The proviso to Section 34(3) of the Income Tax Act, 1922, does not apply to a person who is not affected by or dependent upon the order passed by the Appellate Assistant Commissioner in the appeal filed by the Hindu undivided family.

Untwalia, J.

1. This Income-tax Appellate Tribunal, Patna Bench, has stated a case under Section 66(1) of the Income-tax Act, 1922, here-in-after called the Act and referred to the High Court the following question of law:

"Whether on the facts and circumstances of the case proceedings under Section 34 of the I- T. Act were validly initiated against the assessee for the assessment year 1950-51."

2. The facts are in a short compass. The assessee is a registered firm and the question relates to the assessment in year 1950-51, corresponding accounting period being 12-10-1948 to 30-9-1949. The partners of this firm along with some others originally were members of a Hindu undivided family carrying on business under the same name and style, i.e. Joharmal Parsuram. There was a partition in the family and in the course of the assessment proceeding for the year 1948-49 the Hindu undivided family claimed a partition with effect from 12-11-1947. The Income Tax Officer rejected the claim but on appeal by the family, the Appellate Assistant Commissioner accepted the partition as effective from 16-6-1949. On further appeal to the Tribunal, by its order dated 1-4-1955, it allowed the assessees claim for partition with effect from 1-1-1948. In the mean time assessment proceeding was started against the Hindu undivided family for the assessment year 1950-51 corresponding to the accounting period 12-10-1948 to 30-9-1949. It was claimed on behalf of the Hindu undivided family that since it had ceased to exist during the accounting period, no assessment should be made on it. After partition the present partnership firm which is the assessee in this case was formed and it filed a voluntary return under Sec.22(3) of the Act on 15-12-1950 for the assessment year 1950-51 showing an income of Rs. 68,724. Since in the appeal filed by the Hindu undivided family the appellate assistant commissioner had allowed the claim for partition with effect from 16-6-1949, the Income Tax Officer split up the accounting year into two periods, (f) from 12-10-1948 to 15-6-1949 and (ii) 16-6-1949 to 30-9-1949. The income for the former period was assessed as that of the Hindu undivided family and the income for the remaining 3 1/2 months for the latter period was assessed in the hands of the partnership firm. This assessment was made on 31-3-1955. On appeal by the Hindu undivided family the Appellate Assistant Commissioner by his order dated 13-12-1955 cancelled the assessment in accordance with the decision of the Tribunal in the earlier appeal filed by the Hindu undivided family accepting the partition as effective from 1-1-1948 and directed the Income Tax Officer to make assessment afresh on proper persons in the correct status in the light of the claim of partition of the Hindu undivided family as finally accepted by the Appellate Tribunal.

3. The Income Tax Officer, thereupon, issued a notice under Sec.34 of the Act to the assessee firm on 24-9-1958 for reopening the original assessment made on 31-3-1955 in respect of the assessment year 1950-51. No return was filed by the assessee. The Income Tax Officer by his order dated 14-3-1959 determined the total income of the firm at Rs. 1,08,778 for the whole of the year 12-10-1948 to 30-9-1949 under Sec.23(3) read with Sec.34 of the Act. The assessee appealed to the Appellate Assistant Commissioner and challenged the assessment with the aid of Sec.34 of the Act as being barred by time under the provisions of Sec.34(1)(b) of the Act. By his order dated 21-11-1959, the Appellate Assistant Commissioner held that the limitation commenced to run from 31-3-1950, the end of the financial year in which the order dated 1-4-1955 of the Tribunal was made in the earlier appeal filed by the Hindu undivided family accepting the partition as effective from 1-1-1948. On further appeal by the assessee firm the Tribunal has held that the assessment was barred by limitation and it was not saved by the second proviso appended to Su