Judgement

GROVER, J.: This is an appeal by special leave against the judgment of the Punjab High Court dismissing the writ petition of appellants herein under Articles 226 and 227 of the Constitution by which it was prayed that a writ of prohibition directing the Income-tax authorities not to proceed with the assessment for the year 1952-53 be issued. A prayer was also made for the issue of a writ of certiorari for quashing the notices under Sections 23 (2) and 22 (4) of the Income-tax Act 1922 hereinafter called the Act, which had been issued by the Income-tax Officer in that connection. The appellant firm filed a return for the assessment year 1952-53 on March 31, 1953. It also applied that it may be registered as a firm under Section 26A of the Act, the partners being Bhagat Singh and his two sons Katar Singh and Dhian Singh, their shares being in the proportion of 4/16, 6/16 and 6/16 respectively. The Income-tax Officer passed an order on March 26, 1957 holding that the assessee constituted a Hindu Undivided Family and not a firm. The registration under Section 26A was also refused. The appellants approached the Appellate Assistant Commissioner in appeal who made an order on August 11, 1959 allowing registration of the partnership firm under Section 26A. He further held that the business belonged to the firm and therefore its income must be excluded from that of the family. The Income Tax Officer was directed to assess the income of the business in the hands of the firm. The Income-tax Officer issued fresh notice to the appellants under Sections 22 (4) and 23 (2) of the Act. The appellant refused to comply with these notices and moved the Inspecting Assistant Commissioner of Income-tax for giving a direction that the assessment should not be proceeded with owing to the statutory bar created by Section 34 (3) of the Act. As the Income-tax authorities did not accede to the request of the appellants a petition under Articles 226 an 227 was filed in the High Court. The High Court dismissed the petition on the ground that in view of the decision of this Court in Income tax Officer, A-Ward, Sitapur v. Murlidhar Bhagwandas 1964-52 ITR 335 the second proviso to S. 34(3) would be applicable because the members of the appellant firm could not be regarded as strangers to the proceedings which resulted in the assessment order made in respect of them on the basis of their constituting a Hindu Undivided Family along with others and that they were intimately connected with the "person" whose assessment was made by the Income-tax Officer and set aside by the Appellate Assistant Commissioner on whose direction fresh assessment proceedings were taken. The second proviso to S. 34 (3) of the Act reads:

"Provided further that nothing contained in this section limiting the time within which any action may be taken, or any order, assessment or reassessment may be made, shall apply to a reassessment made under S. 27 or to an assessment or reassessment made on the assessee or any person in consequence of or to give effect to any finding or direction contained in an order under Section 31, Section 33, Section 33A, Section 33B, Section 66 or Section 66A.

In S. C. Prashar v. Vasantsen Dwarkadas, 1963-49 ITR (SC) 1 this court, by majority, held that the provisions of second proviso to S. 34 (3) insofar as they authorised the assessment or reassessment of any person other than the assessee beyond the period of limitation specified in S. 34 in consequence of or to give effect to a finding or direction given in an appeal, revision or reference arising out of proceedings in relation to the assessee, violated the provisions of Art. 14 of the Constitution and were invalid to that extent. The scope and ambit of the second proviso came up for consideration again in 1964-52 ITR 335. According to the majority decision the expression finding" and "direction" in the said proviso means respectively a finding necessary for giving relief in respect of the assessment fo