A and Z were carrying on busineu at various places, includin11 tobacco business at Mauranipur and they were assessed in the statllfl of Association of persons. In 1938 A died leiwin11 his widow as his only heir. She transferred her interest in •favour of Z, who then became the sole owner of the entire business. Z aifted the tobacco business to his D two sons, the respondents, in 1942. Z died in 1948. During the asseument years 1945-46 to 1956-57, the respondents submitted their returns of income in respect of the tobacco busine1S. Following his earlier deci· sion the Income Tax Officer rejected that return and proceeded to assess all the heirs of Z as an Association of persons in respect of all assets including tobacco business. In appeal the Appellate Assistant Commission came to the conclusion that the assessee, namely, the Association of persons consisting of all the heirs of Z, was not liable to be taxed E in respect of the tobacco business, and that that business had been gifted to the respondents in 1948 itself. But he did not find that during the relevant assessment years the respondents were continuing that business in -their own name; nor did he give a finding in respect of any incomfl ec..:ned in that business by the respondents in those years. He there. fore set aside the order of the Incon1e 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 the F second proviso to S. 34(3 J of the Act. Thereafter the Income Tax Officer issued notices to the respondents under S. 34(1)(a) of tbe Act.
