COMMISSIONER OF INCOME TAX Vs. THIMMAIAH M M

JUDGEMENT

(1.) THE assessee is a partner in three firms :

(2.) THE assessment for the three years 1958-59, 1959-60, and 1960-61 were completed by the Income-tax Officer on January 19, 1959, November 30, 1959, and November 29, 1961, under section 23(3) accepting the assessee's share income from the above firms as returned by the assessee. It was noted in the assessment orders that the share incomes were being accepted subject to rectification later. In the assessment year 1958-59, the assessee's share in M. M. Madalappa & Bros. was a loss and was not taken into account in the original assessment. In 1959-60, neither income nor loss was taken into account. In the assessment year 1960-61, a loss of Rs. 4,941 from this firm was deducted. Against the share income from the other two firms, in the assessment for 1958-59, it was noted "tax earned". In the other two years, no mention has been made as to the nature of the share income from the two firms. Subsequently, the assessments of the three firms came to be completed. It was found that there were higher profits in the two firms, and that the assessee's share of profit required to be revised. THE Income-tax Officer issued notices to the assessee for all the years, which notices were shown to have been issued as "Notices under section 154/155". In the body of the notice, the notice being similar in terms for all the years, it was pointed out that :

(3.) THE assessee filed appeals to the Appellate Assistant Commissioner, objecting to the treatment of the share of profit from the firms as unearned income. THE Appellate Assistant Commissioner, however, upheld the orders of the Income-tax Officer, observing as under :