Judgment

SHAH, J. :

Messrs. Lal and Company hereinafter called the assessee carry on business in Bombay as commission agents. In the course of assessment proceedings for the year 1954-55 the assessee s books of account were examined by the Incometax Officer and it was noticed that the assessee had business connections with certain non-resident parties. On March 12, 1957, the Income-tax Officer issued a notice calling upon the assessee to show cause why in respect of the assessment year 1954-55 the assessee should not be treated under S. 43 of the Indian Income-tax Act, 1922, as an agent in respect of twenty-five non-resident parties named in the notice. The assessee denied that he had "direct dealings" with any non-resident party and that in any event the proposed action was barred because the period prescribed for initiation of proceeding had expired, and requested the Income-tax Officer to drop the proceeding. The Inoome-tax Officer B-III Ward, Bombay issued on March 27, 1957, a notice under S. 34 of the Indian Income-tax Act for assessment of the assessee as an agent of the twenty-five named non-resident parties. The assessee submitted a return showing his income as "nil". The Inc