GUPTA TRADERS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), It relates to the assessment year 1965-66, the previous year ended on March 31, 1964. The assessee, M/s. Gupta Traders Kanpur, a partnership firm, had filed its return of income on September 27, 1965. The assessee-firm was constituted of two partners. Deo Prakash Gupta with a 10 annas share and his son, Sheo Autar Gupta, with 6 annas share. In his order made under Section 185(1)(b) of the Act on March 16, 1970, the ITO found that the assessee-firm had not carried on any business in the status of the firm and the business actually belonged to Deo Prakash Gupta, As such the proceedings in the case of the firm were filed (sic). The income shown in the return filed by the firm was to be considered in the case of Deo Prakash Gupta in his individual capacity. Deo Prakash Gupta in his individual return, had disclosed an income of Rs. 20,100. However, the assessment was framed in his case on a total income of Rs. 48,801. In other words, the entire income of the assessee-firm was included in the case of Deo Prakash Gupta, individual.

(2.) THE assessee filed an appeal against the order made under Section 185(1)(b) of the Act. THE AAC allowed that appeal and held that the assessee-firm was a genuine firm. THEreafter, the ITO made the assessment on the assessee-firm on 30th November, 1970. From that order the assessee filed an appeal before the AAC and it was contended that since no assessment had been made on the assessee-firm on the basis of the return filed by it within the period of four years from the end of the relevant assessment year and also as no action had been taken under Section 147 of the Act, the assessment having been made beyond the period of limitation, was not legal and valid. That contention found favour with the AAC and the assessment was cancelled.

(3.) AT the instance of the assessee, the Appellate Tribunal has referred the following questions of law for our opinion :