M. K. M. Karuppan Chettiar v. Commissioner of Income-tax) the facts were briefly these : For the assessment year 1949-50, it was claimed that the assessee's undivided Hindu family had been divided between him on the one hand, and one Muthukaruppan and his sons on the other, the latter forming a separate family of their own. Pursuant to notices under Section 22(2) issued to the Hindu undivided family, the assessee filed returns in his individual capacity in respect of the income from several sources ascribed to his share at the partition. But the-Income-tax Officer rejected the assesse's claim that has hould be assessed as an individual, and assessed the Hindu undivided family for the three years 1950-51, 1951-52 and 1952-53 treating his returns as returns filed by the family. These orders were set aside on the ground that there had been anearlier partition of the family. While disposing of the appeals, the Appellate Assistant Commissioner gave a direction that the income that had been considered in the assessment required to be reconsidered in the hands of the separate coparceners. The assessee filed the returns in his individual capacity for the assessment years 1950-51 to 1952-53, for the first two years on February 3, 1955, and for the third year on June 30, 1956. It may be mentioned that the Appellate Assistant Commissioner, in view of his finding, also recorded the partition under Section 25A. Thereafter, the Income-tax Officer by notice dated March 2, 1957, which were purported to be under Section 34, called upon the assessee to submit fresh returns and they were filed for the three years under protest. On the basis of those 'returns the Income-tax Officer by an order dated March 31, 1957, assessed the income, and appeals arising thereout were unsuccessful and this court, on a reference under Section 66(2), held the assessments to be valid. The Supreme Court set aside the assessment orders on the view that since the returns filed by the assessee originally were disposed of and as long as that position remained to be so, no notices could be issued under Section 34, and the notices issued were incompetent. Reliance is placed on this decision for the contention that, since the assessment orders in this case had been set aside, and the returns filed by the assessee thus remained undisposed of, Section 34 could not be resorted to at that stage and it should follow, therefore, that no direction within the scope of the second proviso to Section 34(3) would be competent.
5. It seems to us that the argument noticed above for assessee is rather premature and anticipates orders to be made pursuant to the direction of the Tribunal to re-do the assessment. We are in this reference not concerned with the question, whether the direction given by the Tribunal is within the scope of the second proviso to Section 34(3) and would save the bar of limitation. The question referred to us relate to the maintainability of the appeals filed by the Commissioner before the Tribunal and its jurisdiction to give the direction which it did. It is obvious that neither of them is concerned with limitation and the lifting of that bar by a direction within the purview of the second proviso to Section 34(3). The first question under reference rather turns on the scope of the appellate jurisdiction of the Tribunal, that is controlled by Section 33(2). A Commissioner may, if he objects to any order passed by the Appellate Assistant Commissioner under Section 31, direct an Income-tax Officer to appeal to the Appellate Tribunal against such order. There can be no question that the order appealed against by the Commissioner was one passed by the Assistant Commissioner under Section 31. But the objection thereto of the Commissioner is that it omitted to give a direction to the Income-tax Officerto re-do the assessment for the years in question. Whether such a direction was competent for the Appellate Assistant Commissioner in disposing of the appeal is a different matter. But the objection of the Commissioner under Section 33(2) may cover not only the merits of the order passed by the Appellate Assistant Commissioner but also what officer had omitted to do in his order. The objection of the Commissioner for purposes of maintainability of his appeal should, of course, be an order passed by the Appellate Assistant Commissioner. But the objection is not necessarily confined to what the order has stated but may extend to what the order has omitted to say. The appeal will not be held to be not maintainable only because the Tribunal might find that the Appellate Assistant Commissioner himself had no jurisdiction to make a direction. That would be an order on the merits not affecting the maintainability of the appeal. We are of the view, therefore, that the first question should be answered against the assessee.
6. The second question before us does not include the point whether the direction given by the Tribunal is within the ambit of the second proviso to Section 34(3). In fact that provision has nothing to do with the jurisdiction of the Appellate Tribunal. It neither enhances nor curtails the Tribunal's jurisdiction, the scope of which is entirely delimited by Section 33. The second question under reference has to be considered, therefore, not with reference to the second proviso but only in the context of Section 33(2). Once an appeal is held to be maintainable, the scope and nature of an order that the Tribunal is competent to make are to be found in Section 33(4). It says. that the Tribunal may, after giving both parties to an appeal before it an opportunity of being heard, 'pass such orders thereon as it thinks fit'. That phraseologv is wide enough to enable the Tribunal, while disposing of the appeal, to give a direction which it did at the instance of the appellant before it. We cannot say that the Tribunal was not right in law in giving the direction from the standpoint of its jurisdiction. Since the assessment orders had been set aside by the Appellate Assistant Commissioner, the Tribunal was entitled to think that a direction might well be given to the Income-tax Officer to re-do the assessments.
7. What would be the effect of that direction in law, whether it would be one competent for purposes of the second proviso to Section 34(3) and would serve to lift the bar of limitation is entirely another matter, which the present reference is not concerned with. It is needless to provide, therefore, that it would be open to the assessee, in the proceedings before the income-tax Officer on the basis of his returns, to raise the question of limitation untramelled in any way by our order in this reference and it should have to be decided on its merits with reference to the second proviso to Section 34(3).
8. Like the first question, we also answer the second question against the assessee. The revenue is entitled to its costs. Counsel's fee Rs. 250.