1991 (1) TMI 100 - HC - Income Tax

Summary

Issues Involved:
1. Validity of reopening assessments u/s 147(a) of the Income-tax Act for the assessment years 1981-82 and 1982-83.
2. Whether the petitioner failed to disclose income arising from assets transferred to minor grandchildren.

Summary:

Issue 1: Validity of Reopening Assessments u/s 147(a)
The petitioner, an income-tax assessee, challenged the notices issued u/s 148 proposing to reopen her assessments for the years 1981-82 and 1982-83. The petitioner argued that there was no omission or failure on her part in disclosing necessary particulars while filing the returns. She had disclosed in Part III of the returns that the income arising to eight minor beneficiaries in the Madanlal Sarda Family Trust was not liable to be included in her returns. The court examined whether the Income-tax Officer (ITO) was justified in reopening the assessments invoking section 147(a). The court found that the petitioner had disclosed all primary facts necessary for her assessment, including the creation of the trust and the income arising to the minor beneficiaries. The ITO, who also assessed the trust, should have been aware of these facts. The court concluded that the ITO's failure to consider these facts at the time of the original assessment could not justify reopening the assessments u/s 147(a). The writ petition was allowed, and the notices were quashed.

Issue 2: Disclosure of Income from Assets Transferred to Minor Grandchildren
The respondent contended that the petitioner failed to include the income arising from assets transferred to her minor grandchildren u/s 64(1)(vi) of the Income-tax Act, leading to escapement of income. The court noted that the petitioner had disclosed the existence of the trust and the income arising to the minor beneficiaries in her returns. The court held that this disclosure was sufficient to alert the ITO to make further inquiries. The court emphasized that the burden was on the Department to show that the escapement occurred due to the petitioner's failure to disclose full particulars. The court found that the information provided by the petitioner was adequate for the ITO to take necessary steps, and any failure to do so was on the part of the ITO, not the petitioner. The court ruled that the ITO was not justified in reopening the assessments based on the petitioner's alleged failure to disclose income.

Conclusion:
The court allowed the writ petition, quashing the notices issued u/s 148 for reopening the assessments for the years 1981-82 and 1982-83, and directed the petitioner to pay the deficit court fee.