RAJINDER NATH ETC. vs COMMISSIONER OF INCOME TAX, DELHI

The Supreme Court addressed the applicability of Section 153(3)(ii) of the Income Tax Act, 1961, clarifying that a mere observation by the Income Tax Officer does not constitute a 'direction' necessary for invoking this section. The Court held that the Income Tax Officer's actions against individual assessees were invalid as there was no prior 'finding' or 'direction' from the Appellate Assistant Commissioner, and the assessments were barred by limitation. Consequently, the Court upheld the Tribunal's decision that the assessments could not be converted under Section 153(3)(ii).