1984 (12) TMI 41 - HC - Income Tax

Summary

Issues:
- Assessment of income tax for the year 1972-73 on the estate share of the late Hemant B. Mafatlal.
- Validity of notices issued under section 148 of the Income-tax Act, 1961.
- Disclosure of primary facts by the petitioners in their income tax returns.
- Interpretation of section 147(a) regarding escapement of income assessment.

Analysis:
The judgment dealt with the case of the petitioners, heirs of the late Hemant B. Mafatlal, who filed income tax returns for the assessment year 1972-73, declaring their entitlement to a one-fifth share in the estate. However, the Income-tax Officer assessed them without considering this share in the estate income. Subsequently, notices were issued under section 148 of the Income-tax Act in 1981, alleging escapement of income assessment for 1972-73 due to the petitioners' failure to disclose their share in the estate. The petitioners challenged these notices through petitions.

The crux of the issue revolved around whether the petitioners had fully disclosed all primary facts necessary for assessment. The respondents argued that the petitioners' disclosure was inadequate, citing a case precedent from the Madhya Pradesh High Court. However, the petitioners had clearly stated their status as heirs to the estate under administration and their belief that their share was not taxable until estate administration was complete.

The court emphasized the obligation of the assessee to disclose all primary facts for assessment purposes. It was noted that the petitioners had explicitly mentioned their inheritance status and the ongoing estate administration in their returns. The Income-tax Officer's change in opinion regarding the taxability of the estate share did not warrant reopening the assessment, as the petitioners had not concealed any material facts.

Ultimately, the court held that the notices issued under section 148 were unjustified as the petitioners had made a full and true disclosure of relevant facts in their returns. The absence of specific details regarding the estate share did not amount to non-disclosure, and the case did not fall within the ambit of section 147(a) for reopening assessments. Consequently, the court quashed the impugned notices and ruled in favor of the petitioners, with no order as to costs.