1980 (4) TMI 14 - HC - Income Tax

Summary

Issues:
- Application under s. 256(2) of the I.T. Act, 1961 for assessment years 1967-68 and 1968-69.
- Inclusion of share income from a partnership firm in the return of income.
- Notice issued under s. 148 alleging underassessment of income.
- Dispute over whether share income was individual income or income of Hindu joint family.
- Rejection of contention by ITO, AAC, and Tribunal.
- Interpretation of reassessment under s. 147 of the Income-tax Act.
- Comparison with reassessment under other tax laws.
- Question of law regarding the right to challenge inclusion of share income in reassessment proceedings.

Analysis:
The judgment dealt with applications under s. 256(2) of the I.T. Act, 1961 for the assessment years 1967-68 and 1968-69, where the applicant, an Assistant Surgeon, included share income from a partnership firm in the original return of income but later disputed its inclusion in a subsequent return filed in response to a notice under s. 148 of the Act. The applicant argued that the share income belonged to the Hindu joint family, not him individually. Despite the applicant's contentions, the ITO, AAC, and Tribunal rejected the argument, relying on the principle that matters not raised in the original assessment cannot be challenged in reassessment proceedings under s. 147.

The judgment referenced a Supreme Court decision in CST v. H. M. Esufali H. M. Abdulali, highlighting that reassessment involves a fresh assessment where the original assessment is completely reopened. It also cited a Full Bench decision of the Andhra Pradesh High Court in CWT v. Subhakaran Gangabhishan, emphasizing that reassessment proceedings wipe out the original assessment, allowing for a de novo and fresh assessment for the entire year. The applicant's counsel argued that under s. 147, any income chargeable to tax that escaped assessment can be reassessed.

The court, considering the facts of the case, framed a question of law regarding the right of the assessee to challenge the inclusion of share income from the partnership firm in reassessment proceedings under s. 147 of the Income-tax Act. Ultimately, the court allowed the applications, directing the Tribunal to refer the question of law for the court's decision, with no orders as to costs in each case.