Judgment

HEGDE, J.:- These are appeals by special leave. Though as many as four questions were referred by the Tribunal to the High Court under Section 66 (1) of the Indian Income Tax Act 1922 (to be hereinafter referred to as The Act ), the only question that was argued before us was question No. 2, namely :

"Whether the Appellate Assistant Commissioner in dealing with appeals of the Association of persons consisting of all the heirs of Zahur Bux could give a direction under Section 34 (3) to take action against the assessee ?"

2. The High Court answered that question in the negative and in favour of the assessee.

3. The material facts lie within a narrow compass. Two persons by name Allah Bux and Zahur Bux were carrying on business at various places including tobacco business at Mauranipur and they were assessed in the status of Association of persons. In 1938 Allah Bux died leaving his widow Begum Zaidi as his only heir. The said Begum transferred her interest in favour of Zahur Bux. Thereafter Zahur Bux became the sole owner of the business. Zahur Bux gifted his business at Mauranipur to his two sons Mohd. Shakoor and Mohd. Bashir in 1942. Zahur Bux died in 1948. During the assessment years 1945-46 to l956-57, Mohd. Shakoor and Mohd. Bashir submitted their returns of income in respect of the Mauranipur business. Following his earlier decision the Income Tax Officer rejected that return and proceeded to assess all the heirs of Zahur Bux as an Association of persons. He also took into consideration not merely the Mauranipur business but all the assets left by Zahur Bux. In appeal the Appellate Assistant Commissioner came to the conclusion that the assesses, namely, the Association of persons consisting of all the heirs of Zahur Bux, was not liable to be taxed in respect of the Mauranipur business. He came to the conclusion that that business had been gifted to Mohd. Shakoor and Mohd. Bashir in 1948 (1942-?) itself. But he did not find that during the relevant assessment years Mohd. Shakoor and Mohd. Bashir were continuing that business in their own name; nor did he give a finding in respect of any income earned in this business by Mohd. Shakoor and Mohd. Bashir in those years. On the basis of his finding that the assessee -the Association of persons consisting of all heirs of Zahur Bux-is not liable to be taxed in respect of the Mauranipur business, he set aside the order of the Income Tax Officer but directed him to "assess the income from various sources in the hands of the respective persons to whom they arose, bearing in mind the provisions of second proviso to sub-section (3) of Section 34 of the Indian Income-tax Act." Thereafter the Income-tax Officer issued notices to the respondents under Section 34 (1) (a) of the Act. The question for decision is whether those notices are barred by time. It is urged on behalf of the Revenue that in view of the second proviso to Section 34 (3) of the Act, the notices were not barred. The High Court has rejected that contention.

4. The first question that calls for decision is:

"Whether the Appellate Assistant Commissioner had given any finding as contemplated by the proviso to Section 34 (3);

" and the second question that arises for decision is :

"Whether the Appellate Assistant Commissioner had given any direction as contemplated under second proviso to Section 34 (3)?"

5. This Court in Income-tax Officer, A ward, Sitapur v. Murlidhar Bhagwan Das, (1964) 52 ITR 335 ruled as to what exactly is the meaning of the words finding as well as direction in the second proviso to Section 34 (3). Dealing with the expression finding , this Court ruled that it meant a finding necessary for giving relief in respect of the assessment for the year in question. A finding therefore could only be that which was necessary for the disposal of the appeal in respect of an assessment of a particular year. In that case the Appellate Assistant Commissioner had come to a finding that the disputed income did no