Judgment

ALAGIRISWAMI, J.:- Sixteen persons constituted a partnership firm known as M/s. Narayandas Kedarnath under an agreement dated 19-5-1930. Out of the said 16 partners three were outsiders and thirteen were members of three Hindu undivided families whose kartas were respectively Narayandas Pokarmal, Meghraj Pokarmal and Hanumandas Sewakram Narayandas Pokarmal had three sons-Govindram, Bhagwandas and Vasudeo; Meghraj Pokarmal had also three sons - Onkarmal, Banarsilal and Beniprasad; and Hanumandas Sewakram had four sons - Kedarnath, Banarsidas, Durgaprasad and Harkisondas. Though the firm consisted of 3 undivided Hindu families the income-tax assessment till the year 1939-40 was on all the sixteen individuals. From 1939-40 to 1941-42 the Income-tax Officer assessed these 13 persons not as individuals but as three Hindu undivided families on the basis of a settlement between them and the Department. Thereafter all the sixteen persons were to be individually assessed. Nevertheless, the Income-tax Officer proceeded to make the assessment as though the three H.U.Fs. still continued. The members of the HUFs disputed this and the Income-tax Appellate Tribunal by an order dated 31-7-1953, relating to the appeals by the three families for the assessment year 1943-44, directed that the assessment had to be made on each individual partner. In respect of the year 1944-45 the Income-tax Officer had meanwhile assessed the three H.U.Fs. as H.U.Fs. by declaring the cases of the individuals as cases of No Assessment . These assessments were set aside by the Appellate Assistant Commissioner who followed the directions given by the Tribunal in respect of the year 1943-44, on 9-3-1954.

2. After the receipt of the orders of the Appellate Assistant Commissioner the Income-tax Officer issued notices under Section 34 to all the 13 persons in April 1954 after obtaining the Commissioner s approval. By that time the Indian Income-tax (Amendment) Act, 1953, which among other things amended Section 34 (3), had come into effect on 24-5-1953 but had retrospective effect from 1-4-l952. The notices under Section 34 were served on or about 8th April, 1954 and the assessments were made on 31-11-955 on the footing that under that section there was no time limit. For the purpose of these assessments the three Kartas of the Hindu undivided families, Narayandas, Meghraj and Hanumandas, earlier referred to, and Beniprasad, son of Meghraj had already filed their returns as individuals and the others as H.U.Fs. It should be made clear that these are the H.U.Fs. consisting of the other 7 individuals and their descendants, to which we shall hereafter refer as the smaller H.U.Fs. The Appellate Assistant Commissioner having dismissed their appeals there were 11 appeals to the Tribunal. Banarsidas and Harkisondas, sons of Hanumandas did not file any appeal.

3. The Tribunal held that all the eleven cases were governed by Section 34 (1) (a) and dismissed the appeals. The Tribunal thereafter at the instance of the parties referred the following questions to the High Court:

1. Whether, having regard to the direction given by the Appellate Assistant Commissioner in his order dated 9-3-1954 in the case of the appropriate H.U.Fs. and having regard to the second proviso to Section 34 (3) as amended by Section 13 of the Indian Income-tax (Amendment) Act, 1953 the reassessment made by the Income-tax Officer on 31-1-1955 in the case of any one or more of the assessees is governed by any limitation period such as mentioned in the substantive part of Section 34 (3)?

4. In respect of Narayandas Pokarmal, Meghraj Pokarmal, Beniprasad Meghraj and Hanumandas Sewakram the further question referred was:

2. Whether in the case of the assessees, the remedy available to the Income-tax Officer had already become time barred under Section 34 before that section was amended in 1953 with retrospective effect from 1-4-1952 ?

Along with these 11 appeals one more appeal by Onkarmal Meghraj regarding