Judgment

PATHAK, J.:- These appeals, by special leave, are directed against a judgment dated Sept. 17, 1971 of the High Court of Delhi, disposing of an income tax reference.

2. There was a Hindu undivided family consisting of the Karta, Lala Sham Nath and his three sons, Rajinder Nath, Ram Chander Nath and a minor, Surinder Nath. The family carried on business. On April 29, 1949, land was acquired in Sunder Nagar, New Delhi in the name of the Karta, and the price was paid out of the books of the family. A building was constructed on the land was completed in September 1954. Another building was constructed in the following year on a plot at Gold Links, New Delhi.

3. On March 18, 1950, there was a partial partition of the Hindu undivided family, and its business was taken over by a partnership firm Messrs. Faqir Chand Raghunath Dass consisting of Lala Sham Nath and the two elder sons, Rajinder Nath and Ram Chander Nath. The partnership firm debited a sum of Rs. 98, 418/- in the building account of the firm towards the cost of construction of the Sunder Nagar property during the assessment year 1955-56. In the assessment year 1956-57, the partnership firm debited a sum of Rs. 99,148/- on account of the construction of the Gold Links property.

4. The assessees, who are members of the partnership firm, filed separate returns in their individual status for the assessment years 1955-56 and 1956-57. They claimed that the Sunder Nagar and the Gold Links properties belonged to the four members of the family in their individual capacity. But the Income-tax Officer regarded the properties as belonging to the partnership firm, and in the assessment proceedings of the firm for those years, he estimated the cost of construction at a higher figure than the cost disclosed, and made additions accordingly to the returned income of the firm. The partnership firm appealed. Allowing the appeals, the Appellate Assistant Commissioner deleted the additions. He found that when the construction of the buildings was commenced the moneys were advanced by the New Delhi branch of the firm, and the debit in the books was transferred to the Head Office where one-fourth of the total expenditure was debited to the account of each co-owner. On that he held that the partnership firm was not the owner of the properties, and, therefore, it could not be said to have earned any concealed income.

5. The Income-tax Officer then initiated proceedings under S. 147 (a) of the Income-tax Act, 1961 against the individual assesses for the assessment years 1955-56 and 1956-57, and the additions on account of concealed income originally made in the assessments of the partnership firm now divided between the assessees and included in their individual assessments. The Income-tax Officer rejected the plea of the assessees that as they had already disclosed that they had invested in the properties when filing their original individual returns there was no case for invoking S. 147 (a). The Appellate Assistant Commissioner, on appeal, agreed that there was no default on the part of the assessees to warrant proceedings under S. 147 (a) and that ordinarily the assessments would have been barred by limitation. But he maintained the assessments on the ground that S. 153 (3) (ii) of the Act applied. In second appeal, the Income-tax Appellate Tribunal while rejecting the contention that the assessee were not covered by the expression "any person" in S. 153 (3) (ii), pointed out that nevertheless that provision could not be availed of by the Income-tax Officer because there was neither any "finding" nor a "direction" in the earlier order of the Appellate Assistant Commissioner in consequence of which, or to give effect to which, the impugned assessments can be said to have been made. It also observed that no opportunity had been afforded to the assessees of being heard, as was required by Explanation 3 to S. 153 (3) before that earlier order was made. The Tribunal further expressed the view th